Mortgage refinance, or refi as it’s commonly called, allows you to use your home as an investment by freeing up cash and lowering the amount of money you pay each month for your mortgage. Whether you’re trying to free up cash to make home improvements or pay off high-interest debt, or whether you want to lower your payment or shorten your loan term, mortgage refinance has many benefits to offer. Here are three of the biggest ones.
1) Getting cash out of your home
If you’re looking to save on interest or shorten your loan term, refinancing is a good way to do it. You can get cash out of your home by taking a second mortgage, line of credit or cash-out refinance. There are some tax implications and requirements with these, but they can be extremely useful if you need to free up some space in your budget.
2) Lowering Your Payment
One big benefit of refinancing is you may be able to lower your monthly payment. Lowering your payment means you’ll have more money left over at the end of each month to spend on your family, which can be a great thing. Of course, if lowering your payment means extending your loan term, you’ll end up paying even more in interest over time.
3) Shorten Your Loan Term
Reducing your loan term can reduce your monthly payments, though you will pay more in interest over time. If you want to lower your payment without a hit to your credit score, consider other options such as refinancing for a lower interest rate or refinancing for a shorter term and paying off more quickly.