Several things have been severely affected by the onset of the Covid-19 pandemic. Job losses, deaths of loved ones to the pandemic, poor health, and lots more have made the year tough for many families. Because of this, regular mortgage payments will undoubtedly be affected, as well. Therefore, If you have an existing mortgage, you may be considering refinancing it.
Refinancing a mortgage is the process of stopping a running or existing mortgage and starting a new one. It involves paying off the current mortgage with the new one. Mortgage refinancing may be just what you need in the face of dwindling income. If you are contemplating refinancing your mortgage, here are three reasons refinancing may give you a respite.
1. Access Your Home Equity
If you have been affected by the pandemic, you can consider refinancing your mortgage as a way to meet your renewal. Although you would be required to qualify before the new lender agrees to lend you, the equity in your home may be sufficient to grant you a new mortgage. Your home’s current value or equity can be used as collateral to get a new mortgage to pay off the existing one you are struggling to settle. There are many ways to go about this, but the Home Equity Line of Credit (HELOC) is certainly a good option. You can contact yr financial advisor for details.
2. Lower Your Rate
Another reason you may consider refinancing your mortgage is to reduce your rate. Look around for lenders and consider their rates; you would be surprised that there are lenders with lower rates than you are paying currently because rates are regularly adjusted. By refinancing your rate, you can save money over time on the interest you pay. Taking advantage of lower rates is another reason you can consider refinancing your mortgage.
3. Debt Consolidation
The mortgage is the value drawn on your home equity. The interest rate charged on a mortgage is usually lower than taking a bank loan or using a credit card. As a result, you can reduce your overall debt, including interest, when you refinance your mortgage.
Takeaway
Think about it. You need to plan for the next mortgage payment and interest. Mortgage refinancing may be the way out for you to make your finance stabilize in the coming year. However, contact your advisor for more clarifications and advice about refinancing your mortgage.
