Mortgage Refinance Goals
Markets change, and depending on when you bought your home or last refinanced, your current rate could be higher than what’s offered today.
You can take advantage of these lower rates to reduce your monthly payment or reduce your overall mortgage term. For example, if your mortgage rate was 6.8% when you purchased your home and you owe $240,000 on your loan, a new mortgage rate of 3.3% could save you around $60,000 over the life of your loan and lower your monthly payment by a significant amount.
One of the most common reasons for refinancing, many homeowners choose to refinance because current interest rates are lower than the one their loan currently has.
Depending on what kind of loan you choose and its term length, refinancing at a lower interest rate could save you money in the long run, or allow you to potentially raise the amount of your loan that you’re paying off each month while continuing to pay the same amount out of pocket, shortening the length of your loan. Either way, you come out ahead.
A Cash-Out Refinance is a mortgage refinance that allows you to access equity in your home. By refinancing and using the equity already in your home to take out cash, you can get access to money at a lower rate than you would if you instead got a personal loan, as mortgage interest rates are generally lower. And instead of adding another monthly payment to your list, you’ll only have to make one — your regular mortgage payment.
A Cash-Out Refinance utilizes the equity you've built in your home to give you access to cash at a lower rate. Your current mortgage is refinanced into a new mortgage with a greater balance, and you pocket the difference between the new mortgage and your old mortgage. For instance, if your home is valued at $300,000 and you owe $200,000, you have equity of $100,000. Say you want $20,000 for home renovations or debt consolidation, so you Cash-Out Refinance your home. Your new mortgage balance would be $220,000, and you get $20,000 from your home.
Are you concerned about the number of years left of your current mortgage, or did you first take out your loan when rates were high? If so, you could shorten the term of your home loan through refinancing.
By lowering your rate to today’s best offerings, you could continue making the same payments you always have but shorten your overall loan term at the same time. You can also refinance to a higher monthly payment to pay-off your loan faster, saving money on interest in the process.
If you're curious about how much you can potentially save on your mortgage by switching to a shorter term, try our Loan Term Comparison Calculator below!
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Featured Refinance Resources
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