So what is refinancing?
Refinancing is actually the closing out of a mortgage and then financing your home with a new loan. Before refinancing can be considered an investigation and comparison of available loan types needs to be carried out. Your mortgage broker can help, but a little home work of your own can pay huge dividends.
There are many reasons why homeowners decide to refinance their home. Refinancing your home and your home loan can be a lot of work. It can be as involved, confusing and as costly, as when you took out your first mortgage. With that said, refinancing can result in some significant savings, depending on your needs and circumstances.
The following are some of the most common reasons why people choose to refinance their homes.
1. Lower Payments. When interest rates fall below your current mortgage interest rates you may want to consider refinancing to lower your payments. Although there are costs involved, if you plan to stay in the home for a long time then the reduced monthly payments will likely offset the costs associated with the refinancing.
2. Converting Equity into Cash. Another reason why you may decide to refinance your home is to convert your equity into cash. The cash could be used to finance home improvements or for wealth creation.
3. To Consolidate debt. A common reason for refinancing is to pay off credit cards, auto loans, and other debts.
4. To Convert an Variable Rate Mortgage to a Fixed Rate mortgage. When interest rates are low, it might be a good time to convert an variable rate mortgage to a more stable fixed rate loan which will likely save the borrower money over time.
Deciding on whether to refinance your current mortgage will depend on many factors including the current interest rates, your reasons for refinancing, how long you plan to stay in the home, your current loan features, and your goals for mortgage refinancing.
The Home Loan Club (HLC) is an emerging online exchange that connects interested consumers to various professional mortgage services companies in its Australia wide network. Fill out the online form for a free no-obligation quote to see if Refinancing will help you.