Whether interest rates are rising or falling, mortgage loan refinancing is common and there are several benefits that homeowners find with refinancing:
- No More Private Mortgage Insurance (PMI) – Refinancing your home could allow you to get rid of your private mortgage insurance. If your home has increased in value or if you have paid enough into your home so that you owe less than 80% of what it’s worth, you can refinance into a new loan and stop paying private mortgage insurance. Eliminating PMI can lower your monthly mortgage payment, which helps you save money.
- Increase cash flow: You could lower your monthly payment by refinancing your mortgage, giving you greater financial flexibility. One of the best benefits is the relief they can provide in terms of your monthly expenses. There's no reason to pay more than you need to, and a lot may have changed since you first got your mortgage; your credit score may have improved, rates may have changed, and your home's value may have changed as well. Talking to a licensed loan officer about your options is a good first step in determining how a mortgage refinance could help you.
- Pay off debt: Refinancing could allow you to pay off high-interest credit card debt, private loans, auto loans, or other high-interest debt. With a home loan refinance, interest rates are typically lower and it would make more financial sense to make payments on a mortgage refinance rather than higher interest loans.
- Getting a better loan: Whether you want to switch from an Adjustable Rate Mortgage to a 30 Year Fixed Rate, or simply wish to lock in a lower rate, refinancing can provide an opportunity to optimize your mortgage loan.
- Increase your long-term net worth: A lower interest rate on your mortgage means you’ll save money over the lifetime of the loan. You can use the extra cash to buy real estate for retirement, save for your child’s college fund, or buy a vacation home.
- Make purchases with less interest: Financing expensive purchases with your home’s equity lets you take advantage of a lower interest rate than what’s typically available on credit cards. You could use a home loan refinance and pay for a wedding, college, or elderly care and potentially save money with a home refinance that lowers your interest rate.
- Tax deductible interest: Interest on your home’s mortgage is generally tax deductible. A licensed tax professional could assist you with determining your eligibility for any deductions.