Homeowners refinance their mortgages for a variety of reasons. Here are five good reasons to refinance your mortgage loan in any economy.
Refinancing your mortgage can help you reach your financial objectives. If your goal is to save money, pay less to the lender, or build equity in your
Get refinancing loan quotes today!home there is a loan that will help you do it, regardless of what interest rates are doing. If mortgage interest rates are on the rise it means you will have to become a savvy shopper when comparing mortgage loan offers. There are still good deals to be had in today’s economy, you just have to work to find them. Here are five good reasons for refinancing your mortgage.
1. Refinance Your Adjustable Rate Mortgage to a Fixed Interest Rate
Interest rates are rising. The Federal Reserve has raised short term interest rates at nearly every meeting for the past two years. If you are concerned how these interest rate hikes will affect your Adjustable Rate Mortgage, you should consider refinancing to a fixed interest rate mortgage. Make sure your current mortgage does not have a prepayment penalty and calculate how long it will take to recoup your closing costs to decide if refinancing is in your best interests.
2. Lower Your Mortgage Payment
If you need a lower monthly payment for your budget there are several ways to get it. If you qualify for a lower interest rate you can lower your payment amount by paying less interest. Consider paying discount points to the lender in exchange for a lower interest rate. Before paying points you need to determine if the trade-off will be worth paying money out-of-pocket in exchange for any potential savings you could gain from the lower interest rate. You can also lower your monthly payment by choosing a mortgage with a longer term length.
3. Drop Your Private Mortgage Insurance
If you are paying Private Mortgage Insurance you are basically throwing money away every month. There are laws in place to protect you that require mortgage lenders to automatically cancel your policy once you have built up the required amount of equity in your home; however, you may be able to drop it sooner by refinancing with a lender that will not require Private Mortgage Insurance.
4. Cash Out Equity in Your Home
If you are in need of cash for any number of reasons, equity in your home is a source of low-interest credit. By refinancing your mortgage and taking cash back you can consolidate bills, pay for your child’s education, or renovate your home.
5. Get Better Loan Terms
If your current mortgage has a balloon payment or other unfavorable loan terms you can improve your financial situation by refinancing with a better lender. The mortgage industry is fiercely competitive; if you do your homework and negotiate for terms you can find a much better mortgage.