There are several reasons to refinance your mortgage. Some of the potential advantages include:
Lowering your monthly payment
An average homeowner may save $160 or more per month with a refinance. With a lower monthly payment, you are free to put the savings toward other debts and other expenditures, or apply that savings towards your monthly mortgage payment and pay off your loan sooner.
Remove private mortgage insurance (PMI)
Some homeowners who have enough property appreciation or principal paid off will not be required to pay mortgage insurance which will reduce your total monthly payment.
Reducing the length of your loan
For homeowners who took out a mortgage in the early stages of their career, a 30-year mortgage may have made the most financial sense. But for those who want to pay of their mortgage sooner, reducing the loan term can be an attractive option.
Switching from an adjustable-rate mortgage to a fixed-rate loan
When you have an adjustable-rate mortgage, your payment can adjust up or down as interest rates change. Switching to a fixed-rate loan with reliable and stable monthly payments can give homeowners the security of knowing that their payment will never change.
Using the equity in your home to take out cash
With rising home values, you may have enough equity to take out a cash-out refinance. This money can be used to finance home improvements, pay off debts or to fund large purchases.
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