If you’ve been watching the market, you know about rates dropping. At the time of this post in early March 2020, there hasn’t been a better time to refinance or lock in an interest rate for a home purchase in many years. We have clients refinancing into low 3% interest rates. We ourselves are refinancing into low 3% interest rates. There are loan programs that allow you to refinance without paying any closing costs up front. From a cash flow perspective, there is nothing holding you back! Below are a few reasons to consider refinancing.
Reasons to Refi!
- Reducing your interest rate – refinancing at the right time allows you to strategically reduce your interest from the time you purchased to where rates are currently. If rates have gone down, it’s a great time to consider a refinance.
- Reducing your PMI – PMI stands for private mortgage insurance. If you put down less than 20% when you purchased, you incur PMI every month. Depending on the size of the purchase, this can be a significant expense. If your property value has gone up or you have increased your equity by paying down your principal balance, consider refinancing. As your equity increases your PMI decreases, and once you reach 20%, you won’t have any PMI!
- Pulling cash out – Maybe you have a lot of equity in your home and you want to do some upgrades or buy a rental property. You might feel that equity could be generating income for you. Consider a cash out refinance where you pull some equity out of your home and do with it as you please.
- Consolidating debt – if you have high interest credit card debt, you might want to consider refinancing to consolidate your debt in to a better interest rate.