5 Good Reasons To Refinance Your Home Loan
When does it make sense to refinance your home loan? When should you refinance?
Refinancing a home loan can be very attractive, but has also been misused in the past. While mortgage lenders in America have become much better at ensuring responsible lending and helping homeowners into loans that truly benefit them, borrowers certainly should remember that this is the roof over their heads that they are leveraging.
It may be pretty obvious that constantly refinancing a home loan to strip equity and simply spending the cash out on frivolous items or taking on more debt isn’t the most frugal financial move. So when should you refinance your home loan? What are some of the good reasons and smart ways to use refinancing opportunities for homeowners?
When Should You Refinance Your Home Loan
Mortgage Interest and Payment Reduction
One of the best reasons to take advantage of refinance loans today is to reduce interest rates. This helps lock in lower monthly mortgage payments, and dramatically reduces the amount of interest paid over the life of a loan.
Reducing the Term of the Loan
Today’s super low mortgage interest rates mean that many homeowners can refinance and take advantage of low rates while cutting years off the time they’ll have a mortgage. This not only means faster equity building, but also protection from future value fluctuations, and the peace of mind of ‘free and clear’ homeownership in retirement.
For those with higher interest rate debts, a refinance can free up credit, reduce money wasted on interest, make monthly payments easier to make, and reduces the outflow of cash. It’s important to be wise here and not simply continue to take on more debt, but there are significant advantages for those that want to become debt free faster.
Taking Cash Out to Invest
This is an ideal time for homeowners to take advantage of cash out refinance mortgage loans. Rates are great, and savvy investors ought to easily be able to make more with this money in other real estate investments. Just be careful not to overleverage.
Cover Major Life Expenses
While some financial advisers may not agree 100%, low rate home loans can be one of the best sources of funds to deal with major life expenses. This could potentially be a superior option than burdening kids with long term student loan debt, forgoing much needed medical care, or even buying automobiles for cash a better discounts.
Why will you refinance?