Refinancing a mortgage can deliver a lot of benefits and such a strategy should never be overlooked. Many homeowners with existing mortgages will always keep an eye out on interest rates and look for when to refinance to take advantage of these lower rates. 

The laws allow lenders to potentially strip equity. Our company had a philosophy to drive down the cost of a refinance either reduce, avoid or eliminate “hidden fees”. Your home’s equity is important and we take it seriously.

However, deciding to refinance a home needs to consider a lot more than just general lender rates, but other factors – all of which create a financial advantage and help meet one’s financial goals. Here are the reasons why one should refinance their home. 

1. Get a lower interest rate

The main reason for refinancing a home is to take advantage of a lower interest rate than what one signed up for on their mortgage.

Of course, the most significant benefit to doing this is lower monthly payments, but a drawback could be extending the timeline of one’s mortgage if the new refinancing option can’t be taken at a shorter-term. Either way, be sure to do the math to ensure one’s getting a better deal.

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2. Reduce PMI

Personal Mortgage Insurance is a requirement when taking out any mortgages, especially if a down payment of less than 20% is placed on the loan. However, the PMI rate can be reduced through refinancing by opting for a lower rate and shorter term and in some cases even get rid of needing PMI.

PMI is a requirement when taking out a loan putting less than 20% down.

However, we have the ability to offer PMI discounts, improved terms, or in some cases the ability to eliminate it completely.

3. Cash-out

Reducing the interest rate on a mortgage via refinancing can also increase one’s liquid position and free up cash to be used for other resources such as home improvements or paying other bills. This is commonly carried out by refinancing for a larger mortgage than the current value and having a strong credit profile helps.

4. Protect investment

If one suspects a downturn, refinancing can allow one to cash out on the equity gained in a home before the market goes down. This cash can then be put to work elsewhere in investment products that are less volatile and guaranteed.

Just like a doctor can prescribe medicine that can hurt the patient, we know that many lenders prescribe home loans that ultimately hurt the equity of a home. We believe in a philosophy that puts the consumer first.

5. Apply a lump sum and lower monthly payments

If one suddenly access to more cash and would like to use it as a lump sum towards their mortgage, then this can be done through refinancing to allow for lower monthly payments moving forward or reducing the term of the mortgage. 

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6. Mortgage consolidation

Refinancing also allows one to consolidate multiple mortgages and would bring them all into one single loan. This is especially favorable if a lower interest rate can be taken advantage of. Alternatively, some of our partnerships and programs can possibly help you secure better terms on your existing 1st and 2nd mortgages.

7. Growing home equity

If the home one’s bought through the use of a mortgage has appreciated strongly, then this can be mean refinancing may allow one to free up some money and refinance at more favorable terms. Similarly, if one’s paying PMI right now, a refinancing of higher equity valued home that’s grown by 20% would be enough to get rid of needing monthly insurance payments moving forward. 

8. Better credit profile

A stronger credit profile could qualify one for far better favorable terms than when they had opened up the loan. This means refinancing can give you access to much more favorable rates than offered previously and save money down the road.\

Our team offers immediate feedback on credit profiles. We believe in delivering timely information to determine what can be done to boost your FICO score to immediately improve the terms of your loan program, and that saves you money off your mortgage payment.

9. Increase the loan term

Refinancing can also be used to extend the loan term for the mortgage. This may be used to bring down monthly payments and make the mortgage more affordable as one’s financial situation changes. 

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10. Shorten loan term

The reverse scenario can also be carried out to the above where refinancing can help shorten one’s loan term and increase monthly payments. This can help pay off a mortgage faster, and in some cases when paired with more favorable rates it can beat the loan terms previously used. 

11. Switch out the type of loan

Refinancing can also help adjust the type of loan being used. For example, an adjustable-rate mortgage can be swapped for a fixed-rate mortgage if one believes that rates will rise in the near future. 

The inverse can also be done where a fixed-rate mortgage can be swapped out for an adjustable-rate one to favor lower interest rates that are currently available to tap into less monthly payments. 

Within different fixed or adjustable mortgage products, refinancing can allow one to swap between these depending on the different loan terms and incentives available. 

12. Buy out partner

If the home and mortgage are co-signed by a partner or spouse, then refinancing can allow one to buy out the other if needed. 

Use Your Local Mortgage Broker

All of this is of course, very complex and requires a ton of analysis to find the best mortgage strategy through refinancing. One aspect to consider in such a case is whether to use a local mortgage broker or an institutional one such as a well-established bank. We believe in putting the consumer first. Our philosophy isn’t the law because simply put, the laws are very lenient, and retail banks continue to make choices to benefit shareholders, and this is at the expense of consumers.

We believe in the protection of your data and will never sell your personal information or what you have worked hard to build. Our team believes in taking ownership of the process so that we can all achieve the best possible outcome

For most refinancing strategies, we recommend a licensed mortgage broker as they are able to tap into the offers available from a wide variety of lenders. Moreover, these brokers commonly work one-on-one and are able to understand one’s needs and financial situation carefully. This allows them to find the appropriate refinancing option that’s best for one’s needs. 

Using a mortgage broker doesn’t disqualify one from tapping into institutional product offerings either and many of these brokers will be looking into loan options available from the big banks and lending firms. There is never a fee to use a mortgage broker and the broker only receives a commission from the lender that one has eventually decided to go with. 

Ready to refinance, see how Mares Mortgage can help!

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