In last week’s The Real Estate Show, we talked about refinancing your property and why now is the best time to do so. You can check it out here.
In the last few years, we have seen property values go up quite a bit and rates go down to an all-time low. With that in mind, unlocking that equity out of your home by refinancing has never been easier. Did you know that more than half of all mortgage holders choose to renegotiate their mortgage before the end of the term in order to have access to that money without needing to sell? Making that decision can sometimes change their lives forever. Refinancing your mortgage for the right reasons can be one of the best decisions you have ever made if done properly.
Let’s explore some of the common reasons for refinancing:
Renovating your home: Get the funds needed to upgrade your home and benefit from an increase in your home value. Some also choose to repair long overdue issues that have been put aside due to financial reasons such as roof repair.
Purchasing another property: Why wait to save up your down payment? By refinancing, you can obtain the funds required to purchase a vacation home or an investment property and start building your real estate portfolio.
Debt consolidation: Paying off high-interest loans can be a huge relief on your monthly debt obligations. When refinancing and using the money to pay off debts, at such a low-interest rate, this improves your monthly cash flow dramatically.
Investing in other vehicles: Want to invest in the stock market, in your business, or in another investment? By getting equity out of your home, you can now use that money to invest into something other than real estate and grow your investments faster.
Obtaining a lower rate: With mortgage rates at an all-time low, renegotiating in order to obtain a lower rate can help with your monthly cash flow by lowering your mortgage payments.
Building a cash cushion: Worried about what the future holds? Refinance and save the money for a rainy day. A cash cushion can help you sleep at night knowing you have something to fall back on in case of emergency.
Helping a family member buy real estate: Saving up a downpayment can be a long and arduous process. Many parents and grandparents are choosing to help their children or grandchildren reach the goal of homeownership faster by refinancing their property in order to obtain the downpayment required.
Improving your monthly cash flow: Sometimes refinancing is about paying off balances of loans that chew up on your monthly cash flow the most. A cash flow restructuring can save thousands per month by using the equity from a refinance to eliminate high payments off your monthly expenses.
Let’s talk about the elephant in the room. Are you worried about paying a penalty to break your current mortgage term? The job of a mortgage broker is to calculate the pros and cons of refinancing and analyzing the cost versus benefit of such a decision. Many times, the benefits outweigh the costs, and the outcome of the refinance outweighs delaying your plans any further.
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