There are so many different reasons to refinance your home, but every reason has one main goal: to save you as much money as possible. There are so many different things that you could try to save that money: lower monthly payments, paying less in interest rates, or erasing high interest debts. But anyway, refinancing cna have both good and bad short term and long term effects on your personal finances. In this article, we are going to look into two good and bad reasons to refinance your home with that main goal in mind: saving you money.
Here are 2 good reasons you should refinance your home.
- Getting Rid of PMI
If you have a PMI, or also known as a private mortgage insurance, it is costing you tons of money every month. Once around 20 percent of the PMI is paid, you can cancel the loan and make it a normal kind of loan. One way to get rid of a PMI sooner is by refinancing your home. Another benefit of refinancing is getting a lower interest rate and that can be very helpful for keeping your funds in the bank. There are many ways to also reach that 20 percent mark to also help you in the long run. Overall, it is just dependent on what you do because you want to do what is best for you and your funds.
- Refinancing Out of an FHA Loan
If you have recently taken out a FHA loan, you have seen that paying mortgage insurance premiums for years on end, and sometimes until the end of the life of the loan. Since most people can not get out of paying these loans to the full for the full time, sometimes the only way to get rid of these kinds of loans is by refinancing it.
Here are 2 bad reasons to not refinance your home.
- To Improve Short Term Cash Flow
If you want to refinance just to have some quick cash on you, you might want to rethink your motives. Refinancing just to get some quick cash can be detrimental and hurtful to your total funds in the long run. The short term gratification of wanting the money for spending purposes can be deadly to your bank account. The circumstances in your life can also change dramatically, and when something life changing happens, you may need that money from refinancing. But if you spend the money from refinancing on shopping trips and spending excursions, you will not be able to use the money for life changing matters such as emergency surgery or home renovations.
- Refinancing With the Rest of the Herd
If everyone else is refinancing at the time because there are low interest rates, sometimes it is not the best idea to refinance with everyone else. It is important to make sure that you have the funds and criteria in order to properly refinance without issues. It is also important to make sure that you are doing what you need for yourself, and not what everyone else is doing.
If ever in need of professional help with refinancing, contact this Lancaster refinance company.