Rates have continued to drop and allow hundreds of American families to refinance their homes this year. However, just because rates are low does not mean that a refinance is for every homeowner. It can depend on your unique financial situation, how long you’ve been in your loan and, your current debt. Here are the top 6 reasons you may want to consider refinancing your home while rates are this low:
Are you currently paying for mortgage insurance every month? This is an expense that can often be overlooked once you become accustomed to your monthly payment but luckily you are not stuck with it forever. Depending on the type of loan and the amount of equity you have built up in your home, a refinance may be a great tool to drop that monthly expense and secure yourself a better interest rate at the same time.
Lowering Your Monthly Payment
One of the most common reasons that families want to refinance is to reduce their monthly payment. For most, a housing payment is the largest bill families have every month. Reducing the amount they have to pay every month can allow can free up extra monthly cash to: • Invest with a financial advisor • Provide financial relief during tough times • Pay for college tuition • Make car payments
Another extremely common reason that people tap into their home’s equity with a refinance is to pay for costly renovations. The benefit of using the equity in your home to pay for these upgrades is that you are investing right back into the home. Updating a kitchen or a bathroom is a great way to add value to your home while giving it the TLC that it desperately needs.
Paying Off High Interest Debt
Did you know that on average each household with a credit card carries $8,398 in credit card debt? This can be an enormous burden as the interest rate on credit cards average over 15%! Student loans and personal loans are often another avenue in which people get stuck in debt that they cannot pull themselves out of. Consolidating it into your mortgage is a great way to reduce the overall interest paid on these items and make it much more manageable.
Shorter Loan Term
If you are looking to shorten the term of your loan from a 30-year to a 15-year, refinancing is a great way to do that. Often, a family may be making much more money when they first bought their home and want to pay off their home faster. You can use a refinance as a way to put yourself into a loan with a higher payment and shorter term. While a refinance is a great tool for many families, it is not for everyone. If you are curious to see whether you can utilize a refinance to drop your monthly costs, renovate your home or shorten the term of your loan, click here and speak with one of our local and experienced home loan professionals today.