Home : home and needs : reasons to choose mortgage refinancing : 6 Reasons To Refinance A Mortgage
6 reasons to refinance a mortgage

6 reasons to refinance a mortgage

Many homeowners consider mortgage refinancing a viable option to save money.  However, whether refinancing a home is a good idea  or not  generally depends on several factors.  These include the current interest rates, the  period of time  a homeowner plans to live in that house, and how long it will take to recover the closing costs. Considering these and understanding the different factors of this financing option can help one make an informed decision.

What is mortgage refinancing?
Generally, refinancing is  a process where  a homeowner replaces a preexisting mortgage with a new one. With refinancing, the new loan term comes along with a new interest rate and a new lender in most cases.

Refinancing is a useful option to lower the interest rate, change the loan type, shorten the loan term of the current mortgage, or reduce the monthly payments. Another reason  why  a homeowner might opt for refinancing is to cash out a percentage of the home equity to pay for renovations and repairs.  However,  not everyone is  eligible for refinancing.  To qualify, a homeowner  needs to   have a good credit score and a reliable credit history,  enough equity in the home, and manageable debt obligations.

Reasons to choose mortgage refinancing

To lower monthly payments
When interest rates decrease after homeowners get their original mortgages, refinancing into a loan with a lower rate might be a good idea.  This  can help reduce monthly payments and the overall amount paid over the life of the loan.

However, if a homeowner expects a decrease in their income, they may want to extend the loan term  so that they can  pay off the loan gradually by making smaller monthly payments.  In such cases, one will have to be prepared to pay interest for  a  longer  period of time .

Credit score has improved  significantly
If one’s credit score has improved significantly, it is a good idea to apply for refinancing that offers better interest rates. For instance, depending on the terms of the original mortgage, even a 20-point increase in the credit score can bring down the rates low enough to save thousands of dollars.  This  is why frequently monitoring the credit score is always recommended, especially if one has been trying to improve it. One can easily boost one’s credit score by making timely payments to consumer bills and reducing overall credit utilization. Paying off all pending debts can also help improve credit scores. 

The end of the fixed period on  adjustable-rate  mortgage
Adjustable-rate mortgages, or ARMs, are  generally  useful for saving money on monthly mortgage payments during the early years of owning the home.  This  is because the rates are lower at the beginning for a fixed  period of time .  However, the interest rate might increase  slightly  once the fixed period is over.  A homeowner can avoid paying this extra rate by refinancing the ARM with a fixed-rate mortgage.  It is important to note that the  fixed rate of the new mortgage might be a bit higher than the original adjustable rate.  Nevertheless, the fixed rate will be more beneficial because it offers protection from further increases in the rate that may occur in the future.

Switching to a shorter loan term
Sometimes, refinancing  a loan by changing its term can be beneficial.   This   is particularly applicable  to homeowners who can afford a higher monthly payment plan. For instance, if there has been an increase in income, one can refinance into a loan with a shorter term, like switching from a 30-year fixed-rate mortgage to a 15-year mortgage. This way, one can pay off the loan faster and save thousands of dollars in interest payments for the rest of the loan term.

Opting for cash-out refinancing
Cash-out refinancing allows  a homeowner  to borrow and use the equity they have built on their home.  Generally, this cash is reinvested back into the house for repairs, remodeling, or renovations, which can increase the  overall value of the house .  Besides this, cash-out refinancing can be helpful in  emergency situations  where extra funds are required to pay for medical bills or education loans. Also, note that cash-out refinances have higher interest rates due to the increased risks for lenders. Yet, it has been observed that the interest rate is still better than the current loan that a homeowner has, particularly when the interest rates have dropped, or the homeowner’s credit score has improved since they first obtained their original mortgage.

The debt has to be  consolidated
Refinance is also a good option  to consider  when one has several other high-interest loans and debts to pay.  This  includes student loans, credit card debt, and a second mortgage. In this situation, one can opt for a debt consolidation refinance, which works similarly to a cash-out refinance.  A portion of the home equity is liquidated into cash, which can be used by the homeowner to pay off other debts and loans.   To do this , the current mortgage  has to  be replaced by a new one that includes the total amount of money  that was  taken out to repay the debts.

Top Reads

Top Tags

Popular Reads

11 management options to keep anxiety at bay
Health

11 management options to keep anxiety at bay

People with anxiety disorders regularly and excessively experience fear and panic in everyday situations. If unchecked, anxiety can impair normal functioning and degrade the quality of life. One must consult a health expert if anxiety is affecting their social life. But first, ensure that any physical health issues are ruled out before consulting them. Most individuals with anxiety disorders need medication or therapy, but coping strategies and lifestyle decisions can also be helpful. Stop and take a breath When you experience an anxiety episode, take a moment to think about what is making you feel uneasy. Usual anxiety symptoms include concerns about a recent or distant event. For example, you can worry that something wrong will happen to you in the future. Or, you can still be upset about something that has already happened in the past. But, whatever your concerns, most anxiety issues stem from not focusing on the present. The next time you feel nervous and get distracted from the present moment, sit down and take some deep breaths to reclaim your composure. You can regain balance and return to the present moment by pausing and taking a few deep breaths. If you have the time, consider advancing this practice by experimenting with breathing techniques.
Read More

