In part 1, we covered the basics. In other words: we covered the normal reasons as to why you would refinance your home. Now, let’s jump into the tier two reasons.
6 Reasons to Refinance Your Home #4
Let’s pay this mortgage off:
In a previous post, we covered the ABC’s of the “cost” of your home. In many cases, with rates being where they are, it’s now time to get serious about owning your home free and clear. Making a simple change from 30 years to 15 years can save you tens of thousands, if not a hundred thousand plus!
6 Reasons to Refinance Your Home #5
I want to utilize my equity:
FACT, equity can be the ultimate savings account. For many homeowners, they don’t realize the access they have to the money they can use for major purchases or expenses. In addition, your equity in a first mortgage possibly is the cheapest money you will ever have access to.
Let’s dive into that:
If you have a major transaction coming up, such as college tuition, home healthcare, buying a second home, investment capital, wedding, or starting a business, people often consider other avenues for cash:
- Credit Cards
- Retirement money
- Cashing out life insurance
Now, not to go down a rabbit hole of losing interest and value. The fact of the matter is you may have a negative tax consequence and you are also losing a potential tax deduction. In future posts, we will break this down in more detail. But in many cases with the examples above, it is a lose-lose-lose situation.
The potential tax-deductible money in your home is the best way to acquire cash for major purchases. Equity is buying power!
6 Reasons to Refinance Your Home #6
I want to pay off debt.
On the surface, you may think this is a no-brainer: that as a homeowner you have the ability to consolidate your debt and pay it off through a refinance of your mortgage. In a recent survey done by Yahoo Finance, it showed only 22% of homeowners knew they could pay off their car, credit card, student loans, installment loans, personal loans, and more by refinancing their home.
Your home is a financial tool. A refinance of your home can be utilized to achieve a number of financial goals. These are only 6 examples of these goals; there are many, many more. That is why the focus should not be on a rate, product, or service. The focus should be on: what will my home refinance achieve? Once you can answer that, the goal is accomplished.