5 Great Reasons To Refinance

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5 Great Reasons To Refinance

Introduction To The Article

Here are 5 good reasons to refinance

1. Lower the amount you pay each month

If you plan to live in your home for a few years, it might make sense to pay a point or two to lower your interest rate and overall payment. In the long run, the money you save each month will have paid for the cost of the mortgage refinance. On the other hand, if you plan to move soon, you might not be in your home long enough to make up the costs of refinancing. Before you decide to refinance, you can figure out if it makes sense by figuring out the break-even point.

2. Change from a mortgage with a variable rate to one with a fixed rate

Adjustable-rate mortgages (ARMs) can give you lower monthly payments at first if you are willing to take a chance on the market going up. They are also a good choice if you don’t plan to keep the house for more than a few years. But if you live in your house full-time, you might want to switch from an adjustable rate to a fixed rate mortgage for 15, 20, or 30 years. Your interest rate may be higher than with an ARM, but you know exactly what your monthly payment will be for the rest of the loan term.

3. Escape Balloon Payment Programs

Like programmers with an adjustable rate, programmers with a balloon payment are great if you want lower rates and lower payments at first. But if you still own the property at the end of the fixed rate term, which is usually 5 or 7 years, you have to pay the lender the full amount of your mortgage. If you are in a balloon program, it is easy to switch to a new mortgage with an adjustable or fixed rate.

4. Get rid of insurance for private mortgages (PMI)

With options for no or little down payment, people can buy homes with less than 20% down. Sadly, they usually also need private mortgage insurance, which is meant to protect the lender in case the loan isn’t paid back. With a mortgage refinance loan, you may be able to get rid of your PMI if the value of your home goes up and the amount you owe on it goes down.

5. Use the value of your home to get cash

You can get a lot of money from your home. Like most homes, the value of yours has probably gone up, which means you can take some of that money and put it to good use. Pay off your credit cards, fix up your house, pay for school, buy a new car, or even take a long-needed vacation. It’s easy to do with a cash-out mortgage refinance. And you can get a tax break for it.

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