main reasons to refinance

Main Reasons to Refinance

Refinancing: there are three reasons to refinance. 1. Lowering the cost of your housing, 2. To shorten the term of your mortgage loan and pay it off quicker, or 3. To use the equity in your home for another purpose like paying off credit card debt or home renovations.

In today’s market, you can replace your existing mortgage with a lower interest rate loan that will reduce your payments. Or by shortening the length of your loan, you raise your monthly payments but pay it off sooner. Either way, your equity would not be reduced unless you rolled the refinancing costs into the new mortgage.

Careful consideration of the reason you want to refinance should be made before you decide to do it. If you refinance to take money out then it will lower your equity and increase the amount of mortgage on the property.

With mortgage rate loans being considerably lower than credit card rates and usually lower than a short-term unsecured loan, student loans, or car loans, homeowners will sometimes refinance to pay off higher-cost debt.

Some homeowners will refinance to improve their cash on hand balance, so they have funds in case of an emergency. Others will use it for investments or rental property buying. And others will use it for capital improvements like remodeling or adding a pool.

Maybe you want to combine a first and second loan on your home, by refinancing you will probably lower your payments and grab a saving with the lower interest rate.

A final situation that would cause someone to refinance would be in the event of removing a former spouse or other co-borrower from an existing mortgage loan. In the case of a divorce, the move may be to remove an ex-spouse who no longer has a financial interest in the property but is still liable because they signed the original note.

Homeowners have a lot of reasons why they refinance a home. Equity in your home is an asset. Combined with good credit and good income you create powerful borrowing power. Seeking a refinance analysis can help you to decide what the new payments would be and how long it will take you to recapture the cost of the refi.

For a trusted lender recommendation, give me a call at (703) 303-4010.

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