6/1/2020

Why Refi? The Benefits of Refinancing Your Mortgage

Whether you want to change your term, interest rate or type of loan, you may be able to benefit greatly in the long run by refinancing.

Have you ever wished your mortgage could simply be better? Lucky for you, you’re not necessarily stuck with your home loan forever. If your needs and goals have changed since first getting your mortgage, you may want to consider refinancing to make it work for you.

What’s Refinancing?

Refinancing refers to the replacement of one loan with another under different terms. Depending on your situation, this means you could potentially save a lot of money, receive cash from your refinance and more. This option could help you reach your homeownership and financial goals faster! It’s important to note that a refinance is not a second mortgage. With a refinance, you get an entirely new mortgage while a second mortgage gives you money from your home equity.

So, what are the pros to refinancing your mortgage?

Lower Rates

Possibly one of the most common reasons to refinance your mortgage is to get a lower rate, and as a result, lower monthly payments. Good news – rates are still at historic lows! If you refinance now, you can possibly get a better rate than what you currently have and save more money in the long run. You may even want to buy points, which means paying an upfront fee to lower your rate even more.

Shorten the Term

Many homebuyers start out with a 30-year mortgage. When you refinance, you can get a 15-year term to pay off the loan faster and often with a lower interest rate. Shortening the term also allows you save more money in interest during the life of the loan and will enable you to build equity faster!

Save and Receive Money

No matter how you refinance, you can conceivably save more money over the life of the loan. If you choose a cash-out refinance, you can receive money at your closing to go toward anything you want, including your kids’ college fund or taking on some home improvement projects to increase its value in the long run. Some of those projects include installing energy-efficient appliances, remodeling your kitchen and bathrooms, and opening up your floor plan.

Consolidate Debt

You can use a cash-out refinance to pay off your other debts as well. Save on interest and reduce your total monthly payments by using the money to reduce or eliminate the balances on your credit cards, car loans, student loans and more.

Predictable Costs

If you originally chose an adjustable-rate mortgage, you may want to refinance to a fixed-rate mortgage. This will help you budget properly and know exactly what you’re going to pay every month. You also won’t have to worry about finding the extra money to cover your house payment if your mortgage adjusts to a higher rate.

Whether you want to change your term, interest rate or type of loan, you may be able to benefit greatly in the long run by refinancing. Everyone’s situation is different, so make sure you speak with me to go over all your options!