Many homeowners find that refinancing their home loan can make life easier and bring monthly savings to their home budget. While it is true that refinancing for those with good credit scores is easy, for those with bad credit scores it may not be so bright. They may be faced with the challenge of finding the right mortgage lenders and the difficulty of higher interest repayments. There are a myriad of reasons why homeowners decide to refinance their current mortgage. Their principal aim is obviously to solve the problem of high monthly payments. Most of the time, home loans come with a high interest charge, which can make it harder for the borrower to pay it off. Given the current economic climate, it may be a good time to consider refinancing.
Refinancing the Mortgage and Your Advantages
One of the many advantages of refinancing a mortgage loan is that you can opt to reduce or increase the term of the loan. If what you want is to be able to save more money and you have grown tired of paying for higher interest rates, you’d better consider refinancing. You may be able to take advantage of lower rates. What’s more if you shorten your 30-year-loan into a 15-year-loan, you can not only pay off your loan sooner, but will end up paying the banks less. Important thing to note is that while you’ll save more on the interest charges, this scheme may require you to pay a larger principal amount. If you’re planning on living in your home for a long time, refinancing may be a good move and even more so if the present interest rates are at least 2% lower than the rate you’re paying on your monthly repayments. We’ve had clients whose lives were made simpler by consolidating all their debt into one home mortgage, meaning it’s all in one place and there are less bills to pay. If you’re currently on an adjustable rate mortgage, you could also take this opportunity to lock in the interest rate, which we’ve found gives our clients peace of mind, knowing exactly how much their repayments will be. This will also mean that your monthly terms are not going to change whatever happens to the mortgage rates in the market. If you’ve had your home for any length of time, your home may have acquired its fair share of equity. That means that you may unlock this equity and be able to access it. This option allows you to receive some additional cash if you increase your loan compared to its actual amount. Of course, doing so has its own advantages and disadvantages. When the amount that you have applied for is more than 80% of the total value of your home, then, you will be required to secure private mortgage insurance. This means an additional expense on your part. But then again, the cash-out fund may be used to settle your other debts, finance a renovation or investment purchase to name a few. So refinancing can actually make things easier for you. Should you wish to proceed, you need to be aware of the pros and cons and how they fit in with your goals.