Life Changes: 3 Reasons You May Want to Refinance Your Mortgage

According to the Financial Reserve, some 10,615,971 residences hold mortgages. It’s a position envied by citizens throughout the world. Homeownership brings status, prestige, and comfort for those who can afford one.

 

American families can buy homes thanks to the mortgage mechanism. They can realize their dreams and build assets for the future. And, you can refinance the assets when the need arises — according to the mortgage contract terms.

 

But, life changes can change your mortgage situation, too!

 

Under the right circumstances, you can apply to refinance your home mortgage. Basically, refinancing refers to paying off your mortgage and replacing it with a new mortgage contract.

 

You refinance by using the equity you have paid into the current mortgage for other purposes Depending on state and federal banking rules, you might pay off other debts, apply for a lower interest rate when available, or alter the terms of the mortgage.

 

3 reasons you may want to refinance your mortgage:

 

Refinancing may or may not be in your interest, but life changes can prompt you to act:

 

1. Building your life: Apartment living is at a peak in most urban areas. Still, newlyweds long for a cottage with a white picket fence. They visualize the house as home to their children. They shop for houses according to bedroom count, square footage, and school system.

 

Wanting and needing a bigger and better home, these growing families commit to mortgage terms they may wish to revise at a later date. They may want to change to a lower interest rate or shorter term.

 

The mortgage allows people to buy houses with a financing device they can manipulate to some extent to their advantage. For example, they can tap into their equity to expand or renovate the house.

 

1. Downsizing: After making mortgage payments for years, you build up equity you can use once your nest is empty.

 

Refinancing opportunities may allow you to pay off the mortgage earlier than expected. You can rewrite the terms, for instance, to shorten a 30-year mortgage to 20. Or, you can use your equity to help your children find their own home or pay for their tuition. Even though they may not be home, adult children will appreciate your help.

 

1. Retiring: With a mortgage, you can retire with some peace of mind. If retirement significantly reduces your income, you could restructure any outstanding mortgage to reduce the monthly payment.

 

If your retirement circumstances threatens to push you out of your house, the mortgage equity can finance your way into more affordable housing. And, where permitted, you can use the equity to pay off other debts.

 

3 reasons you may want to refinance your mortgage — revisited

 

With home mortgage interest rates low but rising slowly, it’s a good time to refinance. Writing for Time, Josh Garskof said, “if you’re a homeowner with good credit and a solid income, now might be an opportune time to refinance.”

 

There are fees attached to refinancing, and you should shop and research your options. Still, these tips for refinancing your mortgage should help you see the potential in using your

mortgage equity to support you when your life changes.

 

Many life changes threaten your lifestyle. Disability can cost you your job. Problems incurred by your children or grandchildren can drain your nest egg. The loss of a spouse or a new marriage will change your financial needs. All such events, as well as marrying, downsizing, or retiring, may drive you to check on your mortgage for its equity potential.