This post was sponsored, and paid for, by LendingTree. All opinions are my own.
Today, many people are tightening budgets and searching for ways to save. They may drop their cable TV, cut back on grocery spending, and eat out less often to save a few bucks.
But those who are homeowners could be missing the bigger picture. There are other ways to save money that they may not have thought of, such as refinancing their home loan. Since interest rates are currently pretty low, now might be the right time to refinance your home loan and save money.
What it Means to Refinance
Refinancing your current home loan involves completely paying off the balance of your mortgage by getting a new mortgage. In essence, you are replacing one loan with another.
If you want to know whether or not you should refinance, LendingTree has free tools and information that may help you make your decision. For example, you can use their refinance calculator to determine whether or not refinancing your home loan will save you money.
Benefits of Refinancing
You might be wondering, why go through the process of refinancing if I’m still going to have a mortgage to pay at the end of it? The answer is that there are benefits to refinancing that outweigh the small hassle of doing it.
Lower Interest Rate
One of the reasons that now might be the time to refinance your home loan is that you may be able to secure a lower interest rate on your loan.
To make sure you get a lower rate, you need to know the rate on your current mortgage and then you need to compare your interest rate to the current rates of other lenders offering refinancing. LendingTree can help you compare rates for free. They assist you with comparing loan offers so you can choose the one that is best for you.
Lowering your interest rate can save you thousands of dollars over the life of your home loan. Instead of paying more interest, you may be able to pay your loan off faster, or use the extra money for other financial goals.
Smaller Monthly Payment
Smaller monthly payments are often the result of refinancing a home loan. Again, this profits you by putting more money in your pocket each month for bills, investments and other needs.
Refinancing your loan may enable you to pay off your home faster as well. If you continue to pay the higher loan payments that you are currently used to, you will see more money go toward the principal each month, which will help knock down your overall balance faster, lower the amount of interest you will pay overall and shorten the length of the loan.
You eliminate debt faster and save money. What could be better than that?
Shorter Loan Term
Another option to consider when refinancing your home loan is to ask for a shorter loan term. The lower interest rates we are currently experiencing can help you do that.
Leaving your mortgage payment at or near its current amount for the new loan lets you pay off your loan at a faster rate.
Fixed Interest Rate
It is sometimes possible to change your home loan from a variable rate of interest to a fixed rate of interest. One reason to do this is to make your payments the same each month.
Not all mortgage lenders offer fixed rate mortgages. To find out if yours does, contact them and see if you can refinance for a fixed rate loan.
Ability to Borrow Against Equity
The low interest rates we are currently experiencing mean that now is the time to refinance if you wish to borrow against your home’s equity. Interest rates may rise in the near future. So, if you don’t take advantage of refinancing now while rates are low, you could regret it later.
Homeownership isn’t cheap, which not only means sacrificing to own a home, but also to maintain one. If you’ve been putting off some updates and repairs, you can borrow against your current equity through refinancing and get them done.
As you can see, there are lots of reasons why refinancing your home now could be a smart move. If you haven’t considered it, now might be the perfect time to reap the benefits.
Have you considered refinancing your home loan?