In today’s economy, everyone is looking for ways to save cash. It’s no wonder that mortgage refinancing is such a hot topic. It’s essentially a way to get your mortgage at a lower interest rate, allowing you to cut on your monthly mortgage payments.
It certainly sounds like a tempting proposition, and it can be if you do the right thing. Just one mistake can end up costing you more than all the “savings” you accrued from refinancing. With that in mind, it’s important to understand what mortgage financing is all about.
What is Mortgage Refinancing?
In the simplest terms, it’s the act of paying off an existing mortgage and then taking out a new one for the same amount. The reasons for refinancing are myriad, but the most common will probably be to get a better interest rate. If you just bought a new home, you may be able to refinance your existing home at a lower rate and save a few dollars.
Another reason for refinancing is to change the type of mortgage you have. For example, if you bought your home several years ago, you may have a 30-year fixed-rate mortgage. Now, however, you may want to take out a 15-year fixed mortgage. By refinancing, you can do so by paying off your existing mortgage.
Some people will also refinance because they are in need of a large amount of cash. By refinancing, they can get the cash they need and then pay off the remainder of their mortgage.
What are the Benefits of Mortgage Refinancing?
1. Lower Interest Rate
If you are taking out the same amount of money, you will be able to pay a lower rate of interest on the money you obtain. If you want to get a lower rate of interest, you may even be able to refinance your mortgage to pay off debts, such as credit cards and car payments.
For example, if you have a 10-year fixed mortgage loan and you get a lower interest rate on a 15-year fixed mortgage loan, the interest you pay over the 10-year period will be cut by roughly 40 percent. You’ll be able to save a bundle of cash by refinancing at a lower interest rate.
2. Shorter Tenure
Many folks are looking to pay off their mortgage as quickly