Should You Refinance Your Home?
Everyone seems to be refinancing while interest rates continue to be at historic lows, but does it make sense for your situation? Below we have outlined some benefits and factors to consider when refinancing your home.
Lower Interest Rate
One of the most common reasons to refinance is to get a lower rate. Depending on the market, and when you last financed your home, you could end up reducing your monthly payment or shortening the term of your loan.
Better Credit Score
If your credit has improved since you applied for your mortgage, you may be able to refinance to qualify for a better rate. This will help you save money and reduce your monthly payment.
If your home currently has a balloon mortgage, the remaining balance of your loan will be due on a certain date. If that date is coming up and you do not have the funds to pay it, you might want to consider a refinance to avoid having to pay the mortgage in full.
Remove Mortgage Insurance
When you financed your home, you may have had little money to put down. If that was the case and you are paying mortgage insurance, you may be able to refinance and eliminate it if you have enough equity in your home. This will lower your payment and help you to save money.
Home Renovations or Cash Out
If you have lived in your home for a while, you may have equity that you can leverage for cash out. Whether you are looking to make some home repairs or are looking to make a big purchase, refinancing can get you the funds you need.
Last Updated: June 2020
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