Have you applied for a mortgage a few months ago and are unable to pay the loan amount due to huge sudden expenses? If yes, you need not worry anymore!! Whether you seek the guidance of a financial advisor or get in touch with a financial institute, everyone will advise you to go for mortgage refinancing to ease your financial burdens. If you are wondering what mortgage refinancing is or is it a good time to refinance a mortgage, keep reading through to have an in-depth understanding.
Individuals who are unable to pay off the debts of existing loans or sets of loans choose to replace them with a new one. This is referred to as mortgage refinancing. There are multiple reasons or say benefits of going for mortgage refinancing, including:
However, considering the need of refinancing your mortgage, you must make wise financial decisions regarding the urgency of loan refinancing.
Let us discuss the lesser-known advantages of mortgage refinancing:
1. Altering The Term Of Loan
If you are facing difficulties in affording your monthly payments or paying them off on time, refinancing can help ease the burden. Increasing the loan term means you have to pay less monthly mortgages and take care of your other monthly expenses. However, you must note that a longer term of loan also implies that you have to pay more interest over time. On the other hand, shortening your loan term will instantly raise your monthly payments. This allows you to pay the loan amount in a shorter duration, saving on interest in the long run.
If you are confused about how your new term of the loan should look like you can readily use a house refinance calculator. After inputting the loan amount and interest rates into the calculator, it gives you an output stating the amount of monthly payments you will have to pay.
2. Lowering The Interest Rates
The COVID-19 pandemic has led to a significant rise in interest rates. Although they are no longer at rock bottom, they are relatively lower than seen before. This can be a good time to refinance your mortgage and ease the burden of an existing set of loans. Refinancing the mortgage also gives you an opportunity to get the new mortgage at low-interest rates, which can be beneficial in the long term. Furthermore, when the high-interest rates of multiple mortgages are clubbed together into a single one, individuals usually get benefitted from the single interest rates rather than paying them off individually.
If you find it challenging to pay your monthly EMIs, it is time for you to get in touch with a financial advisor. A certified financial advisor can guide you through the best refinancing options, and using the home mortgage refinance calculator, you can figure out what type of mortgage suits your financial needs!