With all of the changes being made out there in the economic structure of the world there really hasn’t been a much better time to take a look at home loan rates and the possibility of refinancing your home. While it doesn’t seem like banks are really loaning money too much right now, some of that is starting to clear up to some degree and refinancing your home isn’t a difficult thing to do if you’ve still got some good standing of credit.
The exciting thing about it if you fit into this category is that you can reduce your monthly payments, by hundreds of dollars. Rates have been cut down to below 5% at many institutions if you’ve got good credit and these are locked in rates that you can get for the life of your loan. There are many other benefits to refinancing your home and with some strategic planning you can plan to pay it off much quicker.
Say for example that you’re able to cut your interest rate down from 8.5% down to 5.5% because you’ve been paying your current mortgage on time for several years. That would cut your mortgage payment down by over $200 per month on a $100,000 loan. If you were to take that $200 per month and keep paying that on your mortgage, you could slash the time it takes you to pay your mortgage off almost in half. A lot of people out there don’t realize that these kinds of gains can be made through paying that extra amount on your payment every month.
Home loan rates being as low as they are right now can yield other benefits as well. Say that you’ve got a lot of unsecured credit card debt. We’ve certainly seen the credit card companies go heavier and heavier on their interest rates, with many people reporting dramatic increases. Credit card companies are doing this more and more in an attempt to regain some of the losses that they are seeing from people defaulting on their personal loans of this nature.
Through refinancing your house with these lower home loan rates, you can take advantage of some of the equity that you have in your home to pay off some of those high interest credit cards and be saving more money every month on your expenses. Perhaps you could cut off your credit card bills completely and use that $200 a month to pay the difference to your mortgage and no longer have the credit card companies killing you with finance charges anymore.
Another big benefit of refinancing your home, even if you don’t pay extra every month is just the pure payoff saving that you’ll earn through having a lower interest rate. If you figure how much interest you’ll pay on a loan over a 30 year span, you’ll quickly see that every percentage point you can get or even fractions of a percentage point can make a huge difference to how much you pay over the life of the loan.
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