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Should I Refinance?

Posted on October 3, 2014 by Ray Williams.

This is a good question and there are many variables to consider when deciding to refinance your home.  The most common reason to refinance is to lower your interest rate and right now the interest rates are stable and won’t be dropping like they did a year ago. So what are some other reasons you should consider refinancing?

  • Do you have kids that are college bound? -Federal student-loan rates are fixed and right now are around 7.5% and could potentially rise over the next few years between 8.25-10.5%, depending on the type of loan. If you have equity in your a home a cash out refinance could be a wiser move than taking out student loans.  You could potentially pay college tuition at a much lower, tax-deductible rate.
  • Removing your mortgage insurance– The majority of us were unable to put 20% down when we purchased and needed FHA financing.  If you purchased your home after June 3, 2013 then the mortgage insurance is for the life of the loan, so unless you refinance you will hold your mortgage insurance for the next 30 years.  Right now homes are appreciating and you could be in a great position to qualify for a conventional refinance, removing FHA mortgage insurance could lower your monthly mortgage payment.
  • Renovate/Rehab your home-Are there items you have been wanting to do to your home but just don’t have the funds and don’t want to take out credit cards or max out your credit cards? Well consider doing an rehab refinance and add the costs of your renovation into the loan.  There is the FHA 203k and also a Conventional rehab loan option.  This can add value to your home and also gets all the needed work you have been wanting to do.

Now everyone has a different situation and circumstance for wanting and/or needing to refinance, these are just a few options to consider.  If you are considering refinancing your home discuss it with your lender to see if refinancing is a good option for you.

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