Did you know that even though your mortgage might be a ’30-year mortgage,’ that doesn’t necessarily mean that you have to stick with that mortgage for that amount of time? Every day buyers reach out to The Simpson Team to inquire about refinancing their mortgages, and they all have their reasons for seeking different financing.
While refinancing takes time and can be frustrating, it often presents substantial financial and personal opportunities. Here are the top three reasons you should refinance your mortgage.
- Your equity has gone up, and you can now eliminate PMI. Private mortgage insurance (PMI) is an additional monthly cost that borrowers with less than 20% equity get hit with when buying a home. If the market has gone up since you purchased your property (as it has in most markets recently), you may be pleasantly surprised to discover that your home appraises higher, and you now have more than 20% equity. Refinancing to eliminate PMI can be especially beneficial to buyers who utilized an FHA loan for their initial purchase. Depending on how big the down payment was, borrowers with FHA loans know that they are stuck paying PMI for either 11 years or the life of the loan. Therefore, refinancing into a different loan product can lead to incredible savings over the life of the loan.
- To ‘pull cash out’ of your home. While paying off your mortgage should be a priority, and pulling cash out will slow your progress to a mortgage-free life, sometimes it’s the best option for your finances. For example, it’s not uncommon for borrowers to refinance to pull cash out to pay off bad debt, including credit cards or personal loans. Alternatively, cash-out refinances can be the perfect solution for borrowers wanting to remodel and add value to their assets or to purchase an investment property.If you’re looking to do a cash-out refinance, ensure that you carefully assess your finances and motivation, then talk to a mortgage broker about how your monthly payment will be impacted.
- To get a lower interest rate. While interest rates have been climbing over the past year, that doesn’t necessarily mean they are higher than your current rate. We still have buyers sitting with high-interest rates and who want to refinance in today’s lending environment. Often, we can save borrowers money by consolidating mortgages, getting them better interest rates, or more desirable loan terms.
Have you been considering refinancing but aren’t sure if it’s worth the time or cost? Then, schedule a call with The Simpson Team. We will be happy to discuss your finance options and give you all the information you need to decide if refinancing is the right option for you.