You’ve probably seen the headlines: mortgage rates are low — really, really low. They’re actually at their lowest point in nearly three years, meaning homebuyers can now save big on both their monthly payment and their long-term interest.
What if you already own a home, though?
Fortunately, that doesn’t preclude you from saving big, too. By refinancing your current mortgage loan, there are a number of ways you can take advantage of today’s low interest rates and save significantly in the long run.
Want to leverage today’s low rates and start saving now? Here are your options:
Option 1: Lower your mortgage’s interest rate (and monthly payment).
Your first option is a rate-and-term refinance. This allows you to essentially replace your existing loan with a new one — and get a new interest rate in the process. If the rate is lower than the one on your current mortgage, it means a lower monthly payment and less interest paid over the life of the loan.
Additionally, if you want to lower your costs even more, you can refinance into a longer-term loan (another 30-year term, for example). By doing this, you spread your new loan balance over a longer period of time, shrinking your monthly payments along with it.
Option 2: Roll your higher-interest debts into your mortgage loan.
If you’re dealing with a lot of credit card debt, personal loans or other high-interest debts, you can also use a refinance to save on these, too. The process is pretty simple: you take out a new mortgage loan for more than the balance on your current one, and receive the difference in a single, lump-sum cash payment. Then, you use that cash to pay off your high-interest card balances and debts.
This essentially “rolls” these other debts into your mortgage loan, allowing you to pay them off over time — and at a much lower interest rate. (Mortgages come with significantly lower rates than most financial products.)
Option 3: Use your home equity for low-cost cash.
If you’ve got a significant stake in your home (you’ve been paying off your loan a while or your home has increased in value), then you could use a cash-out refinance to tap your home equity. As in Option 2, this would give you a lump-sum cash payment you could put toward a new car, wedding costs, college tuition or even medical bills. Many homeowners use these loans to cover repairs and renovations around the house, too.
If these are costs you planned to finance using a credit card or higher-interest personal loan, using a refinance to cover them will save you significantly.
The Bottom Line
Whether you’re already a homeowner or you’re still sitting on the sidelines, today’s low mortgage rates can help you save. Want to learn more about your options? Reach out to a loan officer at Premier Nationwide Lending today.
Premier Nationwide Lending is an Equal Housing Opportunity lender. Sponsored by NTFN, Inc. 700 State Highway 121 Bypass, Suite 100, Lewisville, TX 75067 NTFN NMLS 75333.