Weighing the benefits of refinancing your home loan? Here are 5 ways to save money by refinancing your existing home loan:
1. Save with a Payment Reduction
Instead of looking only at the interest rate, compare the savings between your existing payment and the refinance payment. Compare principle and interest payments on a loan amount that includes closing costs, but not taxes, insurance, or cash out, then decide if the savings is worth the effort to refinance.
2. Save by Consolidating Your Debt
Most credit cards charge high interest, which is compounded daily. If you have a substantial balance on credit cards, or other debt, you could save with an equity refinance. Consolidating debts with a low rate mortgage nay reduce your payments, and convert debts into a tax deductible, simple interest loan.
3. Save with a Fixed Rate Payment
An adjustable mortgage can be fine while mortgage rates are low, but eventually rates go up, and payments too. Adjustable loans have a purpose, which is usually for short-term savings. If you plan on keeping your home for a long period of time, refinancing to a fixed rate mortgage can provide long-term savings.
4. Save with a Short Mortgage Term
Reduce the interest paid over the life of your loan with a shorter term. Your payments may increase somewhat, but your overall savings can be substantial. For example, refinancing from a 30 year term to a 15 year term mortgage could save more than $120,000 in mortgage interest on a $200,000 loan.
5. Save by Eliminating Insurance
Provided you have enough equity, you can eliminate unnecessary insurance. If you have mortgage insurance, it is only for the benefit of your lender, and will continue to be collected in your monthly payment until you sell your home, or refinance at 80% loan to value, or less.
Refinance, Home Mortgage Rates, San Diego New Homes
