What Are the Reasons You Should Consider Mortgage Refinancing?
When you first purchased your home, renewing your mortgage was probably the last thing on your mind. Most homeowners, however, will consider
refinancing at some point. Here are four good reasons to consider mortgage refinancing.
1. To Access the Equity in Your Home
Mortgage refinancing allows you to tap into your home's equity, which is your home's market value at the time of refinancing minus the balance of your mortgage. The difference is paid out to you as a lump sum that you can use to pay off debt, finance your children's education, renovate your home, or purchase a second house.
2.To Obtain a Lower Mortgage Rate
If interest rates have dropped since you first purchased you home, mortgage refinancing is a great way to obtain a lower rate. Keep in mind, however, that the interest you would save may not be worth the cost of refinancing. Before signing on a new home loan, run some calculations to determine whether mortgage refinancing would benefit you financially.
3. To Consolidate Debt
Another good reason to consider mortgage refinancing is to consolidate high interest debt into one low monthly payment. Since you'll be using your home's equity to secure the loan, you'll pay a lower interest rate than you would if you consolidated your debts using a personal loan or line of credit.
4. To Take Advantage of a Variable Rate Mortgage
Most first mortgages carry a fixed rate mortgage, which means you pay the same amount of interest every month for the entirety of the term. Refinancing allows you to take advantage of a variable rate mortgage. With a variable rate mortgage, the interest rate fluctuates according to market conditions, potentially saving you thousands of dollars in interest over the life of your mortgage.
Still not sure if now is the right time to refinance? Get in touch with us today, so we can help you assess your current financial situation and future goals to determine whether mortgage refinancing is the right strategy for you.
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