There are a lot of great reasons to refinance an existing mortgage loan, and it can be a smart way to save and manage your money. Some of the most common reasons people refinance include:
Lower your mortgage rate and payment. This may be the #1 reason homeowners refinance their mortgage. If your current interest rate is higher than what is currently available in the market, it may be a good idea to explore whether and how much you could save by refinancing. There are low-cost options that could save you money with little to no investment. However, if you refinance your loan, your total finance charges may be higher over the life of your loan.
Take cash out to consolidate your debt. Leveraging the equity you have in your home is one of the smartest ways to make your money work for you. Use the cash to pay off higher interest, non-tax-deductible credit cards, student loans, or medical bills or to perform home repairs and improvements. By consolidating your debts, you can enjoy the benefit of having only one payment each month, and decrease your overall monthly outflow.
Convert your adjustable rate into a fixed rate. Adjustable rate mortgage (ARM) loans are a great way to ease into your payments, especially if you are a first-time homebuyer or if you need lower payments initially. But, if you decide to stay in your home longer than the adjustable rate financing period, you might consider refinancing into a long-term, fixed rate loan. Doing so will give you peace of mind, knowing that your rate and payment will not change.
Convert your interest-only loan into a fully-amortized loan. Like ARMs, interest-only mortgage loans are a great way to minimize payments initially. However, because you are not paying any principal, your loan balance does not decrease. If you plan to keep your home long term, you may want to start paying off your loan. By refinancing to a 30-year fixed mortgage loan, you should be able to manage your payment amount and pay off your loan over time.
No matter your reason, our experts will help you decide if and when you should refinance, and we will discuss loan options with you. With Fay as your refinancing partner, you can rest assured your mortgage needs will be met.