June 3, 2020
If you’re a homeowner, the thought of refinancing your mortgage probably comes to mind often. Many homeowners are not only uncertain if they should refinance, but they often have little idea what’s involved in the refinancing process.
While each homeowner has their own reasons for refinancing, the ultimate goal is to keep money in your pocket. So, if you find yourself weighing your options, here are five key reasons to refinance your mortgage.
A common reason for homeowners to refinance is simply to lower their mortgage rate. If your current rate is higher than what’s being offered today, you should consider refinancing. You could lower your monthly mortgage payment, free up cash for other uses, or just make daily living a bit more comfortable.
Are you concerned about the number of years on your current mortgage? If so, then refinancing to a shorter term may be the answer. If your current rate is high, the monthly payment on a shortened term may be the same, but the years of payments will decrease. While you may not see a payment reduction every month, the overall amount of interest paid will be reduced.
Short-term debt, such as credit cards, usually have higher interest rates than mortgages. If you have this type of debt, it may be time to turn to a debt consolidation refinance. As long as there’s sufficient home equity available, this type of refinance is possible. Consolidating your debts relieves you of multiple monthly payments and may provide significant monthly interest savings.
If you find yourself in need of money, consider a cash-out refinance. Taking equity as cash to use for other needs may be a cost-effective way to accomplish your goals, since mortgage rates are generally lower than personal loan rates. You’ll only need to make one payment each month instead of having multiple debt payments.
Adjustable rate mortgages (ARM) offer a lower rate at the start, but then will readjust at a specific time. Many new homeowners choose an ARM because the monthly costs are cheaper, but it can change in the future. With the security of a low fixed-rate mortgage, the monthly payment for principal and interest remains the same for the entire term.
Thinking of refinancing your current mortgage? NewRez is here to help you find a refinancing solution that will put you on the path to savings.