Homeowners have been using refinancing as a way to lower their overall home loan costs by putting cash towards their mortgage principal. Homeowners who use cash-in refinancing have been able to, in some cases, lock in a lower mortgage interest rate and put cash towards their mortgage principal at the same time, which allows them to lower their overall mortgage cost.
There have been some homeowners who have sought to refinance their home loan as a way to lower their monthly mortgage payments. With mortgage interest rates being at record lows over the past months there have been many who have been able to take advantage in this way, but homeowners who are more concerned with erasing their mortgage debt faster and paying less total costs have been able to use a variety of means, like cash-in refinancing to do so.
Also, some homeowners who have opted out of a cash-in option on their mortgage principal when they refinanced have simply chosen a shorter mortgage. Options like a 20-year and 15-year mortgage have been chosen by some homeowners who can take the costs that can come with these types of mortgages because they can save more money and get out of mortgage debt faster. Some homeowners, when refinancing to a shorter home loan term, have seen increases in their monthly mortgage payment but, again, homeowners see this as preferable since they can save much more overall.
While refinancing to a mortgage with a shorter term or using cash-in refinancing as a way to help reduce one’s mortgage principal and overall home loan debt have been helpful for some, advisers caution homeowners about pursuing this type of refinancing as it may not be in every homeowner’s best interest. Homeowners who have been successful and take advantage of these types of refinancing opportunities have typically been those who have a good credit score, equity in their home, and can afford the costs that come with refinancing without doing any harm to other areas of their financial life.