Reasons to refinance your home can vary. Simply put, “refinancing” means paying off your current mortgage and replacing it with a new mortgage. There are several reasons that make refinancing your home a decision worth considering.
When the current interest rates are lower than your mortgage’s interest rate, consider refinancing to get that better interest rate. A better interest rate translates to a lower monthly payment and paying less in interest on your mortgage over the life of the loan.
Think about a shorter term on a new mortgage. If you’ve paid your mortgage for several years, and your income has increased steadily, refinance your 30-year mortgage into a 15-year mortgage. Your monthly payment might be a bit more, but you’ll pay off your home sooner.
Choose a longer term on a new mortgage with the remainder of you owe, and your monthly payments will be smaller.
If eligible, consider using home equity cash for remodeling, repairs, or significant expenses like college tuition.
If your current loan still has you paying private mortgage insurance (PMI) because you didn’t make a down payment of 20% or more, refinancing once you’ve passed 20% in equity on your home can help you eliminate PMI.
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