Why refinance your mortgage?
Everyone’s reason for refinancing is different. These are some of the most common reasons to refinance your home.
Mortgage insurance removal. If you purchased a home with less than 20% down, chances are you are paying PMI (private mortgage insurance). Refinancing your mortgage will help you eliminate the extra expense if you’ve paid down your loan balance and/or have seen an increase in your home’s value to a point where you have at least 20% equity in, or a loan-to-value (LTV) of 80% or less.
Lower your mortgage payment and interest rate. The most common reason that homeowners refinance their mortgage is for a lower interest rate and payment. If your current interest rate is higher than what is currently available, it is probably a good idea to see how much you could save by refinancing your mortgage. We have both low-cost and no-cost options* that could save you money with little to no investment.
Overall term reduction of your loan. Taking advantage of the low rates to reduce the term of your loan can result in more savings over the life of your loan.
Interest-only mortgage loan conversion into a fully-amortized loan. Interest-only mortgage loans, much like ARMs, are a great way to minimize payments in the beginning. However, since you are not paying any principal, your loan balance will not decrease. You probably want to start paying off your interest-only mortgage loan if you are planning to stay long-term. A 30 year fixed mortgage loan may allow you to refinance and keep the same payment.
Adjustable rate loan conversion into a fixed rate loan. First time home buyers and those looking for lower payments initially may find an adjustable rate mortgage (ARM) loan is a great way to ease into mortgage payments. However, you may want to consider refinancing that into a long term fixed rate loan if you are planning to stay for a long period of time. You will have peace of mind, knowing that your interest rate and payment will not change.
30 year loan conversion to a shorter-term loan. Life changes can occur suddenly. Sometimes the home you thought would be a forever home becomes a temporary one. If you will be in your home short term then you may consider changing your 30 year fixed to either an ARM or a 5/1, 7/1 or 10/1 loan program with both lower rates and payments.
Home improvement cash out. What better way to use your hard earned equity than to invest it back into your home? Whether you would like to update your kitchen, fix your leaky roof or add a pool, you can have a tax deductible** way to tackle your projects by tapping into your home equity.
Consolidate your debt. One of the smartest ways you can make your money work for you is to leverage your home equity. Using the cash to pay off higher interest, non-tax-deductible credit cards, student loans, or medical bills can really decrease your overall cash outflow.
An investment property purchase. With interest rates at the lowest they’ve been in years, now is the time to think about buying a vacation home or an investment property. By tapping into your home equity you can use the cash for your down payment to buy a house, or any reason at all.
* No closing costs options are NOT available in Washington.
**Consult your tax advisor regarding tax deductible status.