5 Reasons to Refinance Your Mortgage

A home is the biggest purchase most people will ever make, and if you’re lucky enough to own one, chances are you have some sort of mortgage on it. 

When you buy a home, it’s important to consider your mortgage carefully and choose the right loan type to suit your needs. 

That’s why we wanted to share with you five reasons why refinancing your mortgage may be right for you. 

If any of these apply to you, then there’s no time like the present to start looking into how refinancing can benefit you and your current financial situation!

1) Improve your financial situation

There are a number of reasons why you might want to refinance your mortgage. Here are five: 

• 1) Interest rates are still at historic lows and 
• 2) refinancing could allow you to take advantage of historically low-interest rates. 
• 3) You can consolidate multiple debts into one single loan, which could help with debt management if used correctly. 
• 4) If you've already paid off a significant amount of your original mortgage, refinancing for a new loan could save you money (this is known as cash-out refi). 
• 5) If your home's value has increased significantly since you originally took out your mortgage, refinancing will allow you to get more money from selling your house than selling it outright.
  

2) Lower your interest rate

Refinancing a mortgage is a great way to get a lower interest rate without going through the hassle of re-applying for credit or applying for a new loan. 

Interest rates will be considerably lower if you can prove your ability to make payments. You may also be able to refinance from an adjustable-rate mortgage (ARM) into a fixed-rate mortgage, which may save you hundreds or thousands of dollars over time on your monthly payment. 

If you have credit card debt, consolidation loans are an easy way to pay off multiple cards at once, streamline your payments and save money.

3) Consolidate your debts

If you have multiple credit cards, a loan for your car or home, or even several student loans, it might be time to consolidate them. By refinancing your debts, you could reduce your interest rate and get one lump sum payment each month. 

Not only will you have one less bill to pay each month but you’ll likely save money in interest payments. Here are five reasons why it might be a good idea to refinance your mortgage.

4) Secure your home with a fixed interest rate

A fixed interest rate mortgage allows you to get a lower interest rate for a set period of time, as opposed to an adjustable rate. 

If you think your income will increase in the future, you might consider getting a fixed-rate mortgage because it means that if rates go up, your payment won’t. 

There are two main types of fixed-rate mortgages: Adjustable Rate Mortgages (ARMs) and Fixed Rate Mortgages (FRMs). 

Both have advantages and disadvantages; talk with a lender before making any decisions. While both ARMs and FRMs offer lower initial payments than variable-rate mortgages, they come with tradeoffs. 

While firms have higher interest rates than variable-rate mortgages at first, they also feature lower payments over longer periods of time.

5) Get rid of old high-interest credit cards

If you’re carrying high-interest credit card debt and can’t afford to pay it off, now is a great time to look into refinancing. 

You may qualify for a lower interest rate on your credit card balance or be able to refinance a home equity loan with a lower interest rate. 

Make sure you compare different options before settling on one loan or credit card consolidation program – some programs have higher fees than others and refinancing could hurt your home's value if done incorrectly. 

To get rid of old, high-interest credit cards, see if you can reduce your interest rates by refinancing with an alternative option.