3 Smart Reasons to Refinance Your Home Besides Lower Rates
Mortgages often have extended terms, but that doesn’t mean people are stuck with their mortgage until it’s paid. Home refinancing is another solution for homeowners that want to save money or take advantage of equity.
Review these three smart reasons to refinance a home.
3 Smart Reasons Home Refinancing is Popular
Lower interest rates is the most common reason that homeowners refinance their mortgages. There are, however, a few other reasons that a home refinance might be a good idea.
1. Shorter Loan Terms
One of the many factors homebuyers have to consider when they’re choosing a mortgage is the loan term. Mortgages can have term lengths up to 50 years, though they typically range from 15 to 30 years. A lot can happen with the market and someone’s personal credit in that time, though.
Refinancing a home with a shorter loan term can have two results: It can increase the monthly mortgage payment, but it can also decrease the total cost of the mortgage.
2. Conversion to a Different Type of Loan
There are multiple types of mortgages, ranging from conventional to government-backed loans, but nearly all of them are available as either fixed-rate mortgages or adjustable-rate mortgages. The right option a decade ago might not be the best now.
In an economy where interest rates are decreasing, converting from a fixed-rate to an adjustable-rate mortgage might offer significant savings that compound as rates continue to drop.
3. Utilization of Home Equity
After a few years of making payments on a mortgage, many families find themselves with equity in their property. This equity can be an asset if a home needs repairs, kids need to pay for college tuition, or medical expenses need to be covered.
Home equity refinancing can also incorporate other aspects of refinancing, like shorter (or longer) loan terms, conversion to a different type of mortgage, and potentially lower interest rates.
Effective Tips for Finding the Right Home Refinancing Offers
The right home refinancing offers will depend on the goals of the new mortgage. Converting from an adjustable-rate to a fixed-rate mortgage might be better suited to one lender where home equity refinancing is more competitive than another.
Follow these three tips to find the best home refinancing offers:
- Research mortgage providers: There are dozens of mortgage lenders. Research different options and look for providers with credible reviews.
- Review personal credit reports: Good credit scores and credit history are essential to getting the most competitive rates so double-check the reports for accuracy.
- Compare current mortgage rates: Check the rates for different types of mortgages based on the average credit score from the previous step to set expectations.
It might take some time to find the right home refinancing offers, but the research can save money both in the short and long term.
How the Right Lender Can Improve Home Refinancing Options
Refinancing a home is a big undertaking. The right mortgage provider can connect people with a comprehensive selection of loan options, plus help narrow down the best offer for the intended goals.
Are you ready to review competitive home refinancing offers? Contact Americas Funding Group to get started today