Welcome back to my blog. This week we’re going to talk about refinancing. This has been a HUGE topic here lately, especially with the current rate drops caused by Brexit. Surprisingly, there are millions of homeowners that still have not taken advantage of lower interest rates and are still paying too much on their home. CNBC even wrote an article about this. So why would someone want to refinance? There are a quite a few reasons you would want to do so, now let’s talk about them.
- Refinance to pay down your credit card or other debt. People typically look into doing this because of the variable and high interest rates that credit cards carry on them. Most people only pay the minimum balances on their credit cards, if you read the fine print it will tell you how many years it would take to pay it off. By doing a cash-out refinance, you can lower your over all monthly debt obligation and free up money every month. You could also use the savings to pay the mortgage off faster.
- Lowering your interest rate. When you bought your home, interest rates may have been higher than what they currently are. With that being said, homeowners will look into lowering their interest rate because lowering their rate can mean savings on your monthly mortgage payment.
- Cutting your mortgage term and paying it off sooner. This is good way to cut the length of time you have a mortgage and could also lower your interest rate. You could refinance from a 30-year loan down to a 15-year loan and have your mortgage paid off in half the time. Paying off your mortgage in half the time could put you in line with any future plans that you have such as retirement or even saving for your children’s education costs.
- Refinancing to change from an adjustable rate mortgage (ARM) to a more secure fixed rate mortgage. If you opted for an ARM when you purchased your home and now want a fixed rate, then refinancing is something you should do. Luckily, with rates as low as they are, you can secure a low-interest rate on a fixed rate mortgage.
- Refinancing to do some home improvements around the house. Homeowners may want to access some of their equity in their home in order to do some home improvements. Certain home improvements can be quite expensive and accessing the equity in your home would the perfect opportunity to be able to complete your home makeover.
These are just a few reasons that homeowners refinance, each situation is different and you may have a different reason to refinance. So this what I recommend, get together with your mortgage professional (Click here for the best one in the business) and let them know exactly what you want to accomplish with your refinance. Make a list of goals that you have and share that with them. The more information you provide, the more helpful we can be. Once this is done, make sure you get locked in to a low rate and make sure you get them what they need in order to complete the refinance.
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Thanks again and have an amazing week!