Do you want to refinance your mortgage so that you can save money each month thanks to lower interest rates?
Homebuyers have benefited from the fact that interest rates for mortgages have been low for a number of years now, and that means that they are definitely saving money when they purchase a new home.
But what about all of the people that already own a home? Can they take advantage of these low interest rates too? You bet. If you are currently locked into a mortgage and your interest rate is higher than today’s rate, you should consider refinancing your mortgage.
Do Not Include Other Debt
Quite often people think that refinancing your mortgage is a bad idea. They think that it means reworking your debt to include not only your mortgage debt but also credit card debt or other loans. People look at it as a way to consolidate their debt, and then pay it off via their mortgage.
And yes, that can be done, and if you have enough equity in your mortgage and a good income you will most likely qualify to do that.
But the downside of doing that is that once you are done, your monthly mortgage payments may end up being a lot higher, which means it will take a lot longer to pay off your home.
Only Refinance Your Mortgage
When refinancing your mortgage it is in your best interest to only include your mortgage debt.
Refinance your mortgage with a current lower interest rate and you will end up with lower monthly payments. Then you can take that extra cash that you are saving each month and apply it towards any other debt or put it into your savings account.
Another option, when refinancing your mortgage at a lower rate, is to leave your monthly payments the same as they are now. By doing that you will pay less interest each month and more of your payment will go towards the balance of your actual mortgage, which means you will pay it off quicker.
Does it Cost Money to Refinance?
There is one more thing to take into consideration when refinancing your mortgage and that is that many companies will charge you a fee. For example, if you are locked into a 5 year fixed mortgage at 6% interest and the current rate is 4.5%, the mortgage company will lose money if they simply refinance your mortgage at the new rate. So instead they will do a calculation based on the principal owing and the time remaining on your current mortgage, and this will equate to a onetime fee that you will need to pay to refinance.
As a homeowner you will need to figure out whether or not you will save money in the long run, by paying that fee and refinancing your mortgage at a better rate. Browse mortgages online through NPBS and play with the numbers to see if it is a good time for you to refinance your mortgage.