Two Reasons To Refinance Today
Refinancing a mortgage loan can be quite an undertaking, as the process is very similar to purchasing a new home. For this reason and others, many homeowners are hesitant. However, there are times when a re-fi is the best financial move you can make, including the following two common scenarios:
You’re stuck with undesirable loan terms. Many homeowners find themselves in a loan with a high interest rate or an unpredictable adjustable rate. In this case, refinancing could save thousands of dollars per year. Maybe your credit score has improved or maybe average market rates are down; either way, you can probably score a loan with superior terms. Be sure to tell your mortgage lender what your refinancing goals are, so they can best assist in finding you a new loan to suit your needs.
You need cash – fast. Some homeowners know it’s time to refinance when they need to free up cash, say to pay down an existing debt. This is called a cash-out refinance, and it allows homeowners to take out a new mortgage loan for more than they owe on the house. This can be a risky move, as it will typically increase your monthly mortgage payment. However, in cases of high-interest debt like a credit card or personal line of credit, you will likely save money in the long run by eliminating the high-interest debt more quickly.
Even if you’re not in an undesirable loan or in need of cash, the need to refinance may arise. Sometimes it’s a necessary step to settle a divorce, or to eliminate the need for private mortgage insurance. If you’re unsure whether a refinance is the best move for you, talk with several lenders to ask questions and learn your options.
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