There are numerous reasons why homeowners may choose to refinance their mortgage. Depending on why you’re refinancing, there are a variety of benefits that could help you get the mortgage that fits your situation best. Here are a few reasons you might choose to refinance.
Lower Your Interest Rate
If mortgage interest rates have dropped significantly since you bought your home, you may choose to refinance your mortgage with lower rates. This could help give you a lower monthly payment or help you pay less toward interest over the life of your loan.
Shorten Your Loan Term
When your loan term is shorter, that means you’ll pay off your mortgage quicker. While you may end up refinancing and receiving a slightly higher mortgage, if your goal is to pay off your loan, that can be expected — but the trade-off is saving thousands of dollars over the life of the loan.
ARM to Fixed-Rate
Many borrowers don’t like the uncertainty that comes with an adjustable-rate mortgage (ARM), so they refinance to a predictable fixed-rate loan. This helps avoid future payment increases and with long-term budgeting.
Cash-out Refinancing
This type of refinancing lets you convert part of your home’s equity into cash to use however you want. You could pay off high-interest credit cards, remodel your home, pay toward education, cover medical expenses or even take a dream vacation. Plus, you can still enjoy other refinancing benefits like getting a lower interest rate or a shorter term.
If you’re interested in refinancing your mortgage, check out our Refinance Mortgage Calculator to run some numbers and see how you could benefit.