<img height="1" width="1" src="https://www.facebook.com/tr?id=608904346394747&amp;ev=PageView &amp;noscript=1">

Lenderly blog

 Explore our blog for insights on buying, financing, remodeling, and taking care of your home.

Back to all posts

Six Smart Reasons Why You Might Refinance Your Home Mortgage

Woman smiling at man in kitchen

With interest rates the lowest they’ve been in a while, you may be thinking about refinancing your existing mortgage into a new one. As a homeowner, there are good reasons to consider this option: to get a lower interest rate, to drop private mortgage insurance, or to pull cash from your home’s equity to consolidate debt or make home improvements. The short answer, of course, is to have more money each month for groceries, car payments and the orthodontic’s bill.

 

Here are six reasons why you might consider refinancing your existing mortgage:

  • Lower your interest rate and your payment. This is one of the top reasons that homeowners refinance their mortgage. If interest rates are lower than when you bought your house, refinancing the balance on your loan at a lower rate can reduce your monthly payment and the overall cost of the loan.
  • Pay off your home faster. You may want to take advantage of low rates to reduce the term of your loan. Shorter terms mean lower rates. Keep in mind that switching from a 30-year to a 15-year loan will raise your monthly payment, but if you can afford to go with the shorter term, you’ll save thousands of dollars over the life of the loan. You’ll also build equity in your home quicker.
  • Convert your adjustable rate into a fixed rate. Adjustable rate mortgage (ARM) loans can help you ease into your payments, especially if you are a first-time buyer or if you need lower payments initially. If you plan on staying in your home for several years, however, you may want to consider refinancing to a long-term fixed rate loan. Doing so can help you rest easier at night, knowing that your rate and payment will not change for the life of the loan.
  • Your credit score has improved. If your credit score has gone up substantially from when you took out the loan, you may qualify for a better rate. For example, if you’ve been paying your bills on time and in full, your credit score has probably increased.
  • Remove mortgage insurance. If you purchased your home with less than 20% down, you're most likely paying private mortgage insurance (PMI). Refinancing will help you eliminate the extra expense if you've paid down your mortgage balance to 80% of the home’s original appraised value and/or have seen an increase in your home's value to at least 20% equity.
  • Take cash out to consolidate your debt or make home improvements. Every month that you make your mortgage payment, you’re building equity in your home. A cash-out refinance is when you tap into your home’s equity and get cash back to pay for other things, like paying down debt (high interest credit cards, student loans, medical bills) or creating a cash cushion. By consolidating your debts, you can lower your total monthly expenses and keep more money in your pocket.*                                                                                                                                                                                                                                                                                                                                                 
    Been dreaming of a gourmet kitchen? You can also take cash out and use it to remodel or update your home. By doing a little research, you can also make the right upgrades (bathroom, windows, landscaping) that will increase your home’s value and have you living in your dream home too!  

Is this a good time for you to refinance? Our loan consultants say that if you’re planning to move in the next few years, probably not. But, they say, if you can shave one-half to three-quarters of a percentage point off your existing mortgage by refinancing, it’s probably worth investigating.

 

We’re here to help! One of our friendly loan consultants can take a look at your current mortgage, review your options, and help you make a decision that’s right for you.

 

contact us

 

Not intended as accounting or investment advice. Contact your financial representative for more information. *A cash-out refinance increases your mortgage debt and reduces the equity you may have in your home. Your monthly mortgage payments may be higher.

*Down payment and terms are for informational purposes only and are not intended as an advertisement or commitment to lend. Please contact us for an exact quote and for more information on fees and terms. Not all borrowers will qualify.

Related Posts

5 Reasons to Get Pre-Approved Before You Begin House Hunting

Getting ready to buy your first home? One of the first things you can do as part of the home-buying process is to get pre-approved with Lenderly. Why? You'll know how much house you can afford and a pre-approval lets dealers and real estate agents know you have the finances lined up and ready to go.

  • 4 min read
  • Jul 23, 2020 8:50:01 AM

Five Reasons You Should Stop Renting and Buy Your Own Home

Is it time for you to get out of the rent race and buy a home of your own?   There are plenty of advantages to homeownership. And while buying isn’t right for every person or for every life stage or circumstance, there are several perks of homeownership that tend to stay stable over time. These include building long-term equity, the comfort and pride that can be associated with owning your own home and, in many cases, a monthly mortgage payment that's less than your monthly rent check.

  • 5 min read
  • May 11, 2020 8:36:32 AM

Why are VA Loans so Popular?

While no one has ever said buying a home is a simple process, wouldn’t it be nice to reach out and press the “easy” button when it comes time to qualify for your mortgage. If you’re an active member of the military -  or a veteran - qualifying for a VA home loan might be the next best thing.

  • 5 min read
  • Apr 20, 2020 10:04:00 AM
icon_footer_phone-01

Call us

800.466.5626

icon_footer_laptop-01

Get started

Apply online today