Are you thinking about refinancing your mortgage? If you have better credit than when you initially took your mortgage out -- or you've had your mortgage for a while -- it's likely that you're already getting refinancing offers in the mail. There are a few major benefits to refinancing that you might want to consider before making a decision.
1. Lowering Your Monthly Payments
Refinancing is most commonly done in order to lower monthly payments. If you only have ten years left on your loan, you could refinance it for a traditional thirty year loan -- this could cut your payments in nearly a third. Of course, this does mean that you'll need to pay more in interest over time, but this mortgage interest is also tax deductible. You can also refinance for the same amount of years and still save money if your credit has gone up since you acquired the loan.
2. Changing the Names on the Loan
Are you about to get married and want your spouse named on your loan documents? Alternatively, do you need to get a co-signer off of your loan? Getting someone put on or off a loan requires that a refinancing be done; the loan documents themselves cannot be modified. In situations such as divorce, a refinancing is usually a requirement if the property will be changing hands.
3. Getting Cash from Equity
When you're refinancing your home, you can always choose to refinance an amount that is more than what you still owe (assuming that you have built equity in the property). This operates like taking a loan against your property; you'll have some cash in the bank, which you can use for repairs, maintenance, and renovations.
4. Leaving Behind an ARM
Adjustable rate mortgages have notoriously difficult to manage terms once a certain amount of years have passed. If you're currently in an ARM with high interest, you can attempt to refinance your loan for a conventional loan. In general, most ARM mortgages are dispatched with the idea that the new homeowner will be refinancing. The catch is that your credit score will need to have significantly improved by the time you want to transition.
Like any loan product, a refinancing offer should always be compared between multiple institutions. A refinancing does not need to be done at the bank that you have your mortgage with. However, your bank or lender can give you more information regarding a refinancing and its potential consequences.
For more information, contact Liberty Escrow Inc or a similar company.