What Are Some of the Benefits of Refinancing?
Refinancing allows you to seek new, preferable terms for your mortgage loan. In particular, you should consider refinancing as a way to lower your overall interest rate.
Refinancing can give you the opportunity to take advantage of decreases in overall market interest rates, especially if you are not currently on an adjustable-rate mortgage. If interest rates drop, you can refinance to decrease the term of the mortgage, pay back what you owe more quickly, and lower the overall cost of the mortgage over its lifetime.
If your credit score has improved since you took out your initial mortgage, you can refinance to take advantage of your improved score to get a new mortgage with more favorable terms, such as by converting an adjustable-rate mortgage to a fixed-rate mortgage, which is then fixed at a lower rate than your current mortgage.
Note that if your debt is still too high, or your credit score is still low, and especially if your credit score or LTV is even lower than when you initially took out your first mortgage, you may not be able to obtain improved interest rates and there may be no benefits to refinancing your loan.
- What Does It Mean to Refinance a Mortgage?
- How Does My Credit Score Affect Refinancing?
- Is Refinancing Available for FHA, VA, Jumbo, or USDA Loans?
- How Much Equity Do I Need to Have Before Refinancing?
- How Do I Refinance My Mortgage?
- How Do I Know If I Am Eligible to Refinance My Mortgage?
- When Should I Refinance My Mortgage?
- What Are the Disadvantages of Mortgage Refinancing through a Third-Party Mortgage Broker?
- Will Refinancing Lower My PMI?
- What Are the Costs and Fees of Refinancing?
- Should I Refinance If I Only Plan on Living in My Home for a Few More Years?