Benefits of Refinancing
When timed properly, refinancing can have a big impact on your finances. Here are a few benefits you might gain by refinancing your loan.
A Lower Monthly Payment
One of the most common reasons homeowners refinance their mortgages is to lower their monthly payments. This happens by refinancing when interest rates drop below the rate you’re currently paying on your existing loan.
By refinancing to a loan with a lower rate, you enjoy savings two-fold: first, on the interest you pay on a monthly basis, and second, on the total interest you pay across the entire life of the loan. This can mean thousands of dollars saved in the long run.
A Shorter Payment Term
Not excited about paying your mortgage for the next 30 years of your life? Refinancing can help you shorten the term of your loan, so you pay off your mortgage faster. This can be beneficial if you know you’ll be leaving the property sooner than your loan is paid off, or if you simply want to eliminate a monthly financial obligation.
More Cash in Your Pockets
If you’re in need of some extra cash to cover credit card balances, college tuition, home renovations or other household expenses, a refinance can help you get it. Through a cash-out refinance or a home equity line of credit (HELOC), you can leverage the equity in your home for cash, essentially taking out a low-interest line of credit against the stake you have in your home. Use the cash however you wish and pay it back month over month, just like you would a mortgage.
No More PMI
If you’re paying Private Mortgage Insurance on your FHA-backed loan, you may want to consider refinancing to a conventional loan, which would allow you to cancel PMI and save money on a monthly basis and over the life of the loan. Make sure you know how much equity you have in your home first, though; if you’re nearing the 20 percent mark, you may want to simply wait and cancel your PMI policy when your lender allows it.
A More Predictable Payment
For homeowners with an adjustable rate mortgage, refinancing to a fixed rate loan can bring more consistency and predictability to the repayment process. Refinancing out of an ARM is particularly beneficial once the initial lock-in period has passed, and the loan’s interest rates have started to fluctuate or increase.
The benefits of refinancing are numerous. Want to know exactly how refinancing your loan could help your household? Reach out to an Agora Lending loan officer today at 800-332-4594 and we’ll talk you through it.