The following are common reasons to refinance your mortgage loan.
Shorten your mortgage loan term
If you have a 30-year mortgage, you may want to consider shortening the time duration at which you pay off your mortgage. With record low interest rates, you may find that a 15-year mortgage is not much more expensive than the 30-year loan payment you have been paying.
Lower your interest rate
Interest rates are near all-time low levels. Check mortgage rate sites to see if your home is financed at a higher interest rate. If so, it may be a great time for you to consider refinancing. You could literally save tens of thousands of dollars just by taking the time to fill out the necessary paperwork and gather the needed documents. Take the initiative to contact your mortgage broker or check out some online approved lenders thru sites like zillow
Lower your payment
Refinancing your mortgage at a lower interest rate could mean drastically reducing your payment and saving money on interest. Lowering your mortgage payment could also free up hundreds of dollars per month that could be saved or invested. Although refinancing to lower your payment could increase the term of your loan, it could make sense in your particular situation.
Switch from an adjustable rate mortgage to a fixed rate
If you currently have an adjustable-rate mortgage, now may be the perfect time to refinance into a fixed-rate loan. Interest rates are low now, but they may not stay this low forever. Locking into a low fixed rate can protect you from rising interest rates in coming years. Additionally, a fixed payment is easier to plan and budget for.
Refinance to cash out home equity
It’s a tempting proposition to cash out your home equity by refinancing your home. It could even be a great financial move in some circumstances. For instance, it may make sense to cash out some of your home equity in order to buy an investment property or start a business. It mostly depends on what you are trying to achieve and if you are someone who can manage your debts responsibly.
What if I want to refinance?
You may have to pay thousands of dollars in fees for your new mortgage, so you need to determine how long do you plan to keep this mortgage. If you plan on moving in the near future, it may not make sense to refinance your home loan at all.
Then, more importantly, do you even qualify for a refinance? Your loan must meet several requirements in order to qualify. These guidelines can be found online, at MakingHomeAffordable.gov or by talking to a mortgage broker.
After thorough research and a conversation with a broker, you should be able to decide if a mortgage refinance is right for you.