Refinancing often allows you to save money on your home. If you’ve paid off a significant amount of your home balance or if interest rates have gone down, then it may be time to consider this smart financial move.
Here’s what you need to know.
What are the benefits of refinancing a home?
The biggest benefit of a refinance is usually a lower monthly payment, which can take a great deal of strain off of your monthly budget. A cash-in refinance can even use your equity to reduce the balance by a considerable margin, shrinking the amount of time that it will take you to pay off your home loan.
Your payment isn’t the only number that will shrink. You’re also likely to pay a lot less in interest over the life of the loan.
Your credit score might also have gone up considerably thanks to your mortgage. Leveraging that to get better loan terms is just good, clean common sense. For example, you might be able to get rid of mortgage insurance as your equity will now count as a 20% down payment. If you were only able to make a 3% or 5% down payment on your original mortgage then a better mortgage is all but guaranteed.
What is the purpose of refinancing a home?
If lower payments and more favorable interest rates don’t entice you then an ability to make home repairs just might. A cash-out refinance is a form of refinance that lets you turn your home equity into cash so you can upgrade your house or make much-needed repairs to it.
You might even use the money to add more space to your home so that you can make room for extended family members.
Be careful to refinance your home for the right reasons. Using a cash-out refinance for debt consolidation is rarely a good idea, for example, as doing so converts unsecured debt to secured debt and puts you at a greater risk for foreclosure.
When should you refinance your home?
Refinance when:
- You intend to stay in the home for at least 3 to 5 more years, if not longer.
- When interest rates are favorable.
- When you are in a favorable position and can lower your payments.
- When getting a lower monthly payment could help you stay in the home.
If you’re not sure whether it’s the right step for you, you can certainly talk to us. We’re happy to review your current mortgage against your current options and to make our recommendations.
How to Refinance Your Home
Applying for a refinance follows much the same process as applying for a home loan. You’ll need all the same documentation, and the underwriting process is much the same, even if you have a consistent history of making your monthly mortgage payments.
We help take the hassle out of shopping for the right home refinance solution. Contact us, tell us your goals, and get matched to the right loan fast. It couldn’t be easier…and you’ll have us, acting as your partners at every step of the way, ensuring that your refinance will be a step in a positive financial direction.
See also:
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