When you have a home with a loan, you can keep the loan as long as you live there and owe money on it. You also have the option of refinancing it. Refinancing is a smart option for many reasons, and here are three excellent reasons you may want to refinance your loan.
1. To Consolidate Your Debt
Refinancing requires getting a new loan. When this occurs, you pay off your current loan, leaving you with only one mortgage. The good news is that you can take cash out when refinancing, and you can use the cash for any purpose. One excellent way to use the cash is by paying off your credit card bills. If you are at a point when you can barely pay your bills, this could be the best solution for you. You will need an appraisal to get this approved, and you must have enough equity in the property. If you are interested in learning more about how this works, talk to your lender.
2. To Fund Your Home Improvement Projects
The second smart reason to refinance is to pay for the home improvement projects you want to complete. Suppose you want to remodel your kitchen or put on an addition but are not sure how to pay for the costs. You could fund these projects through a cash-out refinance. The benefit of this is that refinancing leaves you with just one loan. The other benefit is that renovating your home will likely add value to it.
3. To Save Money
The other smart reason to refinance your home loan is to save money. You can save money if you can get a lower interest rate on your new loan. By having a lower rate, your payments will be less. Another way to save money through refinancing is by shortening your loan. If you currently have 20 years remaining on your loan, you could consider refinancing to a 15-year loan. If you do this, you will cut five years off the loan, and you will save a lot of money in interest charges.
Are you interested in consolidating your debt or funding a home improvement project? If so, refinancing your home loan might be the smartest way to get the money you need to do these things. If you have any questions about home loans, debt consolidation, or refinancing, contact a mortgage lender of your choice today.