10 Biggest Benefits of Refinancing
To define in the simplest of terms, refinancing means taking on a new loan to pay off a previous loan. Simple as it sounds though, it involves a lot of planning and plenty of thought before refinancing an existing loan, whether it is for a car, house, or any other debt. This involves shopping around for a good lender and finding which type of loan will be beneficial in the long run and if it will improve your finances.
So if refinancing can take a lot of work, why avail it? Refinancing has its advantages.
- Lower interest rates. This is probably the most common reason for refinancing. A lower interest rate means lower interest costs, so for a long-term loan, this spells out savings. Also, check the current market conditions if you will qualify for a lower interest rate refinance than your present loan. Look for a lender that can offer lower interest rates and can assist in checking the current market conditions.
- Shorter loan term. Refinancing can not only lower the current interest rate of your loan but also shorten the term. With a lower interest rate and a shorter loan term, this equates to savings because it can reduce a 20-year loan to 15 or 10 years. This is indeed a good deal and if you can find a lender that can offer this, take the opportunity for the refinance.
- Consolidate debt. This has its pros and cons, but unifying all current loans or debts into a single payment loan is, of course, a benefit. However, as mentioned, there is a negative side to this because this can lead to a cycle of debt once you have paid off one. If you are disciplined enough and know that you can control yourself not to get into huge debt again, then placing all debts under a single payment can indeed be beneficial to you.
- Switching to a different loan type. This is beneficial to those that have variable-rate loans, such as credit cards. Monthly payments change depending on the interest rate, so switching to a fixed-rate loan can help especially when credit card issuers do not give advance notice on increased rates and you are left in shock upon seeing your bill for the month and with higher payments when you choose to close your account.
- Tapping into equity. Using the equity for remodeling a home will benefit if it adds more value to the property and eventually can be sold at a higher price.
- Funds to pay off an overdue or almost due loan. Having the money at hand to pay for a loan that is almost due is, of course, a benefit in itself. Balloon payments are stressful when you do not have enough money, and refinancing helps you gain more time to come up with the money to pay for the new loan.
- Removing a co-signer in a loan. If there is a need to remove a person’s name from a loan, the only way to go about it is through refinancing. The person will no longer be held financially responsible for the new loan for any other reason.
- Consolidate a 1st and 2nd mortgage. With home values being at record levels, it gives many homeowners the ability to consolidate and pay of 2nd mortgages with a new loan with better terms.
- Canceling mortgage insurance. If the house has increased in value over the years, mortgage insurance can be eliminated from the payment. This is good for those who had a significant amount of work done into the home.
- Improve your credit score. Using the equity to pay off other debts can boost credit rating, so this will also result in better credit in the future as long as other loans and debts are paid on time.
Shopping around for a lender that offers good refinancing terms will take a lot of time but it will be well worth it. Nextgen Mortgage Inc is an expert in refinancing in Manchester, New Hampshire. With our experience in the industry, the company is ready to share its knowledge and advice to those needing refinancing. Their team of professionals is ready to provide you with options and specialized plans regarding refinancing in Manchester, New Hampshire.
With no application fees, rate lock fees, and upfront costs, it’s no wonder that Nextgen Mortgage Inc is one of the leading mortgage companies in New England. Their team is ready to assist you in your refinancing needs, from planning to completion, doing all the legwork needed on your behalf with the lender. Schedule a free appointment and get to know your options for refinancing in Manchester, New Hampshire.