Here are some great reasons why you might refinance your mortgage!
There are a lot of great reasons to refinance an existing mortgage loan. And, with today's low rates, many people are refinancing because it's a smart way to save and manage money. Check out some of the most common reasons people refinance:
Lower your mortgage rate and payment. This may be the #1 reason homeowners refinance their mortgage. If your current interest rate is higher than what is currently available in the market, it may be a good idea to explore whether and how much you could save by refinancing. There are low-cost options that could save you money with little to no investment. However, if you refinance your loan, your total finance charges may be higher over the life of your loan.
Take cash out to consolidate your debt. Leveraging the equity you have in your home is one of the smartest ways to make your money work for you. Use the cash to pay off higher interest, non-tax-deductible credit cards, student loans, or medical bills or to perform home repairs or improvements. By consolidating your debts, you can enjoy the benefit of having only one payment each month, and decrease your overall monthly outflow.
Convert your adjustable rate into a fixed rate. Adjustable rate mortgage (ARM) loans are a great way to ease into your payments, especially if you are a first-time homebuyer or if you need lower payments initially. But, if you decide to stay in your home longer, you might consider refinancing into a long-term, fixed rate loan. Doing so will give you peace of mind, knowing that your rate and payment will not change.
Convert your interest-only loan into a fully-amortized loan. Like ARMs, interest-only mortgage loans are a great way to minimize payments initially. However, because you are not paying any principal, your loan balance does not decrease. If you plan to keep your home long term, you may want to start paying off your loan. By refinancing to a 30-year fixed mortgage loan, you may be able to keep your payments about the same amount.
Convert your 30-year loan to a shorter-term loan. Sometimes plans change. Permanent homes become temporary ones and you might need to sell sooner than you thought. Should that happen and you no longer need a long-term rate, you might consider converting your 30-year fixed to either a 3/1, 5/1, or 7/1 adjustable rate loan program, which often have lower rates and payments.
Take cash out to purchase an investment property. With home prices and interest rates at the lowest they've been in years, now might be a great time to buy a vacation home or an investment property. Tap into your equity and use the cash for your down payment, home repairs or improvements.
Turn to Fay for all you refinancing needs
No matter your reason, our experts will help you decide if and when you should refinance, and will discuss loan options with you. With Fay as your refinancing partner, you can rest assured your mortgage needs will be well met.