There are many reasons why you may wish to refinance your home loan. The interest rate that you may have originally locked in may be higher than what you can now get, or you may have an adjustable-rate instead of a fixed-rate one. You may be looking to reduce your monthly payments or to cash out on the equity that you've built up. These are just a few of the many benefits to refinancing your home.
Many homeowners may appreciate how refinancing their home reduces monthly mortgage payments. A recent study published by CBS News showed that the average homeowner who does this can save as much as $160 when they refinance their home.
Others look to refinance their mortgage in order to reduce their payoff period. When you initially took out your loan, you may have selected a 30-year payoff term. As you near retirement, you may be interested in paying off your home more quickly. If you shorten the payoff period, then you may increase your monthly payments, but avoid having to pay high interest.
If you've built up a certain amount of equity in your home, then you may qualify to stop paying your private mortgage insurance (PMI) that often gets tacked on to your loan. When you go to refinance your home, you'll find out if you can drop your PMI. If you can, then you'll save an additional amount each month.
Homeowners who have previously taken out a line of credit, which is often an adjustable-rate loan, may also benefit from refinancing their loan. If you consolidate both your mortgage and line of credit, then you'll have a single fixed-rate loan. This will make it easier for you to anticipate the amount of monthly payments.
While there are many positives to refinancing your home, it's important to remember that whether you're allowed to do so is contingent upon many factors. Lenders will consider what your creditworthiness is like, what your home's value is and whether you've built up any equity on it. An Augusta refinancing attorney can advise whether it's the best choice for you and your situation, and if so, how likely it is that your request will be approved.