Are you STILL on the fence about refinancing your mortgage? Maybe you’re a little apprehensive about what 2021 has in store, and you’re not sure if now is the best time to pull the trigger?
While refinancing does take time and comes with some costs, there are actually multiple advantages to restructuring your mortgage beyond simply saving money on interest and lowering your monthly payment.
1. Lower Your Interest Rate
WE KNOW YOU’RE TIRED OF HEARING THIS BUT WE HAVE TO SAY IT! Mortgage rates are still holding steady at record lows. As of 12/14/20, the average rate for a 30-year fixed mortgage is 2.71%.
These low rates aren’t likely to go away anytime soon. CoreLogic recently released its final three-year housing and mortgage outlook report for 2020, and if numbers hold up, the data company predicts 2021 will maintain its unprecedented home sales and record low rates as the economy continues to recover from the coronavirus fallout.
2. Use Your Home Equity to Pay Off Other Debts
What many homeowners don’t realize is just how much their home has appreciated in value since they purchased it.
Did you know you can use a refinance to access some of that equity to pay off other high-interest debts, create more cashflow for you and your family, or create liquidity for other investments? If you are paying interest on credit cars, student loans, or car loans, doing this could lead to a MASSIVE improvement in your financial situation.
3. Use The Extra Monthly Income to Pay Down Your Mortgage Faster
So you’ve taken some equity out of your home, paid off a few credit cards and your car, and decreased your monthly liabilities by several hundred dollars – PARTY TIME!
Go ahead and celebrate for a bit – take that much-needed vacation or buy the hot tub you’ve been wanting…but then get focused.
Once everything is paid off, why not re-route that additional cash flow back into your home?
You’ve already become used to a certain amount of monthly liabilities – credit card and car payments included. If you can muster up the willpower and continue to live that way, but putting the extra income back into your home, you could take YEARS off the life of your mortgage and save an additional THOUSANDS of dollars in interest payments.
This is because anything extra you pay toward your mortgage above your required monthly payment goes directly to reducing the principal amount of your loan. And because interest payments are calculated based off of the outstanding principal…(yeah, we hear the cash register sounds, too.)
The Bottom Line
Whether or not you choose to refinance today or how you decide to refinance all depends on your specific situation and financial goals. Ultimately, the best strategy for you will depend on how long you’re going to be in your home, your income, and how quickly you plan on paying down your mortgage.
Our job is to make your refinance experience simple, low-stress, and fun. If you’d like to learn more, we’d love to share our total savings analysis tool with you and create a report that will make your decision on which refinance strategy to employ ridiculously simple.
If you’re ready to get started, fill out the form below. We look forward to hearing from you!