There are many reasons why someone may want to refinance their home. First and foremost the best reason would be to reduce your monthly payment, but also to pay off your home in a shorter period of time. Being debt free should be your main goal.
Owning a home clear of any mortgage loans is the first step in preventing yourself from being homeless. Once your home is paid for, you should talk to a real estate attorney or an estate attorney about putting your home in a trust.
Many people have refinanced their homes in order to consolidate their total debt, as a debt consolidation plan to reduce their monthly payments. In short, most of these people just went right back out and charged up their credit cards again. And now actually have more debt than when they actually started.
For debt consolidation, we at The Solutions First Mortgage Team believe it is better to refinance your mortgage loan if you can reduce your monthly mortgage loan payment. Take the difference you are saving and apply it to one debt at a time until all are paid. Starting with the debt obligation with the highest interest rate. We call this an accelerated debt reduction plan.
Refinancing to change to a shorter term loan is another great way to accelerate your debt. In today’s market with lower interest rates, refinancing and retaining the same monthly payment by reducing the term from a 30 year fixed rate mortgage loan to a 20 year fixed rate mortgage loan or even a shorter term mortgage loan, could save you tens of thousands of dollars.
Refinancing for home improvements, having a home that is safe, clean, and functional is very important to your overall heath and well being. Refinancing your home for a roof, air conditioning and heating unit, and functional plumbing are good reasons for home improvement. Putting new curtains, new interior doors, brick pavers, and landscaping may improve the property’s value some, but may not be in the best interest of your total financial picture. Those items might best be paid for in cash after saving and planning well in advance.
Cash-Out Refinancing for Investing is something many people do to invest in other real estate or even in the stock market. This can be very tempting, as most often the math on paper looks good. There is no law against doing this but overall, economical factors could work against you, and the possibility of losing everything is very real as we have seen over the past several years.
Other reasons for refinancing, which we do not recommend, are for paying medical bills, paying for student loans or buying toys such as boats, motorcycles, and cars.
If you have any questions or would like further assistance please contact us directly and we will try our very best to help wherever possible.
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