Are you thinking about refinancing your mortgage but don’t know if it is the right move for you? While there is no right or wrong answer to this question, the fact remains that there are many benefits associated with refinancing, including:
Benefit 1. Mortgage refinancing lowers your monthly mortgage payment.
Refinancing may let you take advantage of the lower interest rates on offer. By refinancing, you may find you can lock in at a lower fixed rate, or you may be able to secure a lower variable rate that could drop even more in the future.
Benefit 2. The total interest paid on your mortgage could be reduced.
While it depends on the loan terms, the costs of refinancing and also the interest rate that you receive when you refinance, it is still possible for you to pay less in total interest. Be thorough with your calculations of the costs associated with refinancing and calculate your total payments to forge an accurate picture.
Benefit 3. You can pay your mortgage off faster.
You may find yourself in a situation where you are making significantly more income than you did when you bought your home. Paying more on your mortgage each month is not always allowed according to the loan terms, so refinancing could be the ideal option for you. Choose a lower term to pay off your mortgage sooner.
Benefit 4. Your better credit could qualify you for lower interest rates.
If you bought your home when your credit was suffering, you probably paid the highest interest rate available. Homeowners who have rebuilt their credit since purchasing a home can take advantage of lower interest rates through refinancing. A better credit score will mean lower interest and better mortgage terms.
Benefit 5. Refinancing lets you unlock the equity in your home.
A major benefit of refinancing is that it allows you to access the equity in your home. You can get a line of credit based on the value of your home and the amount that you've already paid on your mortgage. This is a great way to fund home renovations, pay for university costs or make an essential big-ticket purchase. The interest rate is equal to your mortgage rate, so borrowing from the equity in your home tends to be the most cost-effective financing option available to homeowners.
Should refinancing be right for your situation, or you have more questions unique to your situation, get in touch with me