Refinancing is simply moving your home loan to a different lender in order to trade in an old mortgage for a new one.
People generally refinance in order to lower interest rates, reduce monthly payments, or take cash out of their homes for large purchases. There are different benefits of refinancing. You can reduce your monthly payments.
You can switch loan programs, for example, from an adjustable rate mortgage to a fixed rate mortgage. You can eliminate private mortgage insurance (PMI) or you can cash out on the equity in your home.
Once you have a reason for refinancing, you can decide whether the timing is right or not. Make sure your credit score is in a good state. The better your credit score, the better rate you can obtain. Refinancing makes sense if you plan to be in your home for long term.
A good lender will regularly compare your loan details against the current market and notify you if they think you could benefit from refinancing.
Here are some advantages of refinancing your home:
- It helps you lower monthly payment.
- It helps you avoid the balloon payments.
- It can help you banish private mortgage insurance (PMI).
- It also helps you cash out a portion of the home’s equity.