5 Advantages Of Refinancing Your Mortgage Loan
Although, a no-cost refinance may cost you a bit of time, your efforts are repaid by the benefits of the new loan. Here are a few advantages of refinancing your mortgage loan:
Lowered Interest Rates
If the interest rate of your current mortgage is higher than the available refinance rate, refinancing could be a wise financial move. Interest rates do not stay at their current level indefinitely. In fact, the rates may fluctuate daily. A change in your interest rate percentage could save you tens of thousands of dollars on the total cost of your loan even without early repayment.
Shorter Terms
If you have a 30 or 40-year mortgage, refinancing can quickly shorten the term of your loan. In fact, if the interest rate of a new 15-year loan is substantially lower than that of your initial 30-year mortgage, there may be little difference between the monthly payments of each loan.
It is best to refinance as soon as a substantially lower interest rate is available. The sooner the refinancing occurs after the start of your initial high-interest mortgage, the more you are able to save.
To determine the shortest term that you can afford, use a mortgage calculator. Once you enter the requested information about your current loan along data about your new loan, such as the amount, interest rate and term, your potential monthly savings will be displayed.
Lower Monthly Payments
Even if you are not interested in shortening the term of your loan, you probably would like to lower your monthly bill. If you refinance at a lower interest rate, you could lower your monthly payment dramatically.
Switch from an Adjustable Rate Mortgage
If you currently have an adjustable rate or balloon mortgage, refinancing can fix your interest at one low rate.
Get Your Equity in Cash
If you have accrued a substantial amount of equity in your home and you need cash, if you refinance, you can choose to cash it out. You can use the money to invest, pay for your child's college tuition or even go on the trip of a lifetime.
If you choose to refinance your home, you may be able to reap multiple benefits. Consult with a lender like McHenry Savings Bank to determine the lowest available interest rates and confirm the type of loan for which you may qualify. Your credit rating and and financial stability will impact your ability to qualify for your new loan.
