Many first-time buyers think mortgage companies exist for one reason: to help people buy a house. While home purchases account for most mortgage business, borrowers can actually accomplish many different things.
1. Lower your current mortgage payment
Are today’s interest rates lower than when you bought your home? Has your home value increased? A refinance loan takes advantage of these things by converting your current mortgage into a different structure. You can also consolidate debts from high-interest credit cards into one new loan with a lower interest rate!
2. Buy a house with no money down
There’s a misconception that you need to put 20% down to get a mortgage. That’s not true. Loan programs like the USDA program (for rural areas) and VA loans (for veterans and active service members) allow qualified borrowers to buy a home with no money down. And, the FHA loan allows first-time buyers to purchase with only 3.5% down.
MORE: Check 2019 FHA requirements and loan limits
3. Pay for college, start a business, and more
A cash-out refinance lets you turn the equity in your house into cash now. You can use that cash to pay off student debt, start a business, or a whole host of other options we see borrowers use their money for.