Once you buy a home and get settled in, it is then time to start looking at it as the investment that it truly is. In fact, a home purchase is the most expensive purchase and biggest investment most people make in their entire lives. Savvy homeowners are smart to consider their home as an investment that may need to be tweaked from time to time to reap the rewards and also be best positioned for top money-making ability for you.
Should I Refinance?
If you are a homeowner, you must have certainly heard about the dropping interest rates and have asked yourself, “Should I refinance?” Refinancing is one way to ensure that the equity in your home is always working for you. Is it time for you to consider refinancing your home loan? Mortgage refinance rates are at an all-time low, so now is at least the perfect time to see if you are a good candidate to reap the many rewards that are potentially available for refinancing your home loan.
While a mortgage refinance may not be the perfect solution for everyone, there are some definite perks to refinancing your home loan in the right situation. Here are the pros and cons of mortgage refinance to consider.
Top 5 Reasons People Refinance and the Pros and Cons of Each
Lower Monthly Mortgage Payments
- Pro – The reduction in the amount of your monthly mortgage payment from refinancing can free up extra money that can be used to achieve other goals you have.
- Con – The home loan is extended for another 30 years when you refinance a mortgage, which means more money will be spent paying for interest.
Lower Interest Paid on Loan
- Pro – When you secure a lower interest rate on your home mortgage, your monthly payment drops, giving you extra cash for other financial obligations.
- Con – While refinancing may be a great choice for newer home loans, you may not realize much savings if you have had your loan for many years with a nearing payoff date.
Switch to a Fixed Interest Rate Mortgage
- Pro – Switching to a lower fixed interest rate than you had on your original home loan offers financial consistency with payments remaining the same throughout the life of the mortgage.
- Con – Should home interest rates fall again, you will not be permitted to take advantage of these lower rates without refinancing your mortgage again once you have converted from an adjustable mortgage home loan.
Shorten the Loan Term
- Pro – Refinancing with shorter loan terms allows you to pay off your home loan more quickly, saving money on interest and preparing you for financial success.
- Con – Obtaining a shorter loan term may increase your monthly mortgage payment, possibly wrecking your budget in the process.
Cash-Out for Home Equity
- Pro – Cashing out the equity in your home is a great way to get the needed cash for home upgrades, college tuition, medical bills, or other major life expenses.
- Con – Your home loan term will reset to 30-years and ultimately you will end up paying more interest due to the lack of equity in your home due to the mortgage refinance.
The Mortgage Refinance Experts at Mid-America Mortgage Can Help
Savvy homeowners know that they must weigh all the pros and cons of refinancing a home mortgage in order to make an informed decision about the best option for their unique situation. The mortgage refi experts at Mid-America Mortgage can assist you in learning more about your refinancing options, including any closing costs that may be associated with the mortgage refinance loan. We are here to help ensure you know all of your choices and financial options so that you can successfully reach your financial goals.