Are you on the fence about refinancing your home? If so, you may have been weighing all the advantages and disadvantages of doing so. Here are some great reasons to move proceed with the refinance that you may not have thought of.
To Remove PMI
If you purchased your home with a small down payment under 20% of the home's value, you have been paying private mortgage insurance during the length of the loan so far. Some loans allow you to get rid of PMI once you've paid at least 20% of your home's total value, while other loans require it for the lifetime of the loan. If your loan falls into the latter, a refinance can help you save a lot of money on your mortgage. You can refinance your home and now give a 20% down payment, which will start fresh and get rid of PMI for good.
Make sure to work with your mortgage broker to make sure that this is a viable option with current interest rates. They can let you know how many years it will take to break even on PMI and when you'll start seeing real savings. If you plan on living in the home for that amount of time, it will be wise to refinance.
To Shorten The Loan
Did you start out with a long 30-year mortgage with a conservative budget, but now making much more money? You may be looking to pay off the loan faster than you normally would to avoid paying additional interest. One option is to refinance and get a different loan, with a 15-year term instead of 30 years. Even if interest rates are now higher, you could save significant savings by removing time from your mortgage.
Check with your mortgage provider to make sure that this makes the most sense. Some mortgages allow you to make additional payments, which achieves a similar result without resetting your loan. Other mortgages have large fees associated with early payments, which will make refinancing cheaper.
To Get A Great Interest Rate
If the current interest rates have significantly declined since you received your mortgage, you could take advantage of them by refinancing. When you combine a lower interest rate with either of the two previous reasons, it can make for a great combination that is hard to pass up.
Reach out to your mortgage broker for more information about mortgage loans.
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