Homeowners: 5 Reasons to Consider Refinancing your Home



You may hear a lot of experts saying it is the perfect time to refinance your home, but the whole refinancing process can be hard to understand for newer home owners. While there are a lot of benefits to refinancing your home, you can also do a lot of harm if you do not refinance for the right reasons. Here are the five best reasons to consider refinancing your home to guarantee you get the most benefits out of the entire process.

refinance

Shorten the Loan Terms

If you can afford a slightly higher payment each month, you should also look to shorten your loan terms through refinancing. While you may end up paying a little more each month, you will actually save a lot of money in the long run. 15-year mortgages usually bring lower interest rates than 30-year mortgages, so your payment may not even go up that much.

Lower your Monthly Payment

If you are struggling to pay your mortgage each month, then you may need to refinance to find a way to lower your payment. This may ultimately lengthen the terms of your loan, but it is far better than defaulting on your mortgage.

Get a Lower Interest Rate

Interests rates fluctuate all of the time, so you need to regularly pay attention to the current rates. Refinancing for a lower interest rate is a great way to lower your monthly payment and save money over the entire life of your mortgage. Refinancing through a professional lender should help you get the lowest interest rate possible.

Get Lower Mortgage Insurance

Everyone with a mortgage has to pay a small premium each month towards insurance. Mortgage insurance rates occasionally get lowered by the Federal Housing Administration, and you will want to take advantage of these lower premiums if you can. A .5 percent change in your mortgage insurance premium rates can potentially save you more than $1,000 each year.

Go from Adjustable to Fixed-Rate Mortgage

Some people are only able to buy a home if they choose an adjustable-rate mortgage. While this is a great way to get into a new house, you should look to get a fixed-rate mortgage as soon as possible. Nobody wants to get surprised with an extremely higher mortgage payment just because interest rates happened to go up.

Refinancing is a great tool to save money when it is done properly. If you only refinance for the five reasons outlined, then you will be able to get the most out of your home throughout the life of your mortgage.

 

About the Author: Lizzie Weakley is a freelance writer from Columbus, Ohio. She went to college at The Ohio State University where she studied communications. In her free time, she enjoys the outdoors and long walks in the park with her 3-year-old husky Snowball. The information in this article is credited to Assurance Financial Group.