There are many good reasons to refinance a property or other asset. The status of ownership may have changed due to a marriage or divorce. A better interest rate may be attractive enough to go through the process. In many cases, it is a financial necessity.
Mortgages have been the middle class' path to homeownership since its creation. Although it is better known that these long-term loans are risky since the subprime mortgage crisis beginning in 2008, they have been costing their holders a lot of money for a very long time. One of the best ways to preserve the value of a mortgaged property is refinancing.
Many people lost their homes because they became upside down on their mortgages during the recession in 2008. Those who were fortunate enough to hold on to them were motivated by record-breaking low-interest rates to refinance their mortgages so that they'll owe less each month. Others are motivated to do so for other reasons.
Ever since interest rates hit all-time lows during the years following the 2008 recession, they have been slowly increasing over the past few years. Before these rates get too high again, you may be tempted to refinance your home. While the idea of tapping into the equity that you've built up or lowering your mortgage payment may motivate you to do so, there are some reasons that you shouldn't refinance your home as well.
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.
According to personal finance website MyFinance, as many as 2 million homeowners may have refinanced their homes last year here in the United States. The financial value of these deals came in just shy of $749 billion. An estimated 6.7 million homeowners are eligible, yet haven't taken the necessary steps to refinance their homes.