Capitalizing on Equity or Shifts in the Market With Refinancing
There are many reasons why homeowners elect to pursue refinancing their home loan or mortgage. Some are attempting to free up the equity they have built up over the years by making payments and/or through rising property values in their area.
Others may be attempting to better the terms of their existing mortgage by capitalizing on a reduction in interest rates that will allow them to either reduce their payment, or the term of their loan. And there are still many other reasons why homeowners opt for refinancing – here are the top 5 reasons why so many people are improving or changing the terms of their mortgage.
1 – Mortgage Refinancing for Remodeling Purposes
Is your family expanding or are you looking to finally add on that sunroom and outdoor living area that you’ve always wanted now that your kids are out of college? Regardless of the specifics of the project, many homeowners elect to pull equity out of their homes through refinancing to complete home improvement projects.
Most financial experts agree that if you’re hoping to increase the value of your home prior to resale in this way, you are most likely wasting at least the larger portion of your money and/or time. However, if you are looking to improve your quality of life for the years to come, it may be money well spent.
2 – Debt Consolidation
Some homeowners refinance their home loans to free up equity in order to pay down or to consolidate their consumer debts. Carrying too much consumer debt, at high and/or variable interest rates, is a problem that many Americans face.
However, most financial experts caution against refinancing for this purpose, as the majority of those who elect to refinance their mortgage for debt consolidation seem to find themselves maxed out on consumer debt again within a few years of refinancing. In the meantime, they may also have squandered the wealth they have accumulated in their home.
3 – Refinancing to Capturing a Better or Fixed Interest Rate
A much better reason to consider refinancing is to do so in an effort to capture either a better interest rate than what was available to you at the time you originally purchased the home, or to switch from a variable-rate mortgage to a fixed rate mortgage.
Financial experts agree that this is a legitimate reason to refinance, provided the savings justifies the costs associated with securing the new loan.
4 & 5 – Lowering Their Payment or Shortening the Term of the Loan
Another financially sound reason to seek refinancing of your mortgage is in pursuit of a lower monthly payment or a shorter term on the loan.
Many of us purchase a home only to have our financial situation improve steadily over the years. Pursuing a refinance that lowers your interest rate can also put a homeowner in a good position to either lower their payment, or to reduce the term of their loan.
Either options can make good sense, depending on the overall financial picture of the homeowner.
Good Reasons (& Not So Great Ones) to Refinance a Mortgage
For many Americans, purchasing property is a primary path toward building wealth. Depending on their individual financial circumstances, refinancing the mortgage on that property can make either sound financial sense, or less than sound financial sense.
If your mortgage business is in need of some added growth in the revenue department, it may be time to consider buying exclusive mortgage leads from a reputable agency like RGR Marketing. We’ve got the best leads in the industry and offer valuable customer service to ensure you get the most from your purchase.
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