1.Lower
Interest Rates – The
very number one reason to refinance your home is also the best
reason. If there is a 1.5 to 2 percent difference between the
interest on your present loan and the going rate, it is time to seek
a better deal. Not only will you pay less across the entire length
of the loan, but gaining a lower interest rate should reduce your
monthly repayments as well.
2.Get a
fixed rate – You
may have taken out a loan at a variable rate when interest rates
were higher. It does make better sense, however, to switch to a
fixed rate when interest rates are at all time lows.
3.
Shorten the Term –
If your present personal situation allows you to easily meet your
monthly repayment amount, consider shortening the time term. This
gains two benefits – not only do you pay less interest due to a
shorter term, but interest rates are generally lower on shorter-term
loans
4.
Lengthen the Term - If you
redo a loan to lengthen the repayment term, you can lower the
monthly repayment amount helping to increase your household cash
flow. This will cost more in the long run but if you need to free up
money for monthly bills, this can be a valid refinancing reason.
5.Pop
that Balloon – You
may be facing a huge one-time payment since you took out a home loan
with extremely low monthly repayments. The loan might be entering a
period where you need to make larger monthly payments. The need to
spread payments out to be better handled can motivate home
refinancing.
6.Sell
that House – It
makes NO sense to obtain a long-term loan paying high interest rates
if you only plan to stay a few years. You would fare better
financially taking out a short-term loan that would carry a lower
interest rate. An adjustable rate mortgage loan would provide lower
repayments in the beginning that would suit well since the ultimate
goal is to sell in a short period of time.
7.Grab
Some Cash – Some
savvy homeowners find refinancing will provide some cash in hand
that is the results from a better deal than an equity loan. Also, if
the cash is for home improvements and the refinance is a better
deal, you do well increasing the property value as well.
8.Cut
down the Utility Bill – When a
homeowner puts money into reworking the energy efficiency of the
property, a great amount of savings can be found every month. An
energy efficient home has greater re-sale appeal. Plus, the
refinance to get the funds for creating greater energy efficiency
may also be tax deductible.
9.
Off to School –
Refinancing your home to provide a college education for yourself or
loved one is a smart move that will return on the investment in ways
you do not consider.
10.
Consolidate Debt –
Improve your monthly cash flow by refinancing to pay off all your
present debt. This will provide an opportunity to “start over” where
you can reform spending habits.
Always
examine what situation you will find yourself in after taking out a
loan.
