When you buy a home, you take out a mortgage. Whether you take out a 30 or a 15-year mortgage, use a Conventional, FHA, VA, USDA, or any other type of mortgage, during the term of your loan you may have a great chance to renegotiate the terms of your loan into a mortgage refinance. Why should you refinance your mortgage? There are a lot of great reasons to, and all of them will save you money.
A Cash Out Refinance
The Cash Out Refinance is a great tool to rework your mortgage. You can take the equity in your home and use it for a variety of purposes. There are many different reasons to use this cash. You can pay off your credit cards. This is a huge benefit, as you’re paying off the high-interest credit card debt with low-interest mortgage cash. You can save thousands in interest payments and cut up those cards.
A Cash Out Refinance is also a way to make improvements on your home. You can use that equity to put in a pool, finish off your basement, build a mancave or she shed, put in a deck or patio, or anything that you want to add to your home and increase the value of your home. You can also use it for large repairs, where you may have problems you have been putting off, like cracked concrete, a sagging deck, an ugly pool, gross landscaping, or leaky pipes. It’s a smart way to get the cash to do your repairs and keep the house from falling further into disrepair.
A Rate-And-Term Refinance
This type of loan is a simple adjustment to your payments. The Rate-And-Term Refinance is a great way to lower your monthly payment or shorten the term of your mortgage using lower interest rates. When interest rates are low, like today, you can sometimes both shorten the term and reduce the payments. This can save you money both monthly on your payment and throughout the life of the loan in interest payments.
Shortening the loan has many benefits. You pay less overall in interest, as it doesn’t pile up for 30 years, instead only accumulating over 15. You also own your home more quickly, and gain equity faster.
Reducing your monthly payment is an obvious benefit. If you are in a fixed-rate mortgage, you know that you will make the same payment every month, and this lets you plan ahead for disasters, and pay all of your bills. Reducing the monthly payment gives you money every month for car payments, utility payments, saving for college or vacations. There is so much that you can do with some more money in your pocket, I’m sure you’ve imagined it or you wouldn’t be reading this post!
Get Rid of PMI
If you have an FHA Loan or any loan that put down less than 20%, you are likely paying PMI, or Private Mortgage Insurance. PMI is an additional insurance payment that doesn’t apply to the balance of your mortgage, but helps secure the mortgage since you are putting down less than 20% for the down payment. Why do you have PMI though?
It’s the reason that you were able to get the mortgage in the first place, with the PMI backing the mortgage up for the lender and making it a good investment. When you are over 20$ equity in the home, you can refinance the house to a Conventional Loan, where you can remove the PMI from your loan.
Change The Type Of Mortgage You Have
Many people originally bought their homes with one type of loan, but are now able to move to another type. A very common way is to go from FHA to Conventional as we outlined above. Another common refinance is to go from a Conventional or FHA Loan to a VA Loan. Our Hero.Loan team makes this happen every day for people, getting them into a lower interest VA Loan in as little as 14 days, and helping Veterans get the loan they deserve. Other lenders that can’t quickly close a VA Loan will push eligible veterans and their families into Conventional or FHA Loans that they can close without taking the soldier’s best interests into account, so we help them get into the right loan.
Call The Home Loan Expert Team in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515, Nashville at (615) 810-8555 or Birmingham, AL at (205)721-7656. You can always apply online at hero.loan for your VA Loan, and www.thehomeloanexpert.com for your other mortgage needs, and we’re also open on Saturdays and will come to you to help close your loan. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?