The need to mortgage one’s home has earned about sixty-two percent of owner-occupied properties their own properties. A good mortgage plan steps in to help when owning your home outrightly doesn’t suffice. So where does refinancing one’s home come in? How does it work? What are the benefits? Let’s find out.
What does it mean to refinance your home?
A mortgage cannot be said to be a bad thing, neither can it be said to be a good thing. It is a case of preference. For some people, debt is better avoided at all costs, while for others it is a tool used to increase wealth. Whatever you see it as is what it remains for you.
Now that you have taken on a mortgage for your home, where does refinancing it come in? Simply, Interest! Refinancing your mortgage is a chance to negotiate for a better interest or terms in comparison to what you currently have. If you feel unsatisfactory about it now, it’s probably a good time to refinance. All this entails, is that you replace your existing mortgage with a new one that accrues favorable interest and benefits.
The idea behind this is to give yourself the opportunity to save some money – so closing costs, interest rates, and how many years you will remain in your house will help you decide what your savings will look like.
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Why should you refinance your home?
1. A Shorter Term: Moving from a mortgage spread across 30 years to one that is for 15 years can save you a ton of cash. This may come with slightly higher monthly installments, but based on the weight of your rate or loan, the difference can be almost insignificant.
2. Lower interest rates: Since the surge of refinancing in 2020, lower interest rates are one reoccurring reason why debtors are refinancing their homes. Due to the maturing economy, mortgage rates have reduced and may remain so for a while. When you refinance your mortgage, for this reason, you can save more money for other pressing needs.
3. Home renovation and refurbishing: According to research, over 40 million homeowners have accessible equity. Thanks to the rising home prices, your tapped equity can cover your renovations. This is one reason you should consider refinancing your home.
4. To reinvest: When you opt for a cash-out refinance option, the funds received can be used as a down payment to acquire another home or afford some relaxation for yourself. Better still, it can be used to acquire a rental property that can help you make your payments.
5. Erode mortgage insurance: Thanks to the equity acquired on your home – renovations, vacation homes, a getaway isn’t the only thing that can be covered. When you refinance your home into a conventional mortgage, at least 20% equity can afford you the cost of mortgage insurance. Especially if your mortgage is insured by FHA, also known as Federal Housing Administration.
Accordingly, your need to refinance your home depends on your financial and personal goals. In all, the benefits of refinancing are beneficial with regard to money and time.
If you’re ready to look into refinancing, give me a call. It’s still a great time and if you can get at least one full point lower than you have now, it’s well worth it. It literally costs nothing out of pocket. Contact me now for all refinance options.
