Is it a good idea to refinance your mortgage? As interest rates remain near historic lows, millions of Americans are asking themselves this question. Even if mortgage rates are at an all-time low, that does not indicate that everyone who has a mortgage should refinance. However, for the vast majority of homeowners, now is the ideal moment ever to lock in a reduced monthly mortgage payment by taking advantage of current interest rates. This post will outline the top five reasons to refinance a mortgage and will hopefully give homeowners with useful information.I strongly suggest you to visit Refinance My Mortgage to learn more about this.
When interest rates are low, refinancing your mortgage allows you to swap a higher interest rate for a lower one, lowering your monthly payment. Locking in a reduced monthly payment can be tremendously beneficial to a household’s overall financial health for the millions of Americans who are struggling to meet their monthly payments.
When you refinance, you can reduce the term of your mortgage.Let’s imagine you had a 30-year mortgage when you first got it and have been paying it down for the past seven years. You can convert to a shorter term loan of 10, 15, or 20 years by refinancing your mortgage. You might save thousands of dollars in interest by doing so.
You can apply for cash out financing, which will allow you to put extra money in your pocket by converting the equity you’ve built in your house into cash.
You can refinance your mortgage for a higher amount than the current principle balance and cash out the difference. This money can be used to improve your home, pay off high-interest debt, or build a college fund for your children.
If you have more than 20% equity in your home, you can get rid of your private mortgage insurance.Private Mortgage Insurance is usually necessary for clients who were unable to put down a 20% down payment when purchasing a home. However, if you refinance, you may have built up more than a 20% equity stake and will be able to avoid this additional cost.
You currently have an adjustable rate mortgage and want to convert to a fixed rate mortgage.Your mortgage payments will fluctuate each month if you have an ARM (adjustable rate mortgage), and they will never be the same. If you don’t like the unpredictability that comes with ARM mortgages, you can refinance to a fixed-rate mortgage and lock in a fixed payment for the duration of your loan.