Five Main Reasons
1. Lower your payment.
If you plan to live in your home for a few more years, paying a point or two to lower your interest rate and your monthly payment may make sense. (Remember, your long-term savings should exceed the short-term costs of the points.) But if you plan on moving in the near future, you may not be in your home long enough to recover the refinancing costs.
2. Convert from an adjustable rate mortgage to a fixed rate.
Adjustable rate mortgages are great if you want lower initial monthly payments and are willing to risk upward market adjustments. They can be especially advantageous for homeowners who don't plan to hold onto a home for long. However, if you are looking for more stability, you may wish to convert your adjustable-rate mortgage to a 15-, 20-, or 30-year fixed-rate home loan. Though the interest rate may be higher, you have the confidence of knowing exactly what your mortgage payment will be each month. Adjustable-rate mortgages, on the other hand, can increase monthly payments to a level you no longer can afford.
3. Balloon payment is due.
Like adjustable-rate mortgage programs, a balloon program can be perfect if you want lower rates and lower initial monthly payments. However, if you still own the property at the end of the fixed-rate term (usually five or seven years), the entire balance of your mortgage suddenly is due. Unless you are among the fortunate few who can afford to pay off that balance immediately, refinancing is a necessity.
4. Remove private mortgage insurance (pmi).
Low-down-payment home purchase options allow homeowners to purchase homes with less than 20 percent down. However, they also usually require private mortgage insurance, which is designed to protect the lender from default. As the value of your home increases and the balance of your home loan decreases as you make your monthly mortgage payments, you may become eligible to remove your PMI the next time you refinance your home.
5. Cash out on your home equity.
Your home is a great resource for extra cash if you have equity. You can use the cash to finance your child's education, pay for home improvements, consolidate high interest debt, or take a vacation. With a cash-out mortgage refinance transaction, it's easy. And it’s even tax-deductible.
Main ::
Free Quote Form :: About :: Resources :: FAQs :: Contact :: Reasons
