Refinancing is often a smart money-saving strategy offering many benefits to help you:
- Reduce monthly payments by lowering your current interest rate or extending your repayment period.
- Eliminate the risk of rate fluctuations by switching from an adjustable rate mortgage (ARM) to a low fixed-rate loan.
- Save thousands in interest costs through a lower rate or shortened repayment period.
- Build equity faster with a shorter loan term.
- Utilize the equity in your home as a cash source for major expenses.
Contrary to the old rule of thumb, interest rates do not have to be two percent lower than your current rate for refinancing to make economic sense. You can still save a lot by a reduction of less than two percent.
Get Your Hands on Some Cash
Another way to make refinancing work for you is to borrow more than the balance remaining on your old mortgage: in effect tapping your home equity or “cashing out,” in mortgage speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay.