Five Reasons to Refinance Your Mortgage
Banking professionals suggest mortgage refinancing when homeowners want to replace their current loan with a new one, often to reduce monthly payments or lower interest rates. With a mortgage refinance, your current loan is paid off and replaced with a new one.
This can be a great option for borrowers with good credit who want to alter their current loan. But refinancing could be risky for borrowers with less than perfect credit.
Check out our list of reasons to refinance and see if you could benefit from refinancing your current mortgage.
5 Reasons to Refinance
- Lower interest rates—If mortgage rates have dropped since you first took out your loan, you could secure a lower rate by refinancing.
- Lower monthly payment—Lowering your interest rate could have a dramatic impact on your monthly payment. If you intend on staying in your home for several years, lowering your payment could help you save.
- Shorten loan term—When interest rates fall, homeowners can often significantly shorten their loan term by refinancing without much increase in their monthly payment.
- Convert between adjustable-rate and fixed-rate—With adjustable-rate mortgages, your initial interest rate may be low and and then increase over a period of time. Refinancing to a fixed-rate mortgage could allow you to avoid an increase in rate.
- Cash out to make a large purchase—If you have equity in your home, refinancing enables you to cash out on that equity without taking out a loan, such as a home equity loan. A lot of people will use this cash to pay for home repairs, college tuition, or make a large purchase, such as a car. These types of refinances are typically easy to complete and may even be tax deductible.
If you still aren’t sure if a mortgage refinance is right for you, visit our online refinance calculator to see how much you could save, or visit your local First Bank branch to speak with a mortgage specialist.
Loans subject to credit approval.