A gourmet kitchen. Basement playroom for the kids. Bright sunroom. New windows. There are a lot of ways to improve your home and truly make it your castle. So it’s no wonder that the home improvement industry in America is booming with more than $300 billion in home improvement sales in 2014 and even more projected in the coming year.
If you’re thinking about having some work done on your home, consider getting some additional work on a part of your home that’s just as important – your mortgage.
It may not sound as exciting as a gourmet kitchen or a cozy mancave, but a “mortgage makeover” can offer you significant benefits, including:
- A lower rate. Mortgage rates may not be as low as they were a few years ago, but they still are very attractive. Refinancing your mortgage to a lower rate can lower your monthly payments and the amount of mortgage interest you pay over time.
- A shorter term. With rates still low, you may be able to lower the term of your mortgage from 30 years to 15 years without significantly increasing your monthly payments.
- Home improvement money. Many people refinance their mortgages and take cash out to pay for home improvements. This allows them to take advantage of potential tax benefits (consult your tax advisor).
- Debt or loan consolidation. Another good reason to refinance is to consolidate debt. A common example is refinancing to combine a home equity loan or line (second mortgage) with a first mortgage.
- Conversion to a fixed-rate mortgage. If you have an adjustable-rate mortgage, you may want to consider refinancing to a fixed-rate mortgage, which will provide the peace of mind of fixed monthly payments over the life of the loan.
Make your refinance move wisely.
Keep in mind that refinancing doesn’t make sense for everyone. Before you make your decision, you’ll need to hammer out a number of factors – interest rates, your credit situation, the amount of equity you have in your home, and how long you plan to stay in the home, etc. Before you proceed, it’s important to talk to a lender who will review your unique situation and recommend the option that’s best for you. After all, a makeover is supposed to make you feel your best. And nothing feels better than knowing you made a smart move.
Vince Liuzzi serves as Executive Vice President and Chief Banking Officer at DNB First.