You can refinance your home, but it's not a decision for everyone to make. It's something you can talk to your real estate broker or lender about.
Refinances require a person to redo their home loan under a new rate and terms and thus reactivate a loan from scratch. However, if your home has gained a lot of equity over time or if you want to liquidate some of your real estate wealth, refinancing your home can be quite beneficial. Here are some things to think about if you want to refinance your home.
You want a better rate
Has your credit gone up in recent years? Are you wanting to take advantage of a better rate since the interest rates are lower than they were when you first bought your home? Refinances may be best for you if you can even lower your interest rate just a little bit. You can simply refinance for what you owe on your home currently or for what your home is worth so you can not only refinance and get a new and lower rate—you can get some money in your pocket as well.
You want a lower mortgage
In order to reduce your mortgage, you have to either pay more money towards the principal on your home, or you have to refinance your property so you can get a new interest rate and pay a lower amount monthly as a result. If you can get a few hundred dollars or more knocked off your mortgage every month by refinancing, it's worth looking into.
You want a name off the mortgage
If you are going through a divorce, buying out another party on a home, or need to take a deceased family member's name off the mortgage, then you need to speak to your lender about refinances. You should make sure your income and credit score alone are able to take over a mortgage, but it's worth it to you to have a home in your name. Remember, though, that simply taking over a mortgage doesn't make you a sole owner of a property. You have to make sure a quitclaim deed is done to remove another party's name as well.
You want to be added to a mortgage
Do you want to add another person to your mortgage or be added to a mortgage? The added income can lower interest rates and borrowing power, and refinances can be done in this case. It's best to speak to a lender to see if now is the right time to make this financial move.