For those who have a mortgage, at some point they think about replacing that loan with a new one by refinancing. Good loan officers constantly monitor their client’s existing loan to see if refinancing could work to someone’s benefit. And it’s not always because rates have fallen. Here are the top five benefits of a refinance.

Lower Monthly Payment- This is the most obvious and common reason to refinance, to lower a monthly payment and pay less interest over time. When rates fall a loan officer can compare your current monthly payment with current market rates and compare those savings to the closing costs involved to see if it might be time to refinance your mortgage.

Change a Loan Term- Mortgage lenders offer loan terms ranging from 10 to 30 years in five year increments. The most common term is for 30 years which provides the lowest monthly payment of the group yet the amount of interest paid over the life of the loan is much greater compared to a shorter term loan. The monthly payments on a shorter term loan are higher but the loan is paid down much faster.

From an ARM to a Fixed- Another benefit is changing from an adjustable rate mortgage and lock in today’s fixed rates. For those that intend to hold onto the mortgage will into the future it might make sense to get rid of the inherent uncertainty that accompanies an adjustable rate loan with the stability of a fixed.

Cash Out?- During the course of a refinance, borrowers can choose to pull out equity in the form of cash at the closing table. These funds can be used for any purpose from paying off credit cards, student loans or an automobile payment. Speak with a loan officer about the advantages of consolidating debt.

1st and 2nd- Do you have a first and second mortgage? Many borrowers put down less than 20% when buying a home yet keeping the first mortgage at 80% of the sales price means no mortgage insurance. A buyer can put down 10% and take out a second mortgage at 10% of the sales price and financing 90% of the sales price. However, the second lien will have a higher rate than the first. If property values have risen it might make sense to refinance the two loans into one lower rate.

For more information or questions about mortgage loans, 
Please visit Majestic Home Loan

Or Call  (855) 757-8748


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