Mortgage Refinancing is a great option for homeowners instead of getting a new loan owing to the various benefits it offers. You can not only decrease the rate and term of interest but also do away with PMI and increase your equity.
Refinancing a mortgage is becoming a common and recommended choice for people who are looking for lowering their interest rate and term. The process involves paying off the loan on the first mortgage and replacing it with a new one. There are numerous reasons and benefits involved which motivates homeowners to refinance their mortgage.
Top Benefits Of Refinancing Mortgage
The top reasons why one should refinance their mortgage include the following aspects:
1. Lower Interest Rates
The primary reason for refinancing a mortgage is to get lower interest rates at the new one. Thus even if you save just about 1% on the interest rate, refinancing you’re mortgage is a good option for you. Also, you not only save money but also increase the rate of equity built in your home, thereby decreasing the size of monthly payment. However, this process of refinancing for decreasing the rate of interest is viable only for those who plan on living in the home for a long term as the cost of mortgage can be paid through the monthly savings gained. The people who plan to move soon would not be able to recover from the costs of mortgage refinance. You should thus consider this factor before refinancing.
2. Shorter Term Of Loan
Along with lower rate of interest, the term of the loan also decreases as the homeowners now get the prospect of replacing the previous loan with one that has a shorter term. Although there is not much change in the monthly payment, the term of the loan can be decreased, making it convenient to repay.
3. Removal Of Private Mortgage Insurance (PMI)
While private mortgage insurance was involved while purchasing a home in order to protect the lenders from borrowers with a loan default risk, borrowers can now do away with their PMI by refinancing their loan and decreasing the balance on home and increasing the value of home. Though, the lender will take the decision of when the PMI can be removed.
Recommended Company For Mortgage Refinancing
While there are various companies that can refinance mortgage in San Diego, Western Capital Mortgage Inc is a recommended option. By working with numerous lenders in the industry, the company helps one obtain the best loan possible at the most competitive rates, thereby making them one of the best mortgage companies in San Diego.