Learn More About Debt Consolidation
If you are looking for a way to reduce your monthly mortgage payment or are interested in having your mortgage paid off much earlier, refinancing may be a solution. Refinancing is simply obtaining a new mortgage with more favorable terms, while at the same time paying off your existing mortgage. There are numerous advantages to refinancing.
What Is Refinancing?
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Refinancing your mortgage is a strategy that helps homeowners meet their financial goals. Sometimes the homeowner is in search of a lower interest rate, and other times they might be interested in reducing the term of their mortgage loan.
Other reasons for refinancing might include consolidating higher interest rate credit card debt, repairing and or remodeling your home, or cash out for larger expenditures. When you refinance, your new lender will pay off your existing mortgage and replace it with a new mortgage. There are many reasons for refinancing your mortgage.
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How to Refinance
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If you are considering refinancing your home, the first step you should consider is calling a Lender that can help you answer all of the questions that you are not even sure about yet.
The Lender can help you sort out all of the details to determine if refinancing your home will be financially beneficial for you. The Lenders job is to create a proposal that makes financial sense. Best of all, there is no upfront cost for the Lenders services to create the proposal.
Cost to Refinance (Closing Costs)
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When you refinance, you are replacing your original mortgage loan with a new one which means you will have to pay closing costs again. However, most of the time, the Lender will have the ability to include the closing costs into the new mortgage which makes the process easier for you.
In most cases, the only fee the client needs to pay upfront during their refinance is the Appraisal Fee. This fee could typically range from between $450.00 - $550.00.
Benefits of Refinancing
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The number one reason that many people refinance is to get a lower interest rate on their mortgage. A lower interest rate translates to a lower monthly mortgage payment, which means you will pay less in interest during the life of the loan.
Saving money each month on your mortgage payment will free up extra cash in your bank account to apply towards your savings goals.
If you currently have a 30-year loan and can reduce your rate and possibly shorten your term, this means you’ll own your home free and clear that much sooner. Lower interest rates and shorter terms are most certainly the easiest pathway to building equity in your home faster.
Refinancing to a fixed-rate loan also makes sense if you currently have an adjustable rate mortgage or you want to consolidate a Home Equity Loan (HELOC) or a Second Mortgage into your primary mortgage. Adjustable rate loans can save you money in the short-term, but they can be dangerous if your payment suddenly shoots up due to a rate change.
The same is true if you’ve got a HELOC that’s approaching the end of its interest-only repayment period. Once you have to start repaying the principal, you could see your payments increase substantially which can put a major strain on your wallet. Refinancing to a fixed-rate loan helps you avoid any nasty surprises in both situations.
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Time to Consolidate High Interest Rate Credit Card Debt
That breath you are inhaling and exhaling when you dare think about the interest, you are paying on your credit card balances is not your imagination. It is your financial world that is about to cave in.
It is nearly impossible to make forward progress when you are up against rates of 18, 20, and sometimes even as high as 24%? So take a moment and look around. Now take a moment and look up. The roof over your head may provide the best solution to your overwhelming credit card debt. Your home may be able to rescue you from drowning.
Paying off your high-interest rate credit cards with equity from your home can save you hundreds of dollars per month and thousands of dollars over time and give you the money you need now for your Home Improvement Projects.
