Top 5 reasons to refinance your mortgage

People often prefer to get long term mortgage loans but they do not understand the high interest rates implemented over these long term loans. Refinancing an existing loan is beneficial is a number of ways including the reducing the interest rate and making things easier for you to pay off. In this article we are going to discuss top 5 reasons to refinance your loan.

1-      To reduce the term of your loan

If you have got a loan of let’s say 30 years and now you are looking forward to refinance it and reduce its period to 15 years, this is going to benefit you a lot. The first benefit of this reduction of time is that you would be offered lowest interest rates. Suppose if you had a loan of 30 years at interest rate of 5%, now you can get it again at the rate of 3% easily. This is beneficial for both, the lenders and the borrowers.

2-      To drop your interest rate

The major benefit of refinancing is as mentioned earlier that it reduces the interest rates to the lowest possible level. If you are having some 5% interest rate, by refinancing you can get it to somewhere 2% or even lower than that. If your house is at the moment financed at highest interest rates then it’s the best time to refinance it because you are for sure going to save thousands of dollars in this process. Refinancing is quite easier process as compared to the process of choosing the right mortgage loan. Just go through a little of paper work and there you will be free from heavy load of interests.

3-      To reduce your monthly payments

Things are very simple now. We know when we have lower interest rate; we are going to pay less for monthly installments. Refinance will help you in saving hundreds of dollars on your monthly installments which mean you can save money for other things while paying off your existing debts. Reducing monthly installments can also result in increasing the term of your loan so keep all factors in mind while proceeding with refinancing your existing loan.

4-      Shift from adjustable rate mortgage (ARM) to fixed rate loan

If you are currently working with an adjustable rate mortgage then it’s the right time to shift your loan to a fixed rate loan. Now a day, interest rates are much lower and they may not remain at this level forever. So it’s the best time to grab some great deals on refinancing and start saving thousands of dollars every month.

5-      Cash out some home equity

Refinancing can also help you in grabbing good amount of money to start a new business in terms of home equity loan. You can cash out your home equity to avail some investment opportunities from your existing loan. Keep in mind that progress or results of this move are highly dependent upon your responsibility. If you are responsible enough to manage your debts then it would be great but if you can’t handle that much hassle then better keep yourself out of this game.

 

 

 

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