Refinancing home loans offer several attractive benefits for homeowners:
By refinancing to a lower interest rate, you'll pay less every month. Use your savings any way you'd like:
If you have an adjustable-rate mortgage, refinancing to a fixed rate mortgage has two advantages:
If your financial situation allows you to make larger monthly payments, you can refinance to a shorter term and pay off your home faster. For instance, if you're five years into a 30-year mortgage, refinancing to a 15-year mortgage will enable you to own your home outright 10 years "ahead of schedule."
If your home has appreciated significantly in value, you may be eligible for a loan against that increased value. This is known as "cash out" refinancing. It's an option some homeowners use to finance home improvements and additions that may boost their homes' resale values over the long term.
Cash out refinancing is also worth considering if you carry significant credit card debt. Using your proceeds to pay off those high-interest rate cards, you'll ultimately save money by paying off your debts at a much lower interest rate.
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