If you haven’t heard yet, interest rates are at an all-time low. If you own a home, now is a great time to refinance.
Whether you want to save money (lower payment) or tap into your home’s equity, there are plenty of reasons to take advantage of refinancing right now.
Are you ready to learn if refinancing is right for you?
Interest rates are lower than we’ve seen them in decades. If you bought your home when rates were higher, you may benefit from refinancing.
How do you know?
Look at your current rate. Is it higher than rates now? You may benefit. Even if you only drop your rate 0.5% - 1%, you could save money.
For example, if you have a $200,000 loan at 4% and can refinance into a 3.5% rate, you could save $57 a month. It may not sound like much but over a year you’d save $$684 and over a 15-year term you’d save $10,260.
Everyone refinances for different reasons. As we illustrated above, refinancing to save money (lower your rate) makes sense, but there are other reasons too.
Change your loan term
You may need/want a shorter-term once you own your home. If your income increased or your debts decreased, you may have more money to pay toward your mortgage. If you qualify for a 15-year term versus a 30-year term, you could save thousands of dollars in interest and own your home in half the time.
Refinance out of an ARM loan
If you took an adjustable-rate loan when you bought the home because the rates were lower, you may want out now. With interest rates at all-time lows, it’s a great time to jump into a fixed-rate loan. The ARM loan can be unpredictable and even unaffordable when rates increase.
If you have high-interest credit card debt and equity in your home, you can use the equity to pay off the credit card debt. You’ll have just one monthly payment and a lower interest rate, saving you money on your high-interest debt.
If you want to make major home renovations, you can use your home’s equity to pay for it. Reinvesting in your home helps increase the home’s value, giving you a greater return on your investment.
Pay for a large purchase
Putting a large purchase on a credit card or taking out a personal loan can get expensive. The interest rates are much higher, making them harder to afford. Using your home’s equity to cover the cost of major expenses can save you money and leave you with only one monthly payment.
Every homeowner benefits in different ways from refinancing. The most common benefits are as follows.
You may save money
As we talked about above, if you can lower your interest rate or shorten your term, you may save money. Your savings may be monthly or over the loan’s term. Look at the big picture to see if refinancing will save you money.
You may qualify for better rates
If you had only average or poor credit when you bought your home, you may not have the best interest rates. With better credit and today’s low rates, you may qualify for better terms and save yourself more money.
You can use your home’s equity
If you’re staying in your home long-term, you may want to tap into the equity to put it to good use. Some people prefer taking it out and using it for things like large purchases or paying off credit card debt. Some people even use the equity to pay for their child’s college education or a wedding.
Refinancing isn’t for everyone. Before you refinance, look at the big picture. If any of the following apply, waiting to refinance may make sense.
You’ve had your loan for a long time
If you’ve already paid on your loan for many years, it may not make sense to ‘restart the clock.’ For example, if you have a 30-year term but you already paid on it for 20 years, you have 10 years left. If you refinance now, you’ll start the term over, which means you’d lose the 20 years you already paid on it.
You won’t be in the home long enough to break-even
Refinancing costs money, which is normal. But if you won’t be in the home long enough to pay back the closing costs and enjoy the savings, it may not make sense.
For example, if refinancing will cost you $4,000 and you’ll save $100 a month, it would take you 40 months to ‘pay back’ the closing costs and earn the savings. If you won’t live in the home for much more than 40 months or you’ll move before then, refinancing may not make sense.
Look at your big picture. Interest rates are low, but they won’t stay that way forever. If you haven’t taken advantage of today’s rates yet, now is the time.
If you’ll be in your home long-term, can lower your interest rate and/or shorten your term, or have equity to tap into, now is a great time to take advantage of today’s low rates.
If you’re ready to see how low-interest rates can save you money today, get a quote at www.quotelemon.com. With a little information and a few minutes, you’ll see which rates you qualify for and how much money you can save refinancing your mortgage today.
Refinancing right now can save you thousands of dollars over the loan’s term. Learn why you should consider refinancing today.