Are you falling behind in your monthly mortgage payments? Do you find that your monthly income does not allow you to make your mortgage payments on time? In these circumstances, you may opt for mortgage refinancing on your present home loan. Mortgage refinancing is the process of repaying your present loan with a new one with suitable terms and conditions and favorable interest rate, allowing you pay off your home loan within a specific time period.
4 Reasons why you may opt for mortgage refinancing
- Low interest rate - This can be said as one of the main reasons to choose mortgage refinancing. You may be paying high interest rate on your present mortgage loan. By opting for mortgage refinancing, you will be able to pay a lower interest rate on your present loan. You also need to keep in mind that with a good credit score, you will be able to get a low interest rate on your mortgage loan
- Reduce monthly payment amounts - If you find it difficult to make your monthly mortgage payments and you want to reduce it, it would be best if you opt for mortgage refinancing. With a reduced interest rate on your home loan, you will have a more manageable payment amount.
- Shorten loan term period - It is seen that most of the borrowers choose to refinance their home loan because they want to shorten the loan term period. Suppose you have taken out a home loan of 30 years but now you want to lower the term period to 15 years. In this situation, it is advisable that you discuss with your present mortgage lender, or approach other lenders, to refinance your mortgage loan. Shop around very carefully to get the best offer.
- Alter the type of loan you have taken out - You may have taken out an adjustable loan initially but now, you want to move to a fixed one. With an adjustable loan, you pay a low interest rate at the beginning, but the interest rate may rise or fall according to the market rate. For a fixed rate mortgage, the interest rate remains fixed throughout the loan repayment period and thus, your monthly payments will also remain fixed.