Mortgage refinancing options provide borrowers with the freedom to manage their finances better as circumstances alter. They may lower interest rates, lock in a low fixed rate, forgo private mortgage insurance or access the equity in their home for renovations or other expenses.
When considering whether mortgage refinancing makes financial sense, many factors must be taken into consideration, including your goals and ability to repay the new loan. The key is figuring out why you want to refinance, then making an informed decision based on that reason.
1. Low interest rate: When considering whether or not to refinance, one of the major considerations is often securing a lower interest rate. But saving thousands of dollars over the course of your loan with such an offer won’t be significant unless you have excellent credit or have had your loan for several years.
2. Consolidate Debt: Refinancing can help you combine all your other debts into one lower-interest loan, such as credit cards or a car loan.
3. Accelerate Equity Gains: You may be able to take advantage of your home’s built-up equity through a cash-out refinance or by combining two mortgages.
4. Lower Monthly Payments: Refinancing can offer another advantage of cutting down on overall costs by reducing the length of your loan term and speeding up mortgage payoff. This way, you’ll save money in the long run!
5. Tax-Deductible Loan: If you use your new mortgage as a source of financing for home improvements, those costs can also be deducted from your taxes.
6. Accessing Equity: If you have built up considerable equity in your home, you can use that to access funds for other projects such as a major purchase or an investment property.
7. Refinancing can be a time-consuming process, so carefully weigh your options before agreeing to a new loan.
8. Costs: The cost of refinancing can vary significantly based on the type and fees associated with it. Typically, you’ll have to pay closing costs, appraisal fees and other miscellaneous costs in order to close on your new loan.
9. No closing cost: Many lenders provide “no-closing-cost” or “zero-closing-cost” mortgage refinancing loans to qualified applicants.
10. Finding the Right Home Loan: When selecting a home loan lender, it’s essential to get expert advice from someone you trust. Your Home Loan Expert will guide you through all available types of loans and help determine which one is most beneficial for your individual situation.
11. Lower Your Monthly Payments: With a lower payment, you may have the funds to pay down your loan faster and potentially save thousands in interest over its life.
12. A cash-out refinance is an attractive option for homeowners with substantial equity in their properties, as this option enables them to borrow against it and pay out a larger amount than what was originally owed.