As the world gets back on its feet, the market is becoming more confident in entering large purchase transactions—properties included. Yet, while the public focuses on buying and selling activities, an often-overlooked opportunity evades their notice.
We Are Talking About Refinancing
Current mortgage rates are at historic lows. This means that if you haven’t assessed your mortgage terms in recent years, now’s the perfect time to take advantage of these rates. Here are six ways refinancing can help you save money.
Secure a Lower Interest Rate
With mortgage rates hitting historical lows, you’ll probably have a huge chance to secure a lower interest rate on your loan. This current market condition occurs once in a lifetime, and chances are, you were assessed with a higher interest rate when you took out that loan. So, even a half-point deduction on your current rate will translate to bigger savings in the long run—savings which you can pour back into the loan to pay it off earlier.
Switch From an Adjustable Rate to a Fixed Rate
As stated earlier, this market condition is a once-in-a-lifetime chance to get a better interest rate. If you took out a loan when the market conditions were super bullish, you’d rarely get a decent fixed-interest rate. This prompted a lot of us to pick adjustable-rate mortgages. While these have some wonderful benefits, the unpredictability of an adjustable-rate mortgage is almost certain. By switching to a fixed-rate mortgage, you’ll pay the same amount every month for the life of your loan. This predictability will help you better budget, and you’ll be able to more easily calculate your payoff amount.
Lower Your Monthly Payment
Refinancing can also help you make a good assessment of your current mortgage terms to see if there’s a chance to lower your interest rate. This will, in turn, help lower your monthly payables. You can also create a loan for the amount you still owe but lengthening the term to its original time frame. Again, this will help you to lower your monthly payment. You can then use the “savings” for your other household expenses or bills.
Cash In on Acquired Equity
If you’ve had your property for some time, that property may have already appreciated. Refinancing lets you take out the difference of your loan versus what your home is appraised for and put that money towards other expenses. For example, you can choose to use these extra funds for some much-needed home renovations or other expenses.
Speaking of acquired equity, you may also use this extra source of funds for a more specific purpose—debt consolidation. If you’ve been paying multiple creditors monthly, refinancing can help you pay these smaller loans off and consolidate them into one debt. That way, it’s easier to monitor and track. Refinancing is a great opportunity to reassess your finances and make some meaningful changes toward overall financial health.
Remove Private Mortgage Insurance
You are probably in a better financial position now than when you took out the loan. Since you’ve built up some equity, you probably will no longer be required to get private mortgage insurance. Refinancing will help you figure out if you still need mortgage insurance. You might even be able to refinance to a program that doesn’t require monthly insurance.
Overall, refinancing can open up a lot of great opportunities to help you with your finances. Refinancing can help free up cash, get better rates, and even help you pay off your loan sooner. Total Lending Concepts can help you assess your mortgage and find the best refinance option for you.