For people looking to increase their financial flexibility or limit a major financial burden, a mortgage refinance can be a great way to go. While the term has taken on a negative connotation over the years, this is often very far from the case – refinancing can be a perfect outlet for certain completely standard financial decisions.
At Altius Mortgage Group, we have years of experience helping our customers with refinancing options and many other elements of the mortgage process. Here are a few reasons why you might stand to benefit from refinancing your home:
The first item on our list is also easily the most popular reason why people look to refinance. Mortgages exist over very long periods of time in most cases, and it’s completely natural for financial circumstances to change over years and even decades.
Simply, if mortgage rates are significantly lower than they were at the time when you first signed your mortgage agreement, it could be time to refinance – a general industry benchmark is a two percentage point difference between the current rate and what you originally paid. There are other things you can utilize those lower rates for, which we’ll get into momentarily, but most people simply choose to apply these to lower monthly payments and gain a bit more financial flexibility.
Altering Loan Type
Adjustable-rate loans often look more enticing than fixed-rate loans when you first get started. Their interest rates are lower to begin with, and the potential for these rates to drop even further if the market is robust is very appealing to many people.
In a lot of cases, though, the market doesn’t cooperate and you’re left with a difficult situation when your rates rocket upward. Refinancing your mortgage is a way many people choose to switch from adjustable-rate to a fixed-rate mortgage, which provides more security.
Credit and Equity
Refinancing is also a good way to up your credit – lowering monthly payments helps you make them on time, which in turn raises credit score. Some people are even able to refinance more than once with great success because they leverage their better credit score into yet another lower monthly rate.
Another avenue some people choose down these same lines, though, is using what’s called cash-out refinancing to recoup some of the equity they have in their home. This is perfect for people who have a large lump sum or emergency payment to make, even if it’s just debt from another financial dealing that might help the credit score. For people who have done well enough financially to stay ahead of their mortgage curve, capitalizing on this equity in ways like this can be very profitable in the long run.
Want to learn more? Our Altius Mortgage Group brokers are standing by.