You currently have a home that you don't plan on selling any time soon, but you keep getting offers about refinancing. You may be wondering why you ever want to refinance. There are actually some good reasons to refinance a home if you were not aware of them.
1. Shorten Your Mortgage Term
You may have decided on a 30-year mortgage based on your salary at the time. However, now you are making more money and can afford the larger mortgage payment. This can be a motivating factor to pay off your mortgage sooner and completely own your home.
Refinancing will allow you to convert that 30-year mortgage into one that only lasts 15 years. You'll save money in interest over the life of the loan, even though you're starting over on your mortgage amortization schedule.
2. Take Advantage Of A Lower Rate
Have mortgage interest rates dropped significantly since you bought your home? Thankfully, you can take advantage of the lower rate by refinancing. You are essentially starting over on the 30-year timetable of your mortgage, but you'll do so with paying less in interest every single month. If you know you are in your forever home, this can definitely save you a ton of interest over the year.
3. Get Rid Of Private Mortgage Insurance
It's possible that the current loan you have has forced you to be stuck with PMI for the life of the loan. If you've reached the point where you can pay off 20% of the home's value, it will be worth it to refinance to a new loan. You'll be able to take advantage of being free of PMI, which will save you from paying that insurance every single month indefinitely.
4. Switch To A Fixed Rate Loan
You may have started with a mortgage that has an adjustable rate because you wanted to take advantage of the low interest rates and planned on selling soon. Now you have fallen in love with your home and want to say. The interest rate will go up on your adjustable rate mortgage, which is why it can be beneficial to refinance with a fixed rate mortgage. It will help lower your monthly mortgage payment going into the future, which will make your mortgage more affordable.
Not sure if refinancing is best for you? Consider meeting with a local mortgage lender like Home Mortgage of America. They can go over all your refinancing options and let you know what is best.