You’re thinking about refinancing your mortgage, but are unsure if it’s the right decision at the present time.
There are a variety of well-known benefits, such as the opportunity to secure a lower rate (and a lower monthly payment).
But did you know there are many other benefits you may be overlooking? Here are a few more to keep in mind:
1. Shorter Term
For example, maybe you have 25 years left on your 30-year mortgage. That’s a long time, right?
Through a refinance, you could secure a 15-year mortgage at a lower rate, thus allowing you to payoff your loan 10 years sooner than expected. Your payment may be a bit higher, but the long-term savings could make it well worth it.
2. Cash-out Refinance
A cash-out refinance allows you to borrow against the equity in your home, thus giving you access to funds that can be used for everything from a home improvement project to throwing your child the wedding of their dreams.
Since mortgage rates are typically lower than those associated with other types of loans – such as a personal loan – a cash-out refinance is often the most affordable way to borrow the money you need.
3. Debt Consolidation
For instance, if you have a second mortgage, such as in the form of a home equity loan or line of credit, a refinance may allow you to bring them under the same roof.
Not only does this have the potential to save you money, but it also helps you better manage your finances and budget.
4. Say Goodbye to Private Mortgage Insurance
Have you been paying private mortgage insurance since you didn’t put 20 percent down on your home? This can add up to hundreds or even thousands of dollars over the course of a year.
Through a refinance, you can say goodbye to private mortgage insurance once and for all, which will immediately improve your financial situation.
5. To Put the Home in Your Name
There may come a time when you need to remove another person’s name from your mortgage, such as after divorce.
It’s not as easy as you think to remove them from the loan. The only way to actually do so is to refinance the mortgage in your name.
Do one or more of these benefits of a mortgage refinance pique your interest? If so, consult with several lenders or a broker to learn more about your options and the process for moving forward.
This isn’t a decision you should make on a whim, as a refinance has the potential to affect your home, budget, and overall financial situation in a variety of ways.
If you come to the realization that the benefits outweigh the potential drawbacks, it may be time to proceed. Once your refinance is complete, you hope to look back and realize that it was the right decision.