Recent studies by the MBA (Mortgage Bankers Association of America) report that many American homeowners choose to refinance their home mortgages about every four years. By many standards, this is too high; you should know how to make the decision to do the same. Since there are some very good reasons to refinance your home mortgage, you should consider your options very carefully when deciding if a refinance is a good move for you.
If you need to pay for your kid’s to go to college, but you don’t have the money, you might find that it’s a good idea to refinance your home mortgage in order to get the money you need to pay for your child’s schooling. Often, when you can’t get any financial aid or other types of loans, this can be a last resort that will be a worthwhile option. You should know, though that if you choose to refinance to pay for you child to go to school, you will only be able to do so one time and then there won’t be any equity in your home for a while, so make sure to plan accordingly and consider the cost of schooling versus what kind of money you can get from your home when you’re considering a refinance for this reason.
Lower Home Loan Rates
If you need to get a lower interest rate on your home loan and lower your monthly payments so that you can afford to stay in your home and make the payments on time, then you should consider refinancing your home mortgage. Be careful when you’re refinancing for this reason and make sure to only finance how much you currently owe on your home loan to avoid having to pay on your home loan for a longer amount of time than you should be.
If you have been put in a situation where you find that you are making less money or struggling to make ends meet, then a refinance for a lower interest rate and monthly payment makes perfect sense. Choose a fixed rate loan with a good low payment that you can comfortably afford and you might be pleasantly surprised at how much more easily you will be able to make your ends meet and pay your bills on time.
Paying Off Debts
You might also need to pay off debts and are considering a home mortgage refinance for this reason. You should know that when you do this, you are tapping into the equity of your home to pay for your credit card or other debts. While this means that you have a lower interest rate overall, you will be paying on these other debts for the next 30 years or so. You are not effectively eliminating your debts, you are simply consolidating them.
Plus consider this, if you choose to refinance your home mortgage to consolidate your debts, you might find that you don’t have enough equity in your home to pay them all off. This means that not only have you refinanced your home and owe more on it than you did before, but you also haven’t completely paid off all those high interest credit card bills. When you are considering refinancing your home loan for this reason, you should think long and hard about it, because you might be better off to keep the equity in your home and get a second job to help you pay your bills.
Some people consider refinancing their home mortgages so that they can use their home’s equity to start up a business. This is one of the best ways to get your little plan up and running, but you need to be ready to work your fingers off. This can be a nerve wracking decision, because you will be carrying the risk and responsibility on your own, but once you start turning a profit, they are all yours. If you have an idea that you truly believe in and know that you can make it work, then you should definitely consider a home refinance for this purpose.
The choice to refinance your home mortgage isn’t always an easy one, but it can often be a good one. Consider your options and reasons for wanting to refinance and don’t hesitate to talk to some professionals when you are seeking guidance regarding your biggest investment. When you choose to refinance your home mortgage make sure to only do so if you’re certain that you will be benefiting in the long run.