Purchase Estate Blog

Home Loan – Why should you refinance?

Those who have a low, 30-year fixed interest rate are most probably in good shape. However, should any of the issues listed blow apply to your current situation, you are advised to consider refinancing.

1. Decrease monthly payments. You will be able to lower your monthly payments, if you can get a fixed rate that is lower than the one currently affecting your loan.
2. Get cash out of your equity. Having sufficient equity you can get cash out by means of refinancing. Simply choose the amount of money you want to take out and increase the new loan by that amount. It is one of the methods allowing to release money for major situations, such as home improvements or college tuition.
3. Switch from an adjustable to a fixed rate. I you witness interest rates increase and you would prefer the stability of a fixed rate, or, if interest rates have fallen below your current rate you can refinance your adjustable loan to get the fixed rate you need.
4. Consolidate debt. You are entitled to refinance your mortgage to pay off debt as well. Just increase the amount of new loan by the amount you need and the lender will provide you with that cash to pay off creditors. You will still have a debt with the lender but at a definitely lower interest rate – what is more, that interest is tax-deductible.
5. Pay off your mortgage sooner. If you decide to move to a shorter term or a twice-a-week payment system, you will be able to pay off your house sooner and therefore save in interest. Additionally, if your present interest rate is higher than the new rate, the difference in monthly payments may not be as big as you would normally expect.