Refinancing a home takes a lot of effort. First you have to qualify for refinancing; you then must fill out financial paperwork. Finally, there are terms to accept under the new loan agreement. But as long as you have a clear goal in mind, refinancing can have real benefits. There are several common reasons why you may decide to refinance your existing mortgage.
1. Reduce your payment rate.
When you first got your mortgage the payments were easier to manage. Things have changed and you wish there was a way to lower those monthly mortgage payments. You’re tired of struggling to pay the mortgage and could use some relief. Refinancing is a good way to free up thousands of dollars per year in primary and interest payments. To get a lower payment rate there’s a good chance you’ll be making payments over a longer period of time. This is a fair trade-off if your mortgage is causing a budget squeeze.
2. Get cash you need for important items.
The equity in your home has a certain dollar value in cold, hard cash. If you have an urgent need for a large amount of money. Perhaps to buy a car, make home improvements, pay for medical care or college fees, refinancing can help you cover these types of expenses.
3. Get a better interest rate.
Mortgage interest rates constantly fluctuate. High interest rates take a chunk out of your household budget, so when rates take a big dip, it’s time to consider refinancing. Shop around to find the lowest rates, and best terms. Rates between three and five percent are excellent, but even lowering rates by a few percentage points puts money back in your pocket.
4. Pay off credit card debt.
In addition to monthly mortgage payments, you have one or more credit card bills to pay. Credit card debt is the worst type of debt, because it drains your budget of money needed for other things, interest rates tend to be high. Debt consolidation through refinancing allows you to pay off all of your credit card debt, while getting a better interest rate deal. Once free and clear, avoid habits that led to huge credit bills.
5. Switch to a fixed interest rate.
You currently have an adjustable-rate mortgage, but you want to take advantage of low fixed rate mortgage offers while they last. Grab a great refinancing deal that locks you into a long-term lower payment rate.
Ready to see if refinancing is right for you? Contact one of our loan officers today.