If you have a mortgage on your home, your goal is to get it paid off. Refinancing your home loan could be beneficial for several reasons. You should also do your research and make sure you refinance at the best time, so you can get the maximum benefits. Here are some of the benefits of refinancing your home loan.
- The leading benefit is often a better mortgage rate. If interest rates have fallen since you took out the mortgage loan, you can refinance at a lower interest rate. You can benefit by refinancing at the current rates, or if your credit score has improved since you took out the initial loan, you may now qualify for a lower interest rate.
- You can lower your payment. If you refinance at a lower interest rate, your monthly payment will decrease. Also, if you refinance and you go with an adjustable-rate mortgage that has a lower rate than the current rate, your monthly payment will be lower.
- You can pay your home off faster. While most borrowers go with a 30-year term on their home loan, you can refinance for a shorter term, such as for 15 years. Also, a mortgage rate on a shorter-term loan is usually significantly lower than the rate on an extended loan. You may be able to refinance for a shorter term at a lower rate without increasing your monthly payment significantly if the interest rates have fallen.
- You can also use a mortgage refinance to borrow money. If you opt for a cash-out refinance, you can borrow from your home’s equity to get funds for any purpose you want. You would get a check at the closing, and those costs are added to the principal of your mortgage loan.
- A refinance can be used to build equity in your home faster. If you have reached financial stability that will allow you to slightly increase your monthly payment, you could switch to a mortgage for a shorter term. As an example, if you switch from a 30-year loan to a 15-year loan, you will save on interest and build equity in your home much more quickly.
- You can refinance to remove someone from the mortgage loan. As an example, if there has been a divorce then someone on the loan may need to be removed so they are no longer financially responsible. It can also be used to remove a co-signer’s name if they are no longer needed and want to be freed from the responsibility of the debt.
- Refinancing can also help you get rid of mortgage insurance that you are paying for yourself. You could refinance after you have 20 percent equity in the home so you can get rid of that premium that is included in your mortgage loan interest rate.
If you are interested in refinancing your mortgage loan, or if you are going to buy residential property, you should speak with a residential real estate attorney who will make sure everything is in order and your best interests are taken into consideration. Call the real estate lawyers at Loshak Leach LLP today at (954) 334-1122 or send a message by e-mail to [email protected] to schedule a free consultation.