You’ve already purchased your first home. The experience wasn’t too shocking and you’ve been a homeowner for quite some time. Making consistent monthly payments means that you have built equity in your home. Perhaps you’ve dealt with some life changes and want to lower your mortgage rate or you have plans to add on to your home.
Maybe you purchased your home, but you aren’t quite sure what all of the terms meant. This is common according to data collected the 16th of September 2016. Nearly 59% of homeowners wish that they better understood the details and terms of their mortgage.
No matter what your reasons may be, there are many benefits to refinancing your mortgage loan. There are also many options including conventional refinancing, FHA loan programs as well as other types of refinancing. Start learning your options by speaking with a mortgage loan officer than can point out the benefits that relate to your specific refinancing needs.
A Better Mortgage Rate Is in Your Future
Better mortgage rates is a common reason for refinancing a home mortgage. This is especially true for times when mortgage rates have fallen. You can get lower rates due to a turn in the market that reflects lower rates, or simply because you are now experiencing an improved credit situation and are eligible for lower rates.
How Low Can Your Payments Go?
It is a great idea to ask a mortgage broker how low your mortgage payments can go. It doesn’t hurt to ask and you may be surprised by newer lower interest rates that provide lower monthly payments. Ask about extending your payoff date to lower monthly payments, as well. This allows you to pay less in principle on a monthly basis too.
Would You Enjoy Predictable Costs?
Do you currently have an adjustable-rate-mortgage? When you choose refinancing services for a fixed-rate loan you can lock in a better rate for the remaining time on your mortgage. This gives you the freedom to enjoy monthly payments that do not increase even if rates rise.
Have You Thought About Shortening Your Loan Term?
Most borrowers tend to start with a 30-year loan for their mortgage. Then they choose to refinance and switch to a 15-year fixed-rate mortgage loan. This is an attractive option for homeowners that want to pay of their mortgage faster while being able to save money on interest during the life of a loan. 15-year mortgage rates tend to be quite a bit lower than a 30-year rate mortgage. You might be in a position where you can shorten your loan term without increasing your mortgage payment.
Consolidate Debts and Borrow Money
Borrowing against accrued equity in your home is a great way to ‘borrow money’ and consolidate debts. You can get a check for the home equity that has built up after refinancing. The amount is added back to your mortgage principle, but this is one of the most cost-efficient ways to ‘borrow money’.
Do You Have More Than One Mortgage?
Do you have a second mortgage on your home or a home equity line of credit? You can combine those loans into a single mortgage all at a lower rate. This is similar to what’s called a cash-out refinance. Since it is being used to pay off a secondary mortgage, your home equity would not be reduced with the exception of closing costs that could be rolled into the loan. You will also be able to enjoy the convenience of one monthly payment instead of two.