A Lower Interest Rate Is Not the Only Way to Save On a Mortgage Refinance
Historically low interest rates have been a dominant theme in every mortgage conversation since the summer of 2020. You’ve seen the news stories, social posts, and ads. The publicity has gotten the attention of many homeowners, but it’s not the full story. A lower interest rate isn’t the only reason to refinance. There are others that are often overlooked — ones that can also save you money. Let’s take a look at four reasons you may want to refinance, including some that are independent of getting a lower interest rate.
Get Cash at a Low Interest Rate
Home loans offer one of the lowest interest rates available. If you need cash and have equity in your home, it often makes sense to refinance your mortgage. When your home needs repairs or renovations, you might consider a personal loan or credit card, but they typically carry a high interest rate. A cash-out refinance can give you the money you need at a lower interest rate and with an extended repayment period.
Speaking of high interest, you can also use the cash from a refinance to immediately pay off credit card balances and consolidate your debt into one monthly mortgage payment.
• Finance home repairs and upgrades at a low interest rate.
• Use low-interest cash to pay off your high-interest debt.
Lower Your Monthly Payment
There are times when a lower monthly mortgage payment can make it easier to meet your monthly budget goals. If a few years have passed since you signed your last loan documents, it’s possible you can lower your monthly payment by refinancing to another 30-year mortgage. The extra money in your budget could be used for other things, including paying off high-interest debt, taking on a car payment, or saving for a large purchase.
• Decrease your monthly mortgage payment.
• Add more flexibility to your monthly budget.
Remove the Costly Expense of PMI
Private mortgage insurance (PMI) is an expense many homeowners look forward to eliminating. It’s a cost incurred by many when they don’t make a 20% down payment on their home. PMI can add hundreds of dollars to your monthly mortgage payment. Refinancing is a way of getting rid of it when your home value increases and your equity rises above 20%.
• Eliminate the expense of PMI.
• Reduce your mortgage payment.
Lock in a Fixed Rate and a Stable Payment
If you have an adjustable-rate mortgage, it may be a good time to refinance to a fixed-rate mortgage. When the interest rate on your mortgage is fixed, you don’t have to worry about a higher rate and a larger monthly payment down the road. Your decision to move to a fixed rate could depend on how close you are to a rate adjustment and how long you plan to stay in your home.
• Lock in a low rate for the life of your loan.
• Eliminate the chance of a higher mortgage payment in the future.
You’re missing out if you think the only reason to refinance your mortgage is to get a lower interest rate. There are other ways to save.
It’s true that securing a lower interest rate is a popular reason to refinance your existing mortgage, but there are a number of other reasons that can also save you money! A cash-out refinance at a low interest rate can allow you to pay for repairs or upgrades to your home or pay off high-interest debt. Refinancing to get a lower monthly payment can prevent you from taking on debt at a higher interest rate. When you’ve built up enough equity in your home, a refinance can also eliminate the costly expense of PMI. And with interest rates this low, you may want to switch to a fixed-rate mortgage to avoid higher monthly payments in the future.
If you’d like to learn more about refinancing your mortgage, visit https://www.axosbank.com/Personal/Mortgages/Refinance or speak with an experienced Axos Mortgage Consultant today by calling 888-546-2634.