Mortgage Directory Articles
Why Refinance? The Top Five Reasons Home Mortgage Refinancing Makes Sense
by Gabriel TraversoMortgage Directory Columnist
There are a number of reasons why homeowners today might be interested in refinancing their home mortgage. If you fit one of the following five situations you might want to consider whether a mortgage refinance might be a good move for you, too.
Home Mortgage Refinancing
Here are the top five reasons most homeowners give for refinancing their home mortgage:- Get a lower interest rate. Were rates higher when you first signed your loan? If you can get a lower interest rate by refinancing you'll find you can lower your monthly payments and save a great deal of money in the long run.
- Build your equity faster. If you can afford an increase in your monthly mortgage payments you might want to refinance to a loan with a shorter term, such as a 15-year, fixed-rate mortgage. Your payment may be higher, but you will build up equity up at a faster rate and get closer to owning your home outright.
- Get a more stable mortgage. If you purchased your home using an interest-only mortgage or an ARM you might want to consider refinancing to a 30-year fixed-rate loan. While the ARM can benefit you when rates go down, the fixed-rate loan has one monthly payment amount for the duration of the mortgage term with no surprises.
- Your credit has improved. For many homeowners with poor or bad credit the only way to get into a home is to take a loan with a high interest rate. If you've been making your mortgage payments on time, your credit has probably improved and refinancing could lower your monthly payments.
- Take advantage of your equity. This is one of the top reasons homeowners give for refinancing their home. If you have equity in your home, you can refinance your mortgage or take out a home equity loan and use that money for home improvements, a vacation, or for college expenses.
Gabriel Traverso is a freelance writer, independent musician, and artist. He resides in Reno, NV.
