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Reasons to Refinance
Reasons to Re-Finance Your Home Mortgage
Better Terms and Interest Rate
Try to avoid the biggest mistake in refinancing, by refinancing for another 30 years. It will not be financially productive if you are adding years to your current mortgage. Never finance for more years than you currently owe. If you have 22 years left on your current mortgage, look at refinancing for 15 or perhaps 20 years. Financing at a lower rate will still lower you payments or at least be no more than your current mortgage. Refinancing a the low rates available today will make your home much more marketable when the rates go back up. Home buyers will like the idea of assuming your low interest loan instead of getting a new loan at a much higher rate.
Get rid of your Adjustable Rate Mortgage (ARM) and get a low Fixed Rate
An ARM will always adjust (usually up) and in many cases, it could make your mortgage payment unaffordable. Take advantage of the historically low rates today and get rid of your ARM.
Take Cash Out
Refinancing and taking cash out could help pay for a child’s college education or even help pay for some remodeling or renovations that need to be made in the home. If you must borrow money to pay for these things, at least the interest on the loan may be tax deductible. Please consult with your accountant to determine if the mortgage interest will be tax deductible.
Consolidate two Mortgages
If you have two mortgages on your home, you could refinance and combine both loans into one. You can likely get a much better rate and terms and making one payment will be less than making two payments.
Recover from family hardships
Unfortunately, hardships are part of life. It could be a result of a divorce, loss of job, or even medical bills. Refinancing can help pay for these hardships.