Breast cancer – Causes, types, and management

Cancer that originates in the breast tissue is called breast cancer. It is the second most common cancer among women in the country. The condition is seen in women more than men. Fortunately, advancements in screening and breast cancer treatment have enabled dramatic improvements in survival rates over the years. The symptoms include changes in the texture and shape of the nipples, discharge from the nipples, and a lump in the breast.  Read on to learn the causes, types, and management options of breast cancer.  Causes of breast cancer Breast cancer occurs when abnormal breast cells divide and multiply more rapidly than healthy cells. These abnormal cells accumulate to form a lump or mass. Doctors have not been able to know the exact cause of breast cancer. However, multiple factors can trigger the chances of developing the disease, and they include: Family history and genetics The risk increases if you have parents or close relatives who have been diagnosed with breast cancer. Having gene mutations such as BRCA1 and BRCA2, which are passed down from parents to children, also increases the risk. Age The risk of breast cancer increases with advancing age.  Gender The risk of developing breast cancer is higher in women than in men.   Personal history of breast conditions The risk increases when an earlier biopsy has indicated atypical hyperplasia of the breast or lobular carcinoma in situ or if cancer has been detected in one breast.
Health

10 best laundry detergents and their features

Detergents are available in multiple forms, such as pods, powder, and liquids, and choosing the best one can be tough. In addition to daily wear clothing and regular laundry items, you could have some garments that require specialized products for effective cleaning. Some members of your family might have sensitive skin and need mild chemical-free products. So here is a list of the best detergents that can make your laundry task hassle-free.  Gain Laundry Detergent Among the list of laundry detergents that are known for their fragrance is Gain Laundry Detergent. The liquid not only cleans your clothes but also gives them a delicate fragrance that can last for up to 6 weeks or until the garment is worn. This detergent can be used in all washing machines, including highly efficient ones. The detergent also has Oxi Boost, a combination of surfactants, enzymes, and pre-treaters that aid in eliminating stains and odors that could be two weeks old. Moreover, this product is available in multiple sizes to cater to the needs of every household. Persil ProClean Laundry Detergent Among the laundry detergents that excel in stain removal is Persil Proclean. This concentrated liquid offers deep cleaning and has stain-fighting enzymes.
Everything Else

Things to know about chronic kidney disease

Chronic kidney disease   occurs when there is a gradual failure of kidney function due to illnesses, genetics, etc. The kidneys’ main role is to filter waste matter and flush out excess bodily fluids, but advanced kidney failure causes fluids, electrolytes, and waste to build up in the body. Various factors must be understood to manage the condition, including the causes, symptoms, prevention tips, and more. Read on to learn more about chronic kidney disease. Causes of chronic kidney disease The main causes of chronic kidney disease are as follows: Diabetes When the body’s sugar levels are too high and become unmanageable, bodily organs stop functioning as normal. The first to be affected are the kidneys, leading to diabetes, which, in turn, affects the nerves, eyes, and heart.   High blood pressure This is when blood pressure against the walls of the blood vessels increases, and can lead to chronic kidney disease, heart attacks, and strokes. Hence, chronic kidney disease can also be caused by uncontrolled high blood pressure.   Genetics Chronic kidney disease can also be passed down through the genes. Therefore if someone in your close family has the condition, it is likely to be passed down to you.   Autoimmune disease Lupus nephritis is an autoimmune disease that causes swelling of the small blood vessels, which are responsible for flushing waste out of the kidneys.  Birth disorder Sometimes, certain malfunctions of the kidneys develop in the mother’s womb and can cause infections and kidney damage later on in the person’s life.   Other causes Kidney stones or tumors can cause kidney damage or failure if not treated in time.  Glomerulonephritis It is a group of diseases that can cause inflammation in the filtering segments of the kidneys.
Health

Have these 14 foods to manage macular degeneration

Macular degeneration is an eye condition that causes changes in the macula, leading to vision loss. Though there is no cure for this condition, following an eye-healthy meal plan is important in managing complications like vision loss. A nutritional regime for age-related macular degeneration should include healthy amounts of vitamins, minerals, and other nutrients. Some foods that contain eye-healthy vitamins that help manage symptoms of macular degeneration are listed below. Macular degeneration Age-related macular degeneration is a primary cause of vision loss among people aged 55 years and above. The condition refers to the deterioration of the central part of the retina called the macula. Symptoms include blurry vision, blind spots, difficulty recognizing faces, visual distortions, and more. Studies indicate that nearly 20 million people in the country live with some form of age-related macular degeneration. This condition occurs in two forms- the dry and the wet form. The dry type occurs when the macula gets thinner with age. This condition gradually progresses over the years. The dry form can advance into the wet type when abnormal blood vessels develop in the back of the eye and harm the macula. The wet type of AMD usually accelerates vision loss. Leafy green veggies Dark-green, leafy vegetables are rich in beta-carotene and carotenoids such as lutein and zeaxanthin.
Health