Borrowers may consider refinancing for several different reasons:
- A Lower Monthly Payment The interest rate on your mortgage is tied directly to how much you pay every month for your mortgage. You may be able to get a lower rate because your credit has improved or because of changes in the market. Lower rates mean lower payments, allowing you to build equity in your home more quickly.
- Debt Consolidation Consolidate consumer debt into your mortgage.
- Cash out a portion of the home’s equity Generally, most homes will increase in value, and are therefore a great resource for extra income. Increased value gives the opportunity to pay for major expenditures such as home improvements, medical costs, credit card debt, or college tuition.
- Shorten your loan Shorten your loan term to own your home and to clear the loan.
- May be able to remove mortgage insurance if the value of the home has increased.