This article is based on information from the Kasasa Blog, January 2020.
Depending on your financial standing and the current mortgage rates, there are many ways you can benefit from refinancing. If you are wondering if it is right for you, take a look at these advantages of refinancing.
1. Save With a Lower Rate
If rates have dropped since you financed your loan, then taking out a new loan at the lower rate will result in a lower amount of interest paid over the life of the loan.
2. Predictable Payments
Switching from an adjustable-rate mortgage (ARM) to a fixed-rate loan while refinance rates are low gives you the consistency of a locked-in interest rate and predictable monthly payments for the life of your mortgage. Plus, a lower interest rate may lower your monthly payments, depending on the length of the loan you choose.
3. Faster Payoff
When refinancing your home, selecting a loan with a shorter term will lower the total interest paid as well as the duration of the loan. Home loan rates tend to be lower for shorter terms, allowing you to pay off the loan quicker without necessarily raising your monthly payments much higher than your existing loan.
4. Available Cash-Out
If you have excess home equity available, cash-out refinancing lets you borrow from your equity. This gives you the option to consolidate your debt, make improvements to your home, pay off expenses, or meet other financial needs. You will be given a check at closing, and the cash-out amount is added to the principal of the loan. Since mortgage interest rates are significantly lower than rates on credit cards, unsecured debt, and other types of loans, this can be a great way to reduce your debt and monthly payments.
Home refinancing might be a good option for some, but it is not for everyone. Talk to a mortgage lender to find out if refinancing your home is the right decision for you. Call our office at 608.643.3393 to talk to a lender.