Refinancing is something people consider at least once during the lifespan of their home loan. It allows you to pay off your previous loan and apply for a new loan, hopefully giving you a better financial stance. Their are several great reason to refinance, here are a least five.
-Scoring a lower interest rate. Homeowners typically like to refinance to help secure a lower rate on their mortgage. Allowing them to save money in the long run, decreasing your monthly mortgage and build equity in your home a lot sooner.
-Utilizing an improve credit score. Even though the interest rates haven’t dropped in the market, if your credit score has improve over the years, you might be able to reduce your mortgage rate.
-Shorting the loans term. If interest rates decrease, you might be able to shorten the lifespan of the loan with little to no change in monthly payment, allowing you to pay off your loan sooner.
-Switching from an adjustable rate to a fixed rate. If you chose an adjustable-rate mortgage with great introductory rates when you initially financed your home, that rate may increase significantly over the years. By switching to a fixed rate while interest rates are low, you can protect yourself from future increases.
-Cashing out home equity. If there is a big purchase or payment on the horizon, such as funding a wedding, going back to school or consolidating high interest debt, your best option may be to use the equity you’ve built in your home to borrow money at a lower cost and interest.