Are you thinking about refinancing your home? Here is some advice for an established CPA. It’s tough to meet your financial goals with traditional loan programs such as 30 or 15-year fixed-rate mortgages, 0-down options, lower costs, and adjustable rates. If you reduce your mortgage interest a little, you will end up saving a lot of money over the life of your loan. Here are some of the top reasons to refinance.
1. Reduce Your Monthly Payment
Are you planning to live in your house for a few years? Well, it makes a lot of sense to decrease your interest rate and overall mortgage payment by paying a point or two. Eventually, you will pay for the entire mortgage finance with the monthly savings.
If you are planning to move out in the near future, you may not live in your home long enough to recover the entire refinancing costs. You need to calculate the breakeven point before refinancing and decide on the best way forward.
2. Switch From An Adjustable Rate To A Fixed Rate
With an adjustable mortgage rate, you will enjoy lower initial monthly payments if you are willing to risk upward market adjustments. It’s an ideal option if you are not planning to own the property for more than a few years.
However, if it’s your permanent home, you can swap the adjustable-rate and opt for a 15, 20 or 30 years fixed mortgage rate. Here, the interest will be higher than the ARM option but there is the confidence of knowing the exact payment for each month for the rest of the loan.
3. Avoid Balloon Payment Programs
Like the ARMs, balloon programs are great for lowering rates and the initial monthly payments. However, if at the end of the fixed-rate term of 5 to 7 years you still own the property, the entire balance of the mortgage is due to the lender. If you are currently in a balloon program, you can switch to a fixed-rate or adjustable-rate mortgage effortlessly.
4. Remove Private Mortgage Insurance (PMI)
With the zero down payment or the lower options, you can purchase a home by putting less than 20% as a down payment. However, you need to apply for private mortgage insurance designed to protect the mortgage lender from any loan defaults. With the value of your home increases, the balance reduces. You can remove the PMI using a refinance loan.
5. Cash In On Your Home’s Equity
Your home is a great resource for any extra cash. Like many homes, your home has already increased in value giving you the ability to take some of the cash and use it for the best reasons. For instance, you can pay the credit card debts or go on a vacation. It’s easy to achieve this using a cash-out mortgage refinancing loan. Even better, you can enjoy the tax benefits because it’s tax-deductible.
Check out the mortgage refinancing options available to you and enjoy these and many more benefits.