There are many reasons to consider refinancing your current Mortgage (and many of which can be to your benefit). We’ve created a list of some of the most common (and some of the best reasons) to Refinance.
Lowering monthly payments
Perhaps you’ve gone over your budget and realized you’d be more comfortable with paying less monthly. This is where Refinancing may get a chance to shine! By shopping around for a better Mortgage (weighing-out costs & rates) you can save big bucks monthly!
There are different ways to save Refinancing: consolidating debt, obtaining a Lower Mortgage Interest Rate and/or APR or changing the term (timeframe) of the loan. When going over your options, it’s important to look-into the Equity in your home and your LTV (Loan-to-Value Ratio). If your Equity has gone-up you may be able to get a better Mortgage Interest Rate. Also, if you have more than 20% equity in your home, and you’re currently paying PMI (Private Mortgage Insurance) it’s possible to Refinance without the PMI.
The “great” Mortgage Interest Rate on your ARM is about to expire
You got a “great” Mortgage Rate when you agreed to take out an adjustable-rate mortgage (ARM) but now the Rate is about to end; and with a fluctuating market, who knows if the change will be for the better, or for the worse. Before you get stuck paying more than you have to... shop around for a better Mortgage Interest Rate and, better yet, go for a fixed-rate loan. (You can get a much lower rate and keep that rate for the life of the Mortgage.)
Your credit score went up!
Congrats on the better score(s)! Now it’s time to get out there and compare. With better credit, you may qualify for a better mortgage rate on a brand new shiny Mortgage. This can equal less Monthly Mortgage Payments allowing the grip on your wallet to become a little looser. You can also improve your credit more; by lowering your monthly payments, it can make it easier for you to make payments thus furthering the positivity associated with your credit score.
You need cash!
Uh-oh… something’s come up and you need cash. The good news is that, if you have equity built-up in your home, you may be able to take cash out of your Equity. Here’s how it works… Let’s say you currently owe $200,000 on the mortgage but your home is worth $300,000- this means you have $100,000 in equity. But let’s say out of this $100,000 you only need $50,000 in cash. You can actually take $50,000 cash from your Equity. This means that the new Mortgage amount would be $250,000.
By refinancing with a cash-out option, you can use the cash from your equity to pay off some of your Debts (that fancy wedding from a few years ago, credit cards, student loans, auto loans, etc.) , or use that money for other situations (home improvements, home repairs, medical bills, auto repairs, etc.).
Payoff your loan sooner with higher Monthly Payments
Looking to get out of Debt sooner? There are a couple of ways to do this with a ReFi. One way is to make your Monthly Mortgage Payments higher in order to pay off the loan sooner, and also save money on Interest Payments. To do this, you may need to change the term of the loan; shortening the life of the loan. Or, you can speak to a Mortgage Lender about increasing the amount you're currently paying back on your Monthly Mortgage Payments.
Consolidate your debt
Want to make paying back your debts more streamlined (and possibly cheaper)? By refinancing to consolidate your debt, it’s entirely possible! By rolling all of your other debts (or at least some of your other debts) into your Mortgage, you can just pay one lump sum every month at the same Mortgage Interest Rate. This means if you’re able to shop around, and you find a better rate than what you’re currently paying back, you can save money monthly while also making getting out of debt easier on yourself.
If you want to find out how refinancing your mortgage can benefit you, speak with a Mortgage professional here.