If you are saddled with a mortgage with an extremely high interest rate or terms which you are not comfortable with, refinancing your mortgage may be a way to escape the offending loan. People refinance home loans for a multitude of reasons, but several reasons are more common than others.
Common Reasons to Refinance a Mortgage
- Lower interest rates: the most common reasons that homeowners refinance their mortgage is to lower the amount that they are paying in interest. If you purchased your home several decades ago, you might be facing interest rates of eight to ten percent. Current interest rates are much lower than they were twenty years ago, with the average interest rate in 2018 being 4.5%. With this difference in interest, homeowners can save thousands of dollars per year by refinancing their mortgage.
- Convert to fixed-rate mortgage: Adjustable rate mortgages (ARMs) certainly have their advantages; namely, ARMs generally boast a very low interest rate in the first few years of the mortgage. If rates are on the rise, however, interest rates for adjustable rate mortgages may eventually far exceed fixed rate mortgages. If your interest rates have continued to increase during the periods of time in which your rate can change, you may want to consider refinancing to a fixed rate mortgage.
- Get cash from your equity: if you have built up a significant amount of equity in your home, you may be able to get cash out of your home by refinancing your mortgage. Oftentimes, individuals do this to pay off debt or make renovations or repairs to their home.
- Lower monthly payment: oftentimes, individuals experience circumstances in life which render them unable to make their monthly mortgage payment. In such circumstances, refinancing your loan to have a longer loan term may result in a decrease in your monthly payments. While this isn’t necessarily a “fix” to your problem, it can make your payment more manageable if you are in a financial bind.
- Higher credit score: if your credit was subpar when you obtained your mortgage, you may be suffering the consequences in your interest rate. If your score has significantly increased since you first took out a mortgage, you may be able to save a significant amount of money by refinancing your mortgage at a lower interest rate.
Looking to Refinance? We Can Assist You with Your Closing
If you are refinancing your home and need assistance with your closing, the team of closing attorneys at the Boger Law Firm are standing by to assist you. Our attorneys have over forty years of combined experience conducting real estate closings, and are happy to help you with your closing as well. To learn more about the closing process, or to schedule the closing for your refinance today, fill out an online contact form or call (803) 252-2880 today.