When rates are low, refinancing can be a no-brainer. But, what if they're not? Is refinancing still an option? You bet. Here are five reasons why you should consider refinancing:1. You want lower monthly payments.
A lower rate may mean lower monthly payments. Consider taking out a new loan for the same length of time that remains on your current mortgage.Choose this option if you plan to stay in your home for the life of the mortgage or need more cash for current financial obligations such as college or a new car.
2. You want to pay off your mortgage more quickly.
You may be able to shorten the length of your mortgage (say, from 30 years to 15 years) while keeping your monthly payment at or near its current level. You could save thousands ofdollars in interest and assume full ownership of your house more quickly. Choose this option if you don't plan to stay in your house for very long and you have ample current cash for your current financial obligations.
3. You want to lock in a low rate.
Refinancing may be an easy way to convert your Adjustable Rate Mortgage into a Fixed RateMortgage, ensuring a stable mortgage payment. Check first to see if your current loan has any charge lock-in feature. Choose this option if you expect the rate on your ARM to go up. Which is better - fixed or adjustable?
4. You want a better Adjustable Rate Mortgage (ARM).
Mortgage options are constantly changing. A new adjustable rate program may be available that has more favorable rates and terms than your current loan. Choose this option if you are unhappy with the terms of your current ARM.
5. You want to consolidate debt.
If you have enough equity in your home, you might want to combine a home equity loan with your original mortgage and have one manageable payment. Or you might want to wipe out some other high-interest debt, such as credit and charge card balances or installment loans.
Posts
