Why Should I Refinance My Home?

You may want to refinance to take advantage of lower interest rates or to change the type of mortgage you have. It’s important to be aware of your long-term financial goals when looking at whether or not to refinance. Here are three good reasons to refinance your home!

1. Pay Less Each Month

Refinancing is a good way to lower your monthly mortgage payment. You can refinance to a lower interest rate. Or, you can change the terms of your mortgage. You can go from a 15-year mortgage to a 30-year mortgage. Finally, you can refinance to an interest-only loan. This means that you are required to pay an amount of interest for a certain period of time and can pay as much principal as you want. This can free up your money to make other investments.

2. Change the type of mortgage you have

If you have an adjustable rate mortgage (ARM) you may want to refinance to a fixed rate mortgage, especially if interest rates are going up and you plan on staying in your home for many more years. You might want to refinance from a fixed rate mortgage to an adjustable-rate mortgage if you are not going to stay in your home for very long since ARM’s start out with lower rates and lower monthly mortgage payments.

3. You need cash

If you need to pay for college or pay off high-interest credit card debt you may want to refinance to get some extra cash. When you pay interest on your mortgage it is tax-deductible. Interest on credit cards is not. Credit cards usually have higher interest rates than mortgages. It might be a good move to use your home equity to pay off your high-interest credit cards. Mortgage is “good debt” and credit cards are “bad debt.” It simply makes sense to get rid of any bad debt. However, you should consult a tax advisor or financial professional to help you with this.