Refinancing your mortgage is a fantastic method to let you take control of your finances. By using a new mortgage to replace your existing one, the refinancing pays off the debt on your current mortgage. Not just that, it also gives the borrower the freedom to choose the loan terms, including the rate of interest on their new mortgage. So, you can not only get a loan that saves you a lot of money but also helps you achieve other financial goals. You make the scheduled monthly payments to your new loan with mortgage refinancing instead of the old one.
As a borrower, mortgage refinance has several benefits. Granted, they may differ from borrower to borrower based on their financial needs.
But refinancing will definitely provide the below-mentioned benefits:
- A much better mortgage rate
One of the most important reasons to refinance your mortgage. If the mortgage rate has increased since you took out the loan, you can save money by refinancing your mortgage at the current interest rate. Also, if you have improved your credit score over time, you can qualify for a loan with a lower interest rate.
- Lesser monthly payments
If your loan has a lower interest rate, you are eligible to make lower monthly payments if your refinanced loan has the same payoff date as your previous loan. Additionally, you can lower your monthly payments by simply extending your payoff dates which enables you to pay a lesser principal amount every month.
- Fixed rate of interest
If you decide to refinance to a fixed-rate loan, you can rest assured that the interest rate will be fixed for the remainder of your mortgage. Even if the interest rate rises because of the current financial situation, you do not have to worry as your loan interest rate is locked in for the entirety of the term.
- It helps shorten your mortgage term
Most borrowers apply for a 30-year housing loan, and after a couple of years, refinance the mortgage to a 15-year fixed-rate mortgage. This allows them to pay off their mortgage faster and save a lot of money over the life of the loan. The mortgage rate on a 15-year loan is much lower than a 30-year loan.
- Borrow against your home equity
With a refinancing, you can borrow money against the equity of your house to acquire funds. It is an efficient way to borrow money since a mortgage refinance is tax-deductible, and the rates are lower.
- Debt consolidation
The borrowers can use the cash-out refinance to pay off other significant debts by reducing their monthly payments and interest payments by consolidating the debt into one single loan. As mortgage rates are lower, this is an excellent way to clear off your outstanding debts.
One Mortgage Group offers several options on mortgage refinancing to meet the borrowers’ needs. Contact the team for further enquiries.