Mortgage refinancing increased last year in 2020. There are several reasons to refinance your mortgage but if you’re thinking about it, we can give you a few reasons to do so, here are the main ones.
Change Your Loan Term
The option to change your loan term means you can refinance to shorten the term and that way you save on interest overall. Let’s say you had a 20 year loan and now you can shorten it to 15 or less and the refinance will get a better interest rate so you can pay less once you finish.
The other side of the coin is to lower monthly payments so that would be possible by extending your loan term from 15 to 20years for example.
Lower Your Interest Rate
As you know, interest rates are ever changing and because of that you can find an opportunity to refinance when rates are better than when you first got your loan. That lower interest rate will lower your monthly payment and also best of all you will pay less for interest!
Cash Out Your Equity
When you have equity in your home (your house value has increased), it is possible to cash out some part of it with your refinance, that means you can use that cash for emergencies, bills or anything else. This way you can borrow money at a lower interest rate compared to other types of loans.
Change Your Loan Type
Changing to a different loan type can be helpful to you and there are many reasons to do so, but one of the most common ones is just changing from an adjustable rate mortgage to a fixed-rate mortgage if the rates are low of course.