Common Reasons Why Homeowners Refinance their Mortgages

Homes are purchased for a variety of reasons. Often the decision to purchase a home is centered around providing a place to live for you and your family. Purchasing a home is done because of a vision you have for your future. Homeownership is an investment in your personal future, however it’s vital that in your decision to invest in your personal future you’re also mindful of the monetary impacts of buying a home. When purchasing a home, you’re also taking on a mortgage and therefore a long-term financial investment. Success in your future starts with home loan financing that can get you where you want to be.

The Reliability in Lending Team at Primary Residential Mortgage Inc,  Deb Klein, MBA and her team offer numerous mortgage programs and services. You can count on Deb Klein and her team to find a mortgage that aligns with your long-term financial vision. Purchasing a home opens the door to homeownership. Once you’ve purchased and obtained homeownership you’ve opened an avenue of doors for future financial success.  These ‘doors’ you’ve opened refer to the ability to refinance. What are some of the reasons why homeowners often choose to refinance? Here are a few of the most common reasons to consider refinancing your mortgage.

Changing Interest Rates

In certain cases, you may have purchased an FHA fixed-rate mortgage or a conventional mortgage with private mortgage insurance (PMI) but the current interest rates are currently lower, and your home value has increased reducing the need PMI.  Refinancing now can save you thousands over the life of your loan by eliminating the PMI and reducing your interest rate. Let’s say, for example, your original mortgage has an interest rate of 5.0%, but current market interest rates for that same loan have dropped to 3.75% – this could represent a massive savings for you over the course of your mortgage loan and it often will make sense to refinance.  It’s important to call and speak with our team in advance to understand the full scope of refinancing and whether it will benefit your long-term financial goals.

Major Income Increase

In other cases, you may consider refinancing as a tool to pay your mortgage down faster and improve your finances. The most common scenario we often see is a job change that significantly increases your income, allowing you to make larger payments – in this case, you can consider shortening your loan period from 30 to 15 years.  For example, bringing down the total interest you’ll pay over the life of the loan while raising each individual payment to a higher amount that you can now afford and save hundreds of dollars in interest on your mortgage over time.

Cash Need

Life changing events can happen instantly.  Sometimes for the good and bad, often unexpected life occurrences call for unanticipated financial expenses.  Cash-out refinancing allows you to access equity funds from your home for these unexpected expenses.  Cash out refinancing sometimes can raise your mortgage payment, however it allows you to get the cash you need at a highly discounted rate in comparison to utilizing alternative financing methods such as your credit card.

Changing Loan Term

Finally, for those dealing with long-term financial changes that impact their ability to pay their loan down in time, refinancing to a longer loan term could be a prudent move. If you’re on a 15-year mortgage where the payments are too high, you could refinance to a 30-year option that makes your payments more manageable.

For more on the reasons why some choose to refinance a mortgage, or to learn about any of our other mortgage loan services, please feel call us today for free mortgage check-up.  We are here to help you determine the best mortgage for your long-term financial health and goals.

The Reliability In Lending Team, Deb Klein, MBA with Primary Residential Mortgage, Inc.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.