10 Jan Top Four Reasons to Refinance Your Home
How Refinancing Works
When refinancing your home loan, you pay off the existing mortgage and replace it with a new one. Generally, there are two types of refinances:
Rate and term refinance: With this type of refinance, the new loan has a different rate and/or term than your current loan. This is the type of loan to do if you just want to lower your rate and payment or shorten the term, say from 30 years to 15 years.
Cash-out refinance: With a cash-out refinance, you refinance for more than you owe and keep the difference in cash. This refinance option enables you to put the equity in your home to work for you. While it is possible that you may be able to lower your rate with a cash-out refinance, that is not always the case. Instead, the main goal here is the check you’ll receive after the loan closes.
Here are the top 4 reasons you might consider refinancing your home:
Lower Your Interest Rate
A rate and term refinance can help you enjoy long-term savings, not only with a lower monthly payment, but also by reducing the amount of interest you’ll pay over the life of the loan. This can be a great idea if you are planning to stay in your home for at least a few years. If you think that you may want to sell your home in the near future, it may not be worth the cost to refinance since you may not be in the home long enough to enjoy the savings.
Pay Off High Interest Consumer Debt
If you’ve accumulated a large amount of high-interest debt, like credit cards, a cash-out refinance can consolidate those bills into a mortgage payment with a much lower rate, potentially saving you thousands of dollars and dramatically reducing your monthly outgoing cash flow.. However, it’s wise to examine your spending habits and make changes so that you don’t end up with a lot of high-interest consumer debt all over again.
Paying for Home Improvements
A cash-out refinance is a cost effective way to afford home improvements when you don’t have the cash on hand. This enables you to borrow a lot of money at once, which means expensive renovations are within reach without taking too much from your monthly budget.
Get Rid of PMI
Private Mortgage Insurance, or PMI, is a type of insurance that protects the lender in the event that the borrower defaults on the loan. Typically, you’ll have PMI if you bring less than a 20% down payment or if you have an FHA loan, which requires mortgage insurance no matter the size of your down payment. A rate and term refinance is a great way to take advantage of your home’s increase in value due to the hot housing market by refinancing into a new loan without mortgage insurance. This alone may save you hundreds a month on your payment.
Here to Help
Refinancing may or may not make financial sense for you and your family. That’s why Accurate Mortgage will look at your specific situation and advise you the same way we would a member of our own family.
To learn more about your refinancing options, contact Accurate Mortgage today.
Refinancing the easy way with Accurate Mortgage
There are many reasons why a mortgage refinance may be right for you and Accurate Mortgage is here to help you make the process as easy and as painless as possible. Visit us online to get your mortgage rate quote or give us a call today at (615) 833-0456!