Mortgage refinance is becoming a popular financial remedy, especially for those who are burdened by large monthly installments or multiple debts. Mortgage refinance can prove beneficial in several ways:
Helps Obtain a Lower Fixed Rate
The interest on a fixed rate mortgage that you took several years ago may have dropped drastically. Refinancing the existing mortgage will entitle you to avail of the reduced interest rate.
Convert an Adjustable Rate Mortgage Into a Fixed Rate Mortgage
The interest rates on an adjustable rate mortgage (ARM) might be low initially, but the fluctuations are unpredictable. Many find these constant variations in the interest rate taxing and prefer to refinance the mortgage into a secure, fixed rate one.
Consolidating Multiple Mortgages Into One
Paying the installments of two or more mortgages at the same time can be quite a burden for most individuals. The best solution in this case is to consolidate the multiple mortgages into one, with a fixed monthly interest rate and a longer repayment duration.
Pay Off Other Debts
The proceeds from your refinanced mortgage can be used to pay off credit card bills and other similar expenses. Since mortgage interest is 100% tax deductible, you end up saving a considerable amount.
Make Cash Provisions for Emergency Situations
You can refinance your existing mortgage to free a larger amount of cash, depending on your home equity. Since a mortgage is a secured loan, the interest applied is considerably lower than that of an unsecured loan.