What is Mortgage Refinancing?
When you refinance your mortgage, you essentially replace your original mortgage and abide by your new home loan terms. The terms that change can depend upon your goals, whether you want to reduce your interest rate, pay your loan off quicker, or go from a fixed rate to an adjustable rate or vice versa.
Refinancing your mortgage gives you the freedom to pay off your home on your terms.
Benefits of Mortgage Refinancing
Refinancing your mortgage comes with a slew of benefits, so if you’re in the right place to refinance, you can take advantage of some of these benefits:
- A lower interest rate: If mortgage rates have fallen or if your credit profile has improved since your original mortgage, you can secure a lower interest rate and pay less in interest over the life of your loan.
- Reduced monthly payments: Lower interest rates reduce your monthly payment so that you can have more flexibility in your budget.
- Borrowing money: If you choose a cash-out refinance, you can borrow against the equity in your home to use for any purpose, whether you want to consolidate debt or complete home renovations.
- Shorter loan term: Perhaps you want to pay off your home quicker. In that case, you can reduce your loan term from a 30 year to a 15-year mortgage. While doing so will increase your monthly payment, it will allow you to be mortgage-free faster.
