There may be more benefits to refinancing than you think.
Even though mortgage interest rates have slowly risen, they are still at record lows. This means if you’ve debated on whether or not to refinance your mortgage, now is the time.
Refinancing your mortgage could save you a considerable amount of money and help improve your financial situation. Let’s look at how refinancing works and the benefits of refinancing your mortgage to a lower interest rate.
How Refinancing Works
Refinancing your mortgage is simply applying for a new loan through a financial institution and starting over. However, just because you’re starting over on your loan doesn’t mean you can’t refinance to a shorter term.
You may even be able to keep the same payment and shave some years off your mortgage. Another appealing aspect of refinancing is switching from an adjustable rate mortgage (ARM) to a fixed rate.
It’s also important to realize that there will be some costs associated with refinancing. Talk to a bank representative, such as the guys at Vertuity Mortgage, to figure out the costs of refinancing.
Lower Interest Rate
A couple points off of your interest rate can save you thousands of dollars over the lifetime of your mortgage.
To determine how much money you can save try using a refinance calculator.
As an example, if you currently have a $150,000 mortgage on a thirty year term at 8 percent interest you can save roughly $110,000 over the lifetime of your mortgage by switching to a 5 percent interest rate.
If you have any type of consumer debt such as credit card debt, car loans, or personal loans you can consolidate your debt into a low monthly payment by refinancing your mortgage.
For someone looking to change their financial situation and free themselves of consumer debt, consolidation can be very helpful. By consolidating your debt you’ll only be dealing with one creditor and one bill.
It is important however, that you are serious about improving your financial situation and refrain from racking up more consumer deb once you have consolidated.
Pay Off Your Mortgage Early
If you’ve been aggressively paying off your mortgage a refinance could be the key to becoming mortgage free even faster.
When you refinance to a lower interest rate you will save money in interest and can also refinance to a shorter term, pushing you to pay off your mortgage even earlier.
Check the Numbers
When you’re in the market to refinance play around with a calculator to see how much money you could potentially save. There are some instances where refinancing your mortgage may be hard, such as having a low credit score or owing more on your mortgage than the value of your house. If you aren’t in one of these positions then refinancing your mortgage now is a smart choice.
What are your thoughts on refinancing right now?