If you’ve been hit with the poor economy, you are probably looking for every possible way to budget and save money. If you haven’t already, consider mortgage refinancing. Refinancing loans on your home can help you finally get your head above water when it comes to dealing with your debt and making ends meet each month. The following are three ways that mortgage refinancing can help budgeting easier for you:
Lower Interest Rates Means Lower Monthly Payments and Less Total Cost
Now that the interest rates are at an all time low, you can benefit from them just as people who are buying homes for sale. Chances are, when you bought your home the interest rate was much higher than it is now. That means you are paying more money to your lender than you really need to be. A great way to find out how much money you could save by mortgage refinancing at a lower interest rate is by using a mortgage calculator like the one on RealEstate.com twice, once for the interest rate you have now and then again for the new one you would receive if you decided to refinance.
Not only does refinancing loans decrease your monthly mortgage payments but it also reduces the total cost of your home. If you pay a higher interest rate for entirety of your mortgage term, you will, of course, pay more than if you had a lower interest rate. This savings could go nicely towards something you have been wanting or a nice cushion in your savings account.
Pay Off Debt
Did you know if you refinance your mortgage that you can pay off your debt at the same time? It’s a form of debt consolidation. Basically, when you refinance, you take the amount that you still need to pay on your home and add in all other debt you have. For example, if you still owe $100,000 on your home and have $30,000 in debt, you would refinance $130,000. The benefit of this is that the interest rate you receive with a refinance right now is likely to be much lower than you would receive from a credit card company or other type of debtor.
Access Cash
Another benefit to mortgage refinance is that you can tap into your home equity to make repairs on your home or other use.
Contact your lender now to find out about mortgage refinancing!
Photo Courtesy of: ukeig on Flickr
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