Top 10 Reasons to Refinance Home Mortgage

You may have gotten a great rate on your loan when you first purchased your home. But if it's been some time since you've revisited things, you are very likely to be eligible for a much lower rate, which means that a refinance home mortgage could be in your near future.

Before you even choose new terms, however, considering whether you think you will live in your home for longer than five years may be the first thing to think about. You may also wish to decide how long you want to pay for your current home before you decide to make the refinancing leap. And choosing the right loan for you will be easier when you know how much you will be paying each month and what your repayment terms are.

Reason 1 - Selling Your Home

If you're having trouble selling your home but have an adjustable rate mortgage, refinancing may be right for you, because as time goes on, your monthly payments will rise with interest rates. Look for a noticeable increase in lending rates over one or two years, which can help you decide.

Reason 2 - Reducing Your Monthly Payments

Refinancing with the purpose of reducing your monthly payments also be a good idea. Although it can cost anywhere from 3-6% of your home loan for closing costs, and you will end up making more mortgage payments by extending loan terms, it can be well worth it if the math works out for you.

Reason 3 - Trying Something New

The stimulation of the housing market by the government, along with lenders who are aggressively seeking customers has resulted in the creation of many new mortgage products. This can mean that you have more options than you did a few years ago.

Reason 4 - Adding Value

By taking advantage of the Homeowner Affordability and Stability Plan, you have a great opportunity to add value to your home with expansions and renovations. The plan allows you to refinance up to 105% of your home's value, which is great news, considering the costs are cheaper than ever to build.

Reason 5 - Business Investing

With unemployment plaguing so many around the world, you could very well be next. But you can give yourself a helping hand by refinancing your home. Refinancing can give you the start-up cash you need to gracefully eliminate layoff paranoia. If you're not looking to start your own business, you can also use this extra cash for investing in someone else's startup.

Reason 6 - Improve Your Credit Chances

Homeowners who have a high debt-to-income ratio can find it difficult to get the credit they need. But refinancing can help improve your ratio, as well as your credit score.

Reason 7 - Property Investment

Investing in a second property, whether it be a holiday home or an apartment in the city can mean long-term stable and steady rent income that can fund other investments or recreational adventures for your family.

Reason 8 - Quicker Ownership

Refinancing is a good idea if your income has improved over the last few years, as it means you can make higher payments on your mortgage and more quickly build equity. You can do this be either changing the frequency of your payments or changing your loan to a lower year mortgage.

Reason 9 - Go Green For Less

Refinancing can allow you to fight rising energy prices by freeing up some cash so you can start generating your own energy or use less off the grid. Making these kinds of improvements can also result in you getting tax breaks from the government.

Reason 10 - Lock In Your Rate

When interest rates take a nose dive, refinancing can mean that you get to enjoy that low rate for an extended period of time when you enter into a fixed-rate mortgage.

When NOT To Refinance

There are many reasons that homeowners refinance their mortgage. But among the many good reasons, there are also reasons that can hurt you in the long term. So if you're thinking about refinancing, ensuring that you're doing it for the right reasons can help you avoid a lot pain and frustration in the long-term.

Refinancing your mortgage by lengthening your term can definitely save you money every month, but can result in you paying more interest overall. Take a look at the total cost of your loan over the period you're considering before you make the refinancing leap.

Consolidating debt by a refinance home mortgage is extremely risky, and yet, many homeowners do just that. And it's probably because it makes sense, at least on paper, to pay off a high-interest debt with a low-interest mortgage. But the truth is that it can cost you your home if you are unable to make your loan payments.

Being Weird Can Benefit You

Did you know that, along with the common 15 or 30 year mortgage, that your lender also likely offers a wide range of repayment periods? You may be able to take advantage of terms anywhere from a 5-year 'balloon' mortgage to a 29-year agreement with your lender.

While these loan types may sound weird, they may actually benefit you if:

- you are approaching retirement age and are just buying or refinancing your home;

- have recently purchased a low-cost property, but don't want to spend a long time in repayment;

- a homeowner who wants to lock in low rates, but doesn't want to replace one 15 or 30 year loan with another.




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