If you’ve been looking for ways to lower your monthly expenses, you may have considered the option of refinancing your home. While there can be plenty of benefits of refinancing your mortgage, there are many factors to consider before you decide if it’s the right move for you. Whether your financial situation has improved or mortgage rates are lower, here’s what to know about refinancing your home.
What does refinancing your home mean?
Refinancing your home essentially means trading in your old mortgage for a new one. You’ll pay off your original mortgage loan by taking out a new one. The process of refinancing your mortgage works similarly to how you got the mortgage in the first place. You’ll shop around and compare interest rates to find a mortgage lender that has the best offer for you, comparing the terms of your existing mortgage to the one you want to replace it with.
Benefits of Refinancing Your Home
There are a few reasons in which you could benefit from refinancing your home:
- Lower interest rate and payment: If the market or your credit score has improved since you first got your mortgage, you may be able to save money with a lower monthly payment and/or lower interest rate.
- Cash out: You may be able to cash out a portion of your mortgage loan if you have a considerable amount of equity in your home. The portion you cash out can be used to pay bills or finance a large purchase.
- Change rate type: If you originally got an adjustable-rate loan, you can switch to a fixed-rate loan to avoid market fluctuations.
- Change loan term: If you shorten the term of your loan, you can typically qualify for a lower interest rate.
When You Should Refinance Your House
Refinancing your home is not something you should do out of nowhere, because while there are many benefits, there can also be many pitfalls. The common reasons people refinance their homes are either to switch the type of mortgage they have or to get a lower interest rate. If you want to take advantage of lower market interest rates, have improved your credit score, are looking to cash out a portion of your equity or want to reduce your monthly payment with a longer repayment term, then you should consider refinancing.
Save More Money by Re-Shopping Your Homeowners Insurance
An easy way to lower your monthly expenses is to reevaluate your homeowners insurance coverage. Carriers offer discounts for certain home improvements that you may have done since purchasing your home insurance policy. Many people also find that bundling multiple insurance policies with one carrier is an easy way to not only manage insurance payments but to also receive a home insurance discount. Working with SelectQuote makes it easy to do both: re-shop your home insurance and help you find out if you’re eligible for any policy-related home insurance discounts.
See How Much Money You Can Save with SelectQuote
There are a number of factors that could impact the cost of your home insurance, but at SelectQuote, we try to find the most affordable home insurance for you. We can compare coverage and rates from some of the most trusted insurance companies in just minutes. We’ll learn more about your home and your situation, ensuring you have a homeowners insurance policy that is right for you and your budget.