Applying for a mortgage is a necessary step in the home purchase process for many people. Now that you are a happy homeowner, you have the ability to keep that mortgage in place until you sell the home or until you pay the balance off. Another option, however, is to go through the mortgage process again with a home loan refinance. Why would you spend the time and energy applying for a new mortgage when it is not required? Here are a few prime reasons.
1. Lock in a Lower Interest Rate
Have interest rates declined since you set up your current mortgage? Have your financial situation and credit rating improved significantly? If so, you could qualify for a lower interest rate. With a lower interest rate, you could dramatically reduce the amount of interest charges that you pay throughout the life of your mortgage. In addition, you could pay the principal off faster, establish lower payments or structure a new loan with other benefits.
2. Pull Cash from Your Home’s Equity
If you put down a sizable down payment, have held your mortgage for at least a few years or have enjoyed exceptional property appreciation, you could be sitting in a healthy nest egg. By refinancing your mortgage, you could draw cash from that equity while still retaining ownership of the home. This cash could be used to pay off debts, to invest in lucrative opportunities or to achieve other goals.
3. Change the Loan Terms
By refinancing your mortgage, you are replacing your existing loan with a new loan. This means that you can select new terms that are more aligned with your current needs and goals. For example, you can retire your 30-year mortgage with an adjustable interest rate or opt for a 15-year mortgage with a fixed interest rate. You could also change loan programs to eliminate PMI or to take advantage of other more favorable terms.
Should you refinance your home mortgage soon? Before you can answer this question with a high degree of confidence, you need to learn what loan terms you could qualify for today. By connecting with a lending representative, you can explore the many specific benefits that are available based on your qualifications and scenario.
Contact one of our loan consultants to learn more.