There are many reasons people choose to refinance their homes, most being financially motivated. Of course, there are both pros and cons, and refinancing is a big decision that should be carefully considered.
Many people are so happy with their decision to refinance that they do it more than once! Before you decide if refinancing is right for you, do your research, and weigh your options. If you do choose to go this route, here are 5 benefits you might enjoy.
Lower Monthly Payments
Who doesn’t love saving money? If you refinance your home, you’re almost certain to make your monthly mortgage payments go down. Whether you’re saving up for a trip, a home renovation, or something else, lowering your monthly payments can be a great way to reach your savings goals faster.
Combining Two Mortgages Into One
If you happen to own more than one home or property, it can make your life a lot easier to pay one mortgage payment each month rather than two or more. Refinancing can help make this possible by combining the mortgages together.
Remove A Person From A Mortgage
After a divorce, oftentimes one person will “buy out” the other and will choose to keep the house. In this case, for the person moving out, in order to no longer be financially responsible for payments, they need to be off the mortgage. The only way to get a person’s name off of the mortgage is to refinance.
Changing Your Term
Another possible benefit of refinancing is the option of changing your term. You can go from a 15-year term to a 30-year term or vise-versa. It may be beneficial for some people to shorten their term while for others lengthening their term may be a better choice. It all depends on what you’re trying to accomplish.
Cashing Out Equity
Each time you pay your monthly mortgage payment, you are putting equity into your home. The closer you are to paying off your home, the more equity you will have obtained. There are many reasons cashing out equity might be of interest to you, including consolidating debt, paying a large unexpected bill, making a big purchase such as another home, a car, or a boat, or paying kid’s college tuitions.
As you can tell, refinancing can be an easy, helpful way to lower monthly payments, change your mortgage terms, remove a person from a mortgage, cash out equity, or combine multiple mortgages. While these benefits may be well worth it to you, it’s important to remember there are also some costs. Do thorough research and talk to friends who have refinanced in the past before you make the decision to do so.