by: Gaye Jones ~ AnnieMac Home Mortgage
Although it may take a little time and effort on your part, the savings or influx of cash may be worth it. Here are five reasons to consider refinancing your primary, vacation home or rental property.
Refinance to shorten the term of your loan. If you have a 30-year mortgage, now may be a great time to consider refinancing. With record low interest rates, you may find that a 15-year mortgage is not much more expensive than the 30-year loan payment you have been paying.
Refinance to lower your interest rate. As I mentioned before, interest rates are near a record low. If your home is now financed at a higher interest rate, it may be a great time for you to consider refinancing. You could literally save tens of thousands of dollars in interest & payments just by taking the time to fill out the necessary paperwork and gather the needed documents.
Refinance to lower your payment. Refinancing your mortgage at a lower interest rate could mean reducing your payment and saving tens of thousands of dollars in interest. Lowering your mortgage payment could also free up hundreds of dollars per month that could be saved or invested. Although refinancing to lower your payment could increase the term of your loan, it could make sense in some situations.
Refinance from an adjustable-rate mortgage to a fixed-rate loan. If you currently have an adjustable-rate mortgage, now may be the perfect time to refinance into a fixed-rate loan. Interest rates are low now, but they may not stay this low forever. Locking into a low, fixed rate can protect you from rising interest rates in coming years. Additionally, a fixed payment is easier to plan for and budget.
Refinance to cash out home equity. It’s a tempting proposition to cash out your home equity by refinancing your home. It could even be a great financial move in some circumstances. For instance, it may make sense to cash out some of your home equity in order to buy an investment property or start a business.
If you refinance into a conventional loan you don’t have to take the typical 30 year mortgage. In my personal case, I refinanced and shortened my remaining years by one year, that way I didn’t have to “start over” and I still saved on my monthly payment.
Be careful of those offers in the mail, most sound great, but some have some hefty discount points! If you want to find out if refinancing is right for you, call a local lender that you trust to be honest about whether a refinance is right for your situation!