3 Benefits of Refinancing Your Mortgage
If you are searching for a way to lower your mortgage payments or clear off your home mortgage faster, mortgage refinancing may be a good option. Mortgage refinancing involves changing your existing mortgage with a new one with better terms and conditions. There are several advantages to mortgage refinancing, and in this blog post, we will discuss three of them. But before that, what does it mean to refinance a mortgage?
Explaining mortgage refinancing
Mortgage refinancing is an excellent financial strategy that helps property owners meet their financial goals. With a refinancing, you can get a better interest rate with different mortgage terms. When you apply for refinancing, your new lender will pay off your existing mortgage. You can choose a reduced monthly mortgage payment option or increase the length of the mortgage. It will depend on you.
3 advantages of mortgage refinancing
- Getting a lower interest rate on monthly mortgage payments: As a mortgage borrower, you can save thousands of dollars over the term of the new mortgage when you lock in your interest rate. Locking in means, your mortgage interest rate will be fixed and it can also lead to lower monthly mortgage payments. You can use the saving out of interest to pay off high-interest debt. Another choice can be adding it to your savings account and building that fortune for your retirement years when you can be financially independent.
- Save funds for home improvements: If you have taken a mortgage loan, you will already know that home equity is built through mortgage payments. As a borrower, if you choose cash-out refinancing, you will be able to access the equity in your home. You can use the secured loan by keeping your home equity as collateral for several purposes. One of them can be renovating your property which can help in increasing its market value. Afterwards, you can flip the property by selling it at a higher price than you purchased it for and make a profit on the sale.
- Removing mortgage insurance: Except for VA loans, you will have to purchase mortgage insurance if you have financed over 80% of your home’s loan. In this scenario, refinancing your mortgage can be a great way to remove this extra expense. It is available for borrowers whose loan-to-value (LTV) ratio is less than 80% because of a reduced loan amount, an increased home value, or even both.
And those are only some of the benefits that you can reap from refinancing your mortgage. If you want to know more then you can get in touch with your local mortgage brokers. Consider OneFund Financial if you are living in Oshawa. They are experts in the trade. And if your like topics like these, consider subscribing to our blog and contact us.