Throughout the lifetime of your mortgage, life itself can bring changes to your situation. Some of these changes are good while others are bad, but when it starts to affect finances, you may be wondering to yourself if you should refinance your mortgage to better suit those life changes. You’ve probably heard stories of people refinancing, you’ve probably seen commercials on TV or on YouTube, but past the fun graphics and smiling representatives, here’s the straight explanation as to why you might want to refinance your mortgage.
1. Getting a Lower Interest Rate
Probably one of the most frequent reasons why anyone refinances their mortgage is because they’re looking to reduce their interest rate. This does rely on mortgage rates being lower than when you initially took out your mortgage, but it can go a long way to reduce how much you’d be paying every month. However, it is worth noting that refinancing will reset the time on your mortgage unless you opt for a shorter term.
2. Has Your Borrower Profile Been Getting Better?
Have you been doing things to boost your credit? If your credit score has been looking much better than when you first got your mortgage, you may be eligible for a better and lower interest rate. Taking advantage of this can mean lower monthly payments and saving some extra bucks through refinancing.
3. Are You Considering a Different Loan Product?
You might find yourself in a position to have access to more loan options later down the road versus how you were when you first got your mortgage. Different loan options have different rates and rules and getting access to a better one is a good reason to refinance and switch over. This is yet another way to get your hands on that lower interest rate.
4. Adjusting the Length of Your Loan Term
Whether you wish to shorten your mortgage loan term so that you can pay it off faster or you wish to lengthen it because you want to make smaller payments, refinancing gives you the ability to do either such as switching from a 30-year to a 15-year or vice versa.
5. Switching to a Fixed-Rate or an Adjustable-Rate
Depending on how you think rates might change, refinancing can give you the ability to switch to a Fixed-Rate Mortgage from your ARM (Adjustable-Rate Mortgage), or you can switch from your Fixed-Rate to an ARM. This is another way to take advantage of lower interest rates, depending on how the rates are looking and how likely they may be to change in favorable directions.
6. Refinance to Get Cash Out of Your House
Refinancing can also be a helpful tool to get some extra cash out of your home equity and into other projects. This could be anything from needing to make home renovations to buying a second home or paying off your college tuition costs.
7. Going Solo on a Mortgage
Maybe you have a co-signer on your mortgage that you need to have removed from the mortgage—whether it is because of a divorce or you’re buying the house from your parents, refinancing will give you the means to switch that mortgage to your name alone. You may also be able to get a better interest rate in the process.
From stocks to putting money aside for purchasing a new investment property, refinancing can help you cash out some of your home equity to prepare and execute your investment plans.
If you’re someone who has multiple mortgages, refinancing could provide a possible avenue to consolidate those mortgages into a single one. This could make things a lot more convenient as you will only have one mortgage then to pay off and you might be able to catch a lower interest rate in the process, thus reducing your monthly payments and putting some extra money in your pocket.
10. Preparing for Harsher Times
Ultimately, refinancing provides a way to prepare yourself for harsher times if you see change on the horizon. Sometimes rates could go in the wrong direction and you want to make sure you get a better interest rate before that happens. Other people might refinance just because they want those better rates and a more comfortable situation. But whatever your intentions, when you’re dealing with a mortgage and you see that things in your life may be changing, a refinance could save you at least the financial headache of being a homeowner while you adapt to the rest of your life’s changes.
Speak with the Best Mortgage Brokers in Your Area About Refinancing!
When choosing to refinance, you’ll want to make sure you get the best rates you can on your new mortgage. But with so many mortgage brokers out there, it can be a hard task to figure out who to look to for your refinancing options. Fortunately, TopResearched has already done the searching for you! With our research team, we’ve gathered the most qualified mortgage brokers in and around your area before putting them through our rigid double-selection process. With our lists of top mortgage providers, you can skip the runaround and get straight to setting an appointment with a trusted mortgage broker!