Benefits Of Refinancing Your Mortgage Loan

Posted on: 6 October 2020

Since buying a house is quite expensive, few people are able to pay in full with cash. Instead, the majority of homeowners take out a mortgage loan and then make monthly payments on their loan. If you have lived in your home for a few years and have a mortgage loan, you may seriously want to consider talking to lenders and mortgage brokers about refinancing your loan. With a refinance, your existing mortgage is paid off, and you have a new mortgage with the terms that you have agreed upon. Some of the biggest benefits of refinancing your home mortgage loan include:

Make Lower Monthly Mortgage Payments

If you are interested in lowering your monthly mortgage payment, opting to refinance your loan is the way to go. When you refinance your mortgage loan, your new mortgage will be for the total amount that you currently owe on the house, not the amount that you purchased it for. Thus, if you have been paying your mortgage for several years, your new mortgage amount will most likely be much less than your current mortgage. Likewise, a lot of people opt to refinance their mortgage when interest rates fall. Securing a mortgage loan with a lower interest rate will also result in lower mortgage payments.

Save Money in the Long Run

When you notice that interest rates are low, it is wise to consider refinancing your mortgage loan. This is especially true if your current mortgage loan has a high-interest rate. The interest rate attached to your mortgage can make a huge difference in how much you pay over the life of your mortgage loan. If you are able to refinance and lock in a much lower interest rate, you can save tens of thousands of dollars by the time your house is paid off, since you won't be paying as much in interest.

Access the Equity in Your Home

Many lenders offer refinancing programs that let you access the equity in your home. For example, if your home is worth $300,000 but you only owe $150,000 on your current mortgage, you can opt to refinance your mortgage for $175,000. Your existing mortgage will be paid off, and then you will have $25,000 of cash to use as you like. Many homeowners opt for a cash-out refinance when they want to make major improvements to their home, such as remodeling the kitchen. 

To learn more about refinances, reach out to a local real estate agency.