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Good Reasons You Should Refinance Your Mortgage

Why should you refinance your mortgage? The most obvious reason is in order to obtain a lower mortgage rate, however there also a number of other reasons why doing so could be beneficial to your finances. Here are five good reasons why you should consider refinancing your mortgage.

Obtain a Lower Mortgage Rate

As previously stated, the number one reason to refinance your mortgage is to get a lower mortgage rate. Keeping an eye out on mortgage rates will allow you to know the best time to refinance your home. On top of this, you should also keep a look out for good deals on hybrid mortgages that offer a special deal as you could save a substantial amount of money by refinancing your mortgage using one of these.

Convert Your ARM

If you want stability when it comes to your mortgage then you may want to consider getting rid of your adjustable mortgage rate in order to get your hands on a fixed rate loan. This is especially the case if you are worried about inflation. Converting your mortgage from an adjustable to stable rate can give you peace of mind knowing that your mortgage will not become unaffordable overnight.

Get Needed Cash

If you are in need of some extra cash in order to pay an emergency debt or to simply go on a vacation then you can use your paid-down home in order to do so. People often forget that just because they've already paid off their first mortgage doesn't mean they can't obtain another one if they want to get their hands on some money. This also may be a savvy financial move if you have a large amount of credit card debt that you wish to pay off, as you may be subject to lower interest rates from refinancing your home then you would through your credit cards.

Purchase Another

Refinancing a home in order to purchase another property has become quite popular in recent times. These properties are often purchased as an investment. However if you are interested in this it is important to keep in mind that refinancing your home in order to buy another property can cause major tax issues as well and problems with your mortgage underwriting. Keep in mind that these issues depend substantially on how exactly you plan on using your new property as well as the property that you refinance. As an example, if your new property that your purchased is to be used as your primary residence then this can cause tax issues. In order to avoid this, it is a good idea to hire a tax professional who will be able to determine the best way to deal with this type of mortgage refinancing.

Consolidate Your Mortgages

If you have a mortgage and a home equity line of credit on your home then you may want to consider consolidating them by refinancing and combining them. Even if you have a home equity line of credit that is as low as three percent then it can still be beneficial to refinance your mortgage in order to get rid of it entirely. Although this behavior may seem strange as the interest rates on home equity loans are quite low right now, you must keep in mind that these interest rates are subject to change and you could easily be dealing with an interest rate as high as 13% in only a few years' time. If you don't want to risk your finances in the future then refinancing your mortgage can be the right option for you.