Choosing to refinance a home mortgage can help your family save money and stay in the home you love.
The sad reality of today’s economy is that many people are in homes that they simply cannot afford. Many people have had to cut back on other necessities simply to be able to pay the monthly mortgage. In the worst cases, families have been facing foreclosure and must move with little notice.
Because of the hard times, many people are choosing to refinance a home mortgage rather than continue paying out the nose.
Here are some great reasons to consider refinancing your home mortgage:
- For lower rates. Some families may have gotten a high rate on their mortgage when they first applied, either because of the average rates at the time or bad credit. Refinancing your mortgage may help you to lower the rate, which means that you’ll pay much less money in the end.
- To lock in a good interest rate. If you have an adjustable rate mortgage, you may be worried that your interest rate will suddenly increase. In fact, this happens to many families and this makes for much larger monthly payments. If you cannot afford the larger payments, you may face foreclosure. A fixed rate mortgage is more secure, so it’s a good idea to refinance a home mortgage that is an adjustable rate.
- For extra cash. If you find that you’re a bit short on the cash you need for a major purchase, such as a child’s college education or a necessary home improvement, you can refinance your mortgage to get the cash you need. For example, if your original loan was for $200,000 and you have paid $50,000 of that, you can take out another loan for $200,000, pay off the $150,000 and have an extra $50,000 in cash. This assumes that your house has maintained its value.
- To lower payments. If you’re struggling financially and can barely make your monthly mortgage payment, you may be able to lower the monthly payment by refinancing your mortgage to extend the term.
Refinancing a home mortgage is not for everyone. There are various fees associated with a new mortgage, so it’s important to factor those fees in when you think about how you can save money. However, if you think that it’s time to refinance your mortgage, call a mortgage professional to help you qualify.