Thursday, 19 September 2019
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This Old House - Do-it-Yourself

5 Reasons to Consider Refinancing Your Home Now

Written by Posted On Friday, 13 September 2019 09:56

Refinancing your home means using a new loan to replace an existing one. While you may be hesitant to begin the process, there are many advantages to refinancing. Here are five reasons to consider refinancing your home immediately.

Lower Payments

Your initial home loan was determined by the housing market and the loan program you chose. Interest rates fluctuate, and you can exchange your higher interest rate for a lower one. Additionally, with an enhanced credit score and income, you may be eligible for a better price.

Cash Out Refinance

You can tap into your home’s equity with a cash out refinance. You will have the ability to refinance for an amount higher than the current principal and take the funds as cash. This large lump sum of money can be used for personal use. Some common ways people use the money include paying for a home remodel, paying high-interest credit cards, paying tuition for your children, or paying off medical bills.

Eliminate Private Mortgage Insurance

Chances are you have private mortgage insurance (PMI) if you did not make a down payment of 20 percent or more when you purchased your home. If the value of your home has increased, and you’ve made payments on time, your equity could be higher. A refinance can help keep the PMI expense in your pocket instead of tossing it into thin air.

Shorten the Loan Term

Refinancing your home loan can save you thousands of dollars in interest over the term of the loan. A lower interest rate also shaves off years of repayment. For example, a 30-year fixed-rate mortgage term can be cut in half to 15 years with only a slight increase in your monthly payment.

Converting to a Fixed Rate

A fixed interest rate on a home loan can be cheaper than an adjustable interest rate if you plan to stay in your home for a while. Locking into a lower, fixed-rate can protect you from rising interest rates. Predictable payments make it easier to plan your family’s monthly budget. Strike while the iron is hot, and refinance when interest rates are low.

Refinancing your home can be a relatively simple process. Do your homework and determine if now it is the right time. Work with a mortgage broker who can find you the best rate based on your qualifications.

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