All-time-low interest rates have led more people than ever before to consider refinancing their mortgages. If you have a home loan, it is incredibly important to educate yourself about refinances, because they have the potential to save you so much money.
Why Do People Get Refinances?
There are many different ways in which a refinance could be beneficial to someone, but the vast majority of refinances are started for one of three reasons:
- Lowering Interest Rate and Monthly Payment – The most common reason for refinancing is to take advantage of decreased interest rates. If you are paying a rate significantly higher than current rates for comparable loans, you may be one of many who could lower their monthly payments by refinancing their loan.
- Shorten the Term of Your Loan – There’s a good chance that if you have a mortgage, it is a 30-year loan. However, you can refinance your loan to pay it off sooner, which can save you quite a bit of money in interest.
- Cash-out Refinance – If you’ve built up equity, you may benefit from replacing your existing loan with a new loan for more than you owe, enabling you to use the difference to invest in other ventures.
Is a Refinance Right for Me?
Everyone’s financial situation is unique, so to determine how much you stand to gain from a refinance you need to determine in what categories you want to improve the most. If you’re uncertain, or you’d prefer to consult a professional, schedule time to speak with a loan officer.