With the tough economic times that we are currently facing, there is a good chance that you are trying to save money anywhere you can. Lucky for you, now is a great time to save money on your mortgage. Chances are, if you bought your home more than a few years ago and have yet to refinance, current interest rates are lower than when you first took out your loan. Lower interest rates equals more money for you and less money needed to spend on your mortgage; a win-win situation.
Wondering how to take advantage of the great timing and low rates? Check out these three strategies below that are geared towards refinancing and start paying less on your mortgage.
1. Lower Your Interest Rate By at Least .5 to 1 Percent
If you want to cut down your monthly payments, refinancing your mortgage to the same terms as you have now – but at a lower interest rate – is one solution. According to Freddie Mac, mortgage rates fell to 65-year lows in December of 2012, and the numbers have stayed that low since. Freddie Mac expects rates to remain near record lows for the first half of 2013, so now is definitely the time to refinance your home!
2. Switch to a 15-Year Mortgage Term
If you can afford a larger monthly payment, refinancing from a 30-year to a 15-year loan could help you own your home sooner and save you big in interest. You will want to keep in mind that the interest rate on a 15-year mortgage vs. a 30-year mortgage is generally lower. So, depending on your current and new interest rates, that monthly payment might not even be much higher with a 15-year loan. Take a look at the example below to see what we mean. However, if you can afford the higher monthly payment, the savings could be huge.
3. Do a Cash-Out Refinance to Pay off Higher-Rate Credit Card Debt
It is not uncommon for many individuals to be buried in credit card debt and paying massive interest on their balance. If this applies to you, don’t head for the hills quite yet; we have a solution that can help you get back in the black. You can consider doing a cash-out refinance to take cash out of your home’s equity and use that money to erase your credit card debt. Why/how can this work? Since the interest rate on your home is most likely much lower than the interest rate on your credit card, you’ll be paying less money overall in interest if you do a cash-out refinance and use the cash to pay off your credit card debt.
If you are looking to cash in (and out) and take advantage of this great time to refinance, give On Q Financial, Inc. a call and we’d be happy to help!