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Why Should I Take Out a Refinance Mortgage?
When you bought your home, you spent ages searching the market for a mortgage that best suited your needs at that time. Now that interest rates have fallen, do you feel that you could save yourself money if only you could have a mortgage with these lower interest rates? This can be achieved by taking out a refinance mortgage.
What is a Refinance Mortgage?
A refinance mortgage is basically a new mortgage that pays off and replaces your old mortgage.
Why should I take out a Refinance Mortgage?
- If the mortgage interest rate is lower than your existing mortgage, it makes perfect sense as your monthly repayments will be lower and you will be saving yourself money.
- Perhaps when you took out your original mortgage, interest rates were far higher than now and you had to opt to pay back the mortgage within 30 years instead of 15. Now, if interest rates are considerably lower you could shorten the term of the loan, afford the monthly repayments and save yourself thousands of dollars in mortgage interest.
- If you need to tap into the equity of your property you can take out a refinance mortgage and take cash out at closing rather than taking out an equity loan. You will have to check with each individual mortgage lender if they offer this but as interest rates on a refinance mortgage are generally lower than a home equity loan, this could save you cash too.
- A refinance mortgage could again help you to consolidate your debt as you could combine your first and 2 nd mortgage into one new mortgage.
Are there any reasons why I shouldn't take out a Refinance Mortgage?
- If you have already been paying your mortgage for around ten years it would be unwise to commit to a loan with a lower interest rate for another thirty years. In the long run you would pay more interest than sticking with your current mortgage provider.
If you have had bad credit experiences since you took out your first mortgage, you may not qualify for the best rates anymore so it may not be worthwhile switching.