The most common reason why homeowners face the harsh reality of home foreclosure is due to missing their monthly mortgage payments. The main reason why monthly payments on the original home loan or mortgage are missed is due to the increasing interest rates that make it impossible to make regular payments. This is why many responsible homeowners turn to refinancing their mortgage to avoid losing their house to the bank.
For those contemplating on whether or not they should turn to refi, here are the best reasons to refinance a mortgage:
Reason 1: Interest Rates Are Down
Lowered interest rates are the primary reason why homeowners decide to refinance their current mortgage. In fact, low rates are the main reason why any loan is refinanced. If done at the right time a homeowner can save up to $3,000 per year when they refinance their mortgage. Just because it looks like rates have gone down doesn’t mean you should jump on refinancing your mortgage immediately.
Pay attention to the current housing market and talk to experienced and trusted financial institutes and get their advice on whether you should proceed with the refi or not.
Reason 2: Your Credit Scores Have Improved
If you have reached the stage in your life where you are confident about your financial stability and your credit scores have improved it is also a good time to check out mortgage refinancing options. Even when interest rates haven’t gone down, financial institutes may offer you lower interest rates now that you have a better credit score standing. Plus, taking out a new loan to pay off the old one will also improve your credit scores while at the same time lowering your monthly payments to make them more manageable.
Reason 3: Convert From ARM to Fixed-Rate
ARM or adjustable-rate mortgages may offer lower rates at the start of the loan term, but they eventually inflate. Switching from ARM to a fixed-rate loan will allow you to save more money by avoiding huge interest rates in the future. Fixed-rate loans are also a better choice when it comes to maintaining and sticking to a monthly budget for a long-term goal. Homeowners are able to predict and set aside an exact amount until the terms of the new loan are met which is easier on the pocket.
Reason 4: Tap Your Home’s Equity
One of the best reasons to refinance a mortgage is to tap into the equity of your home. Your home is basically an asset that can be tapped to cover huge expenses like a remodeling job, expensive medical bills, and even for college tuition. Refinancing is also a good way to consolidate all your debts to avoid costly interest rates of different small loans. One new a big loan on your home allows you to pay off current debts and avoid bankruptcy and other financially crippling situations.
Be smart about your mortgage refinancing options and speak to an expert before taking the step to refi your home. Visit refinancingmortgages.co for more info. Likewise, check out this practical tip for homeowners: http://business.baylor.edu/Don_Cunningham/The%20Refinance%20Rule%20of%20Thumb%20(2012).pdf.
Trying to figure out if you need to refinance your mortgage or not? Visit refinancingmortgages.co for tips, guides, FAQs, and more so you can make a good decision.