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Should I Refinance My Mortgage?: Top 5 Reasons To Refinance

Compare Closing LLC
Should I Refinance My Mortgage?: Top 5 Reasons To Refinance

Should I Refinance or Not

Buying a home is one of the biggest and most important financial decisions you will make in your life and it involves a mortgage which is a wonderful tool to help you reach your future home goals.

Why should I refinance my mortgage?

By refinancing you can change the terms of your mortgage and secure a lower monthly payment, you can also switch your loan terms, consolidate debt, or even take some cash from your home’s equity to put toward your pending bills or get a renovation done.

1. When you want to change your loan term

There are various reasons why you as a homeowner might want to change your loan term. You may be switching to a longer or shorter term.

Longer mortgage term

If you having trouble making your monthly mortgage payments, or are not satisfied with your current payment amount then a refinance can allow you to lower your monthly payments by lengthening the term of your mortgage.

Shorter mortgage term

Similarly, you can also refinance your mortgage from a longer-term to a shorter term.

2. You need cash to pay off debts

You might have equity in your home because you’ve made payments on your mortgage.

Cash-out refinance for debt

By replacing your current loan with a higher-value loan and by taking out a portion of the equity you have, a cash-out refinance helps you to tap into the equity of your home.

3. When you want to improve your home or renovate it

For repair or for replacing some fixtures, you might need to invest in your home.

Cash-out refinance for renovations

The average 30-year mortgage rate is currently is less than 3.5% while the average credit card rate is more than 12%.

4. You want to have a better retirement saving

The principle of compounding interest is one of the most powerful tools when it comes to saving for retirement.

Cash-out refinance for investing

If you have not maxed out your annual retirement contribution limits and having equity in your home then you can make more money by taking a cash-out refinance and investing the difference.

5. When you are converting from ARM to a fixed-rate mortgage

Some homeowners may opt to refinance their ARM into a fixed-rate mortgage, so as to eliminate the fluctuation in interest rate.

Still, stuck with the decision of — should I refinance?

Evaluate your finances

When should I refinance?

Make sure to consider home values and interest rates in your area when you plan to refinance, and how long will it take to refinance.


A refinance could help you move closer to your financial and personal goals.

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