Low-interest rates are the most common reason that homeowners choose to refinance their home loan, but there are several other beneficial reasons to consider a refi. All of these may not apply to your personal financial situation, but we bet at least one applies to you!
1. Your Borrower Profile Has Improved
Your financial health has a significant impact on the terms of your loan. As your credit score goes up, and you remove negative items from your credit history, you will very likely qualify for a better rate.
2. Switch To A Conventional Loan
Maybe your original mortgage program wasn’t ideal, but you agreed to it because your options to qualify were few. Now that you're in a better situation, you have more loan options to choose from. Low rates combined with no PMI makes a conventional home loan one of the most popular loan products in this situation.
3. Get Rid of PMI
If your Loan-To-Value ratio (LTV) has decreased, refinancing your loan could eliminate private mortgage insurance (PMI). The savings from getting rid of PMI, combined with a lower rate? Sounds like a win/win situation to us!
4. Get Cash
A cash-out refinance is the most convenient way to tap into your home equity. Use the money to pay for college, make home improvements, or pay off debt. Today's low rates make a cash-out refi a typically smarter choice than taking out a personal loan.
5. Reduce Your Loan Term
Changing your 30-year mortgage to a 15-year saves you money, thanks to the lower interest rate that you will pay over the shortened loan term. While this is a more aggressive way to pay off your mortgage, your eventual savings throughout the life of the loan could be in the thousands.
6. Lower Your LTV
Maybe you recently inherited some cash or received a larger-than-expected bonus, and are looking to reduce your mortgage balance. Instead of just applying that lump sum toward your current loan, consider refinancing into a shorter-term loan, and then use the lump sum. This way, your rate will be lowered, and your loan will be paid off more quickly.
Today’s market is perfect for taking advantage of a refinance option. Your Midwest Lending professional will be happy to sit down with you, provide you with an analysis, and ensure that you reap the savings this fall.