It seems like all around you people are refinancing their homes. You had no plans to refinance, but the sudden scramble to take advantage of low interest rates makes you feel like you’d be crazy not to follow the crowd.
Believe it or not, many people refinance for reasons that don’t involve lowering their monthly payment. We talked to our team of experts and learned three common reasons people refinance that have little to do with interest rates.
Reason #1: Consolidate Debt
Do you have equity in your home? A cash-out refinance can help you pay off high-interest credit cards or auto loans. Consolidating your debt as much as possible can help relieve stress because it eases the overall financial burden of multiple loan payments every month.
Reason #2: Decrease Loan Term
In the several years since you’ve purchased your home, you’ve changed careers or gotten a significant raise. Consider a refinance to decrease the term of your mortgage. A shorter term for your mortgage could potentially save you thousands of dollars on future interest.
Reason #3: Home Improvements
Depending on how long you plan to be in your home, it might be a good idea to make some significant home improvements. Maybe it’s time to redo your kitchen or replace your roof. Home improvements have the potential of increasing your property value. Even small aesthetic improvements can boost the value of your home.
Many people who have considered building a new home have found the cost to be more than they’d like, or they love their current neighborhood but would like their home to have that “new feel”. Remodeling their home just makes sense. Accessing your equity through a simple refinance lets you “rebuild” your dream home.
Refinancing isn’t always about getting a lower interest rate (although that’s just as good a reason!). Just because “everyone else” is refinancing doesn’t automatically mean you should. Take time and consider your financial goals to see if a refinance is the right decision for you. Contact us if you need help deciding.