If you have a mortgage on your real estate property, you should be keeping an eye on interest rates.  Rates have been down over the last few years.  This may provide you with a favorable opportunity to refinance your property if you haven’t done so already.

The decision to refinance may not be solely predicated on obtaining a lower interest rate, but can depend upon a variety of individual circumstances and needs such as:

  • Eliminate PMI Charges – Your original loan may have Private Mortgage Insurance (PMI) payments that you cannot get removed.  If you now have enough equity in your home, you may be able to refinance to avoid the PMI charges with a new loan.
  • Obtain a Lower Interest Rate – With interest rates at or near the lowest level in several years, refinancing could lead to lower payments.
  • Replace a Variable Loan with a Fixed Loan – If your current loan is a variable one, this may be your opportunity to switch to a fixed rate mortgage.
  • Consolidate Debt – Although individuals should exercise restraint in tapping the equity from their home, for those with burdensome consumer debt, refinancing may offer the opportunity to convert high interest rate, non-tax deductible consumer debt into deductible home mortgage debt at lower interest rates.
  • Combine Multiple Existing Mortgages – If you have multiple mortgages on your property, the interest rates on the second or third mortgages may be substantially higher than the prevailing interest rates. Refinancing and rolling all the debt into a new first mortgage at prevailing rates may make sense.
  • Finance a Child’s Education – Looking for ways to finance your children’s education? If you have sufficient equity in you home, it may make sense to refinance your home for the cash needed to finance their education. This is probably a better option than tapping taxable retirement funds or taxable assets.
  • Finance a Business Transaction – Using your home equity to finance the purchase of business assets will probably provide a lower interest rate than a business loan. However, financing business needs with a home loan often leads to tax complications, and you should consider the tax ramifications before proceeding.
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