With today’s low mortgage rates, refinancing activity is on the rise. Does it make sense for you to refinance your home loan? Here are a few reasons why you may want to consider it:
You want a fixed rate home loan. When you purchased your home, you took out an adjustable-rate mortgage. But you plan on staying in your home over the long term and want the predictability of a fixed-rate home loan.
You want to get rid of your monthly mortgage insurance payment. Generally, private mortgage insurance is required with a down payment of less than 20 percent. In some cases, though, if you have increased your home equity past the 20 percent mark, refinancing can help you get rid of your monthly mortgage insurance premium. It all depends on your home value as determined by an appraisal and your outstanding mortgage balance.
You want to tap your home’s equity. Depending on the amount of equity you have in your home, you may be able to ‘cash-out’ of some of your equity during the refinancing process.
You want to lower your monthly payment. If today’s mortgage rates are lower than when you purchased your home, you may want to refinance to lower your monthly payment. It’s estimated that there are millions of homeowners with higher-rate mortgages who could save money by refinancing.