Benefits of Refinancing Your Family Home This Year

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If you’ve been thinking of refinancing your family home this year but aren’t sure whether it is the right move, then you came to the right place. Refinancing your home is basically a good idea. Not only does it offer you peace of mind, but enables you to enjoy lower interest rates, lower monthly payments and so much more. Here’s a more precise overview of how you’d benefit by refinancing your family home this year.

You build equity faster

If you’re looking to build equity in your family home as quickly as possible, but you don’t have the extra money to add to your monthly payment, then you could refinance your home. If you’re getting a lower rate when you refinance, you could get into a shorter-term loan and have more of your payment going to your debt each month. This would increase your equity.

Remember that when you move from a 30-year mortgage to a 15-year mortgage, you can build your home’s equity faster, and save money on interest if you get lower interest rates.

You get to tap into your equity

We all get those times in life when we need a cash influx. Maybe you want to pay tuition fees, upgrade your HVAC system, remodel your bathroom or kitchen, or boost your small business. If that’s the case, then you could use your home’s equity to achieve those ideas. There are refinancing options that can allow you to get some cash out of your equity and roll it into your mortgage. Utilizing them can help you avoid going into credit card debt while paying for important things in your life.

Cash out refinance is a good example. It’s a popular refinancing option that lets you take some cash out of your home’s equity. This amount is often the difference between the home’s appraised value and its current value. The cash-out refinance can be a great alternative to a home equity loan; it allows you to access a lot of money to pay for various personal projects without selling your house. As you can imagine, this would be a great way to re-invest debt into your home to increase its value.

You pay less each month

Today, more and more homeowners are refinancing their mortgages with the aim of netting lower monthly payments. This would particularly benefit you if your monthly budget is already overstretched, and you want a little breathing space. If you get a lower rate, you could pay lower monthly payments, and free up some cash for important things, such as education and savings.

Of course, before you start refinancing, you need to check the most recent mortgage rates to confirm that they’re lower than your current rate. Remember that even a slight difference can have a huge impact on your financial health in future.

You evade the PMI

There’s a chance a proportion of your monthly payment is going to the private mortgage insurance (PMI), a form of mortgage insurance that homeowners with a conventional loan are often required to pay. According to Forbes, the PMI doesn’t protect you; it’s there to protect the lender from huge financial losses in case you fail to repay the loan. As the PMI is an avoidable cost, it’s prudent to look for means to evade it. If you’ve already accumulated a lot of equity and only have to refinance under 80% of your home’s value, you may get out of paying the PMI payments through refinancing.

You enjoy predictability and stability

If your original mortgage loan is an adjustable rate mortgage, you should consider refinancing to a fixed rate mortgage if your initial fixed term is almost expiring. When you lock in a rate, you can shield yourself from any increasing interest rates in future. Moreover, you’d find it easier to plan and budget when you have the same interest and principal. Besides the potential cost savings, you would love the predictability and stability you achieve from this.

Conclusion

As you can see, there are many benefits of refinancing your family home. In summary, refinancing your home today would help you build your equity faster, help you pay less each month, assist you evade the PMI, offer you predictability and stability and give you the chance to tap into your equity to finance your projects.