Refinancing shouldn’t be done on a whim. It should be part of a sound financial strategy. We’d love to explore the many benefits of refinancing with you.
Lower Your Current Mortgage Payment
The interest rate on your mortgage is tied directly to how much you pay on the mortgage each month. Lower rates usually mean lower payments. You may be able to get a lower rate because of changes in market conditions, or because your credit score or the amount of equity in your property has improved. A lower interest rate also may also let you build equity in your home more quickly.
The interest paid on a first mortgage loan is typically tax deductible. The interest on consumer debt is not. So, under certain circumstances, it can be advantageous to consolidate your outstanding consumer debt into a new first mortgage. Consult a tax professional to determine if this strategy is appropriate for you. The other added advantage of consolidating debt is that the overall monthly payment to service the debt will probably go down because you’re amortizing over 30 years at a low interest rate. It will improve your immediate cashflow so you can go live large and create more debt...or save money.
Pay Your Mortgage Faster
By refinancing to convert to a shorter-term mortgage - for example, a 15-year mortgage instead of a 30-year mortgage - you build equity substantially faster. And you typically have lower interest rates. What's more, by paying off the loan sooner, you can significantly reduce your total interest costs. But there's a trade-off. Your monthly payments are usually higher, because you're paying more of the principal each month.
Get Cash Out
Home equity is the dollar-value difference between the balance you owe on your mortgage and the value of your property. When you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment (this is called a cash-out refinancing). You might want to do this if you need cash to make home improvements or to pay for a child’s education. Converting home equity to cash should be carefully considered. Consult with a trusted financial advisor before you take this leap. We can help you find a financial professional in your area.
Convert to a Fixed-Rate Mortgage
If you have an adjustable-rate mortgage, or ARM, your monthly payments will change when the rate adjusts. With this kind of mortgage, your payments could increase or decrease, but monthly payments may not exceed the ARM loan cap.
You may be uncomfortable with the idea that your mortgage payments could unexpectedly go up. In this case, you may want to consider switching to a fixed-rate mortgage. Knowing that they have a steady interest rate and monthly payment gives many people some peace of mind.