As a homeowner, the current low home interest rates can be tempting for a possible refinance of your mortgage. Refinancing can give you lower monthly payments and lower your interest rates, making it a smart move for many people. If you've considered having your home mortgage refinanced, here are some of the benefits this process can provide.
Perhaps the most obvious benefit of a home loan refinance are the lower monthly payments. If you get a mortgage with a lower rate, your payment should also be lowered as a result. This will free up your cash flow for other things like putting extra money in savings, paying off other debts like student loans or credit cards, or using that extra money to make home improvements. There are closing costs associated with refinancing a mortgage but this cost is usually rolled into your new loan, and you should barely notice it in terms of your new monthly payments. Depending on how low the new rate is, you could save several hundred dollars in payments per month.
If you refinance your mortgage smartly, you can reduce the number of years you have left to pay it off. If you currently have a 30-year mortgage, you may be able to change the mortgage terms to a 15-year one. This will help prevent you from starting all over again at the 30-year repayment mark and can reduce the overall length of time it will take to repay the mortgage. It's always recommended that you speak with a knowledgeable mortgage officer or broker who understands the best way to refinance your home without putting you in the hole. Better terms can be good for the long term, but a shorter repayment term may mean that your payment stays the same or could even be higher. Think about your long-term goals and if you plan to stay in the home, a shorter term is definitely the way to go.
Using Your Equity
Home equity is the money that you've gained from your home's value increasing while the overall mortgage balance has decreased. If you have some extra equity in your home and want to use it for things like remodeling, buying a car, or putting money away for your child's college tuition, an equity refinance can be a viable option. You may be able to put that extra equity in your pocket, and use it for things you need. Make sure you consult with a mortgage professional like Kingsway Investment Ltd before you decide to refinance in order to get an equity payout just so you're sure that the refinance will be in your best interest. It's important to understand that with all of the benefits of refinancing comes a few pitfalls as well, so get professional advice before starting the process.
A few years ago, I found myself in a tough spot. My sister had passed away, and I had lent a lot of money to my parents to cover funeral expenses. Also, I had taken off a lot of time from work, which was putting a lot of stress on my finances. Fortunately, a friend of mine told me about a place that issues fair loans, and so I went in to talk with a representative. However, I was nervous about agreeing to unfamiliar loan terms. I spent a lot of time researching financial options, and this blog is all about my experience. Read here to learn more about loans and financing, so that you can understand terminology.