Twelve Reasons Homeowners Refinance their Homes
There are many reasons homeowners refinance their homes. The most common reasons for refinancing home loans are:
- Obtaining a lower interest rate
- Obtaining a lower monthly payment. This can sometimes be accomplished even if the interest rate on the new loan is higher.
- To consolidate debts. For example, paying off high interest rate credit cards, car loans, and installment loans may result in a far lower monthly payment and even a lower blended interest rate.
- To set aside funds as an emergency fund to protect against potential risks and liabilities.
- To create a fund for college tuition and related expenses.
- To utilize the funds for the down payment for an investment property.
- To remove a person from the existing loan.
- The provide funds to buy-out a co-owner such as a partner or spouse in connection with a divorce.
- To provide funds to assist an adult child to buy a home.
- To provide funds to upgrade the home or add square footage to the property.
- To remove mortgage insurance premiums.
- To convert from a variable rate loan to a fixed rate loan or a fixed rate loan to a variable rate loan.