Why Refinancing Your Home Now Could Save You Big Bucks Later!
Whether you have a Utah home or live out of state, there are many reasons to refinance your home! There are many reasons why refinancing your home is a wise move that will save you a ton of money down the road. Here are some of the many ways refinancing can save you money:
Reduce Your Mortgage Payments – You can take advantage of lower interest rates if you refinance your mortgage. By recalculating your home loan at a lower rate, your monthly mortgage payment will shrink and you will save money over time.
Deal With Your Debt Head-on – You can actually eliminate debt by refinancing in a couple different ways. The first way goes hand in hand with our first option. With lower interest rates, you free up your cash flow and can start attacking high interest debt like credit cards or medical bills. Or you can refinance your home and take the money to pay off creditors, therefore reducing debt and saving money in the long run.
Draw Equity Out Of Your Home – You can use your home equity towards your advantage. Perhaps you want to tap into it for home improvement (which raises the value of your home) or use it to pay down looming balloon payments or tuition bills, or start a business. Just make sure to be wise how you spend that money. Don’t spend it frivolously, invest it in yourself and multiple your money.
Escape! - Perhaps you took the best offer at the time when you bought your home but now, years later, it is just not working out. If you don’t like your mortgage plan or the mortgage company, you can get out of the relationship by refinancing. This not only allows you to lower your payments but also will save you stress.
Switch Up The Type Of Mortgage You Have - If you have an ARM (adjustable rate mortgage) consider switching to a fixed mortgage. Give yourself some stability and save some money by avoiding unexpected spikes in interest rates.
Consolidate Your First and Second Mortgage
Two Things to Know Before Refinancing
2% Rule of Thumb - Traditional real estate wisdom states that for the refinance to be worth it, your new interest rate should be at least 2% lower than the one you currently have. While there is truth in that – a lower interest rate is a good thing – it is a bit misleading. Waiting for a 2% drop in interest rate before you refinance can end up costing you money. Remember, ARMS are priced at below market rates, and for some people even 0.5-1% of difference can make a big difference.
Timing is Everything - The only way to know if refinancing is for you right now is to analyze the time and cost factors. Take a look at how long you’ve been holding your mortgage and consider how long you want to be in your home. Use these to determine how much money refinancing can save you.
We’re not trying to say the market is fantastic – we all know it isn’t. The timing for a refinance of your mortgage right now is unique. By refinancing you can lower your monthly payment, reduce the amount of interest you pay, and in some cases, you may even find that you gain equity and shorten the life of your loan. Especially if you are in an uncomfortable situation with an ARM or a mortgage with a balloon payment, refinancing could put you into a mortgage with much better terms, interest rate and monthly payments.
There isn’t anyone who can’t afford to save money and get a better deal. Possibly the best thing you can do for your bottom line is to refinance your home’s mortgage. Call your lender or other mortgage carriers today and see how refinancing your home can free up money to live your life a little better.
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