Reasons to Refinance

NJ Lenders Corp.

Here are some great reasons why you might refinance your mortgage! Lower your mortgage rate and

As our life circumstances change, so do our financial needs. Refinancing is a great way to change the terms of your loan to better support your financial goals. Here are the most common reasons to refinance:

 

Lower your mortgage rate and payment. One of the most common reasons that homeowners refinance their mortgage is to lower their rate and payment*. If your current interest rate is higher than what is currently available in the market, it's a good idea to see how much you could potentially save by refinancing. There are no-cost and low-cost options that could save you money with little to no investment.

* Refinancing your existing loan may lead to higher total finance charges over the life of the loan.

Reduce your term.  Take advantage of low rates to reduce the term of your mortgage loan. Shorter terms mean lower rates, making this an advantageous reason to refinance.

Convert your adjustable rate into a fixed rate.  Adjustable rate mortgages (ARMs) are a great way to initially secure lower payments, especially if you are a first time buyer or if current interest rates are high. Eventually, however, if you decide to stay in your home for a longer period of time, you may want to consider refinancing to a fixed-rate loan. Refinancing for a fixed-rate loan will give you peace of mind, knowing that your rate and payment will remain steady for the life of the loan.

Convert your interest-only loan into a fully-amortized loan.  Interest-only mortgages can be a great way to lower payments initially; however, you are not paying the principal balance. If you plan to keep your home long-term, it’s important to address that principal balance. Refinancing an interest-only loan to a fixed-rate mortgage will help you to pay down the principal balance without any major payment increases.

Remove mortgage insurance.  If you purchased a home with less than 20% down, you're probably paying for private mortgage insurance (PMI). Refinancing will help you to eliminate the extra expense if you've paid down your balance and/or have seen an increase in your home's value to a point where you have at least 20% equity in, or a loan-to-value (LTV) of 80% or less.

Convert your 30 year loan to a shorter-term loan.  If you are planning to sell your home sooner than you originally anticipated, you might consider converting your 30-year fixed-rate loan to an ARM to potentially benefit from lower rate and payment options.

Take cash out to consolidate your debt.  Leveraging your equity is one of the smartest ways you can make your money work for you. Use the cash from your home equity to pay off higher interest, non tax-deductible credit cards, student loans, or medical bills. By consolidating your debts, you have one payment each month and, in many cases, your overall monthly payment decreases.

Take cash out for home improvements.  Homeowners can use their equity to invest back into their homes with repairs and renovations. Whether you’re looking to fix a leaky roof or finally update your kitchen, you can tap into your home equity to tackle some home improvement projects (consult with your tax advisor).

Take cash out to purchase investment property.  If you've been considering buying a vacation home or an investment property, now may be a great time to take action on your mortgage loan. Tap into your home equity and use the cash for the down payment on your next real estate purchase.