Refinance had gained immense popularity in the recent times due to the continuous drop of mortgage interest rates. But is qualifying for low rates the only advantage of refinance? Not really. There are various other advantages or gains of mortgage refinance. Let's take a look:
Cash out equity: Refinancing your existing mortgage is one of the best ways to cash out the equity that you have in your property. Cashing out of equity will be helpful in paying off your medical bills, unsecured debts, tuition fees, etc.
Get rid of adjustable rate mortgage (ARM): If you have an ARM, then a refinance will help you in changing it to a fixed rate mortgage (FRM). Thus, you will be able to pay off your loan at a low interest rate throughout your loan term.
Get a rate and term cut: With the help of refinance, you will be able to get a rate cut as well as cut in the loan term if you want. You can keep the payment same so that you pay off the loan much faster than expected and own your property free and clear.
Combine two mortgages into one: If you have two separate mortgages and want to combine both of them into one, then you can refinance both the loans into one. However, in order to get a refinance you should have 20% equity in your property. Apart from this, you should also meet all the required criteria as asked by the lender.
So, if you're thinking about refinance, you now know what advantages you will be getting.