When is it time to refinance your mortgage? Managing and handling debt not only puts a strain on you financially but can take a toll on your mental and physical health. Despite working multiple jobs and building up your savings, you may still struggle to pay off your growing debt. If you find yourself in this situation, it could be time to consider refinancing your mortgage to consolidate debt. Our experienced loan specialists at BrightPath can work with you to determine if this is the right option.
To figure out if refinancing your mortgage to consolidate debt is the best solution for you, it is important to know both what it means to refinance your mortgage and how it can benefit you.
Benefits to Refinancing Your Mortgage to Consolidate Debt
When you refinance your mortgage to consolidate debt, you get a new loan that replaces your existing one.
There can be many benefits to refinancing your mortgage to consolidate debt, including
- Lower monthly payments
- Lower interest rate
- Receiving home equity as cash
- Saving money on your total overall payment
Timing is very important when considering refinancing your mortgage, as the “wrong” timing could have adverse effects. Below are five signs that it may be time for you to refinance your mortgage to consolidate debt.
Your Existing Payments are Too High
One of the greatest benefits to refinancing your mortgage to consolidate debt is that it can provide immediate relief to your wallet by lowering your monthly expenses, especially if your existing payment is high. Make sure to review how the interest rates have fluctuated since you took out your loan. If they are currently lower than your original rate, you may be able to switch to a loan with a shorter duration while making lower payments.
Interest Rates Have Gone Down
When determining if refinancing your mortgage to consolidate debt is the right option for you, interest rates are key. If they have lowered from the time you took out your original loan, refinancing has the potential to save you thousands of dollars in interest payments over time. However, it is important to factor in the additional costs that can come from refinancing, including points and closing costs.
Your Credit Has Improved to Refinance Your Mortgage
Your current credit score is crucial when you are considering refinancing your mortgage to consolidate debt. If you have been able to improve your profile and credit score since taking out your original mortgage loan, you may qualify for a lower interest rate, which can significantly reduce your monthly payments and save you a lot of money over time.
You Want to Stop Paying PMI
Refinancing your mortgage to consolidate debt is an ideal option if you want to stop paying for PMI (private mortgage insurance). According to the Consumer Financial Protection Bureau, PMI is a type of mortgage insurance you may be required to pay if you take out a conventional loan. Similar to other kinds of mortgage insurance, PMI is structured to protect the lender if you stop making payments on your loan. If you put less than twenty percent down when you purchased your home, you are likely paying a monthly PMI.
As you determine if refinancing your mortgage to consolidate debt is a good solution for you, do some research to see if the equity in your home has risen or the property values of the houses surrounding you have increased. If so, then refinancing may be able to help you eliminate your PMI payments.
You Want to Tap into the Equity of Your Home
Home equity can play a very important role in determining if refinancing your mortgage to consolidate debt is the right solution. Having higher home equity can qualify you for a cash-out refinance, which provides you with money that can be used for other purposes including making home improvements or paying down other debts.
When You’re Ready to Refinance Your Mortgage to Consolidate Debt, Choose BrightPath
As outlined above, there are many reasons why you may want to consider refinancing your mortgage to consolidate debt. The mortgage loan officers at BrightPath can provide their expert knowledge and resources to help you find the right mortgage for your needs. Contact BrightPath today to begin on the path to a brighter future.