Even when you own your home, but life can a way of throwing curve balls at you. If your circumstances have changed since you purchased your home, you may want to think about how refinancing could be the best thing for you.
If you find yourself in any of the following situations, refinancing might be the best option for you.
You qualify a lower interest rate.
The most obvious reason to refinance your home is to get a lower interest rate. If your credit score has improved dramatically, you may be eligible for a better interest rate than when you originally purchased your home. Interests also may have gone down as well depending on the market. You can save a lot of money by getting a lower interest rate.
Learn more about improving your credit score.
You want to pay off your mortgage faster.
Refinancing to a shorter term will save you thousands of dollars and cut years off of your home loan. Short-term mortgages have lower interest rates than long term ones which means that your monthly payment will not increase.
You need to borrow money for home improvements.
If you need to borrow money you can do so through a cash-out refinance. It’s like a home equity loan where you are borrowing against your own mortgage. This is a great option to do home improvements that can increase the value of your home.
You want to consolidate your debt.
Consolidating debt is a great reason to refinance. You can use the money you borrow to pay off high interest credit cards, medical bills or any other high interest loans. You can wrap your bills up into one monthly mortgage payment. Mortgage interest is tax deductible.
You want a fixed rate.
Changing mortgage types from an adjustable-rate mortgage to a fixed-rate mortgage is a way to guarantee your interest rate won’t change. With a fixed rate, you always know what your interest rate is going to be and it will not change with the market.
You want to get rid of your mortgage insurance.
Eliminating mortgage insurance is an option once you have paid down your mortgage to a certain point. Borrowers who put down less than ten percent must carry mortgage insurance to protect the lender, but once you have reached twenty percent equity in your home you can eliminate mortgage insurance and save money every month when you refinance.
You need to remove someone from your loan.
Personal life changes can call for refinancing. The only way to get a partner’s name off of the loan is to refinance and remove them. Otherwise the ex may still be responsible for any missed payments, which could cause some uncomfortable conversations in the future.
The bottom line is this…
Refinancing your home could save you money and help you get out of debt. If this seems like an option that could help you, you’ll need documents similar to when you initially purchased your home and a lender to help you. You can be well on your way to a better financial situation today.
Curious what your interest savings might be based on refinancing your existing mortgage?
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