All investors and homeowners are set out to make a profit. And with the current status of interest rates, the new song on the lips of everyone is whether to refinance their mortgage or not. The decision is a tough call, as there are numerous indices to consider before doing this.
But then, to make this decision easy, GreenSprout, a financial blog that provides numerous forms of financial advice and tools, has decided to share with you some of the peculiar reasons you should consider before you refinance your mortgage.
- To reduce your interest rate and payment: One thing that constantly buzzes the minds of homeowners is how they can make lesser payments for their homes. The opportunity for this often shows itself when interest rates are low.
So, if, as a homeowner, you observe that the interest rates are currently low, it is a good sign for your to refinance your mortgage. This will allow you to reduce your monthly payment and, of course, the overall payment on your loan.
- Offsetting your home payment faster: When interests are low, it means you get to pay less on your loans. You can leverage this to reduce the timeframe for the repayment of your loan.
This shorter time for loan repayment means less payment. And with the current low rate of interest, it even means lesser payment.
- You have experienced improvement in your credit score: If you have been sticking to quick and easy repayment of your loans, it is possible that your credit score has gone up.
If this is the case, then you can refinance your mortgage. With a better credit score, you get to get a better rate for repayment on loans. This, no doubt, is a win for you.
- Remove mortgage insurance: If, when making a purchase for your home, you did it with less than 20% down, then it is possible you are paying what is called a private mortgage insurance. The implication is that this costs more for you.
But then, it can be removed. Now that the internet rate is to your advantage, you can refinance your mortgage, which will help you to get rid of additional expenses on your repayment.
- Draw cash to make home improvements: If you are considering making home improvements, then refinancing your mortgage will not be a bad decision. The reason is that each time you improve your home, you are building equity in your home.
This also means you are lowering your overall expenses and saving costs. And what better time to do this than when the interest rate is at a low point?
- Convert your adjustable rate to fixed rate: If you consider easing payment, then an adjustable-rate mortgage may be your best shot. However, this is only applicable if you are a first-time buyer or if you need an initial lower rate.
If, however, you plan on retaining your home for years, it is better to convert to a fixed rate, which is an advisable option for a long-term repayment basis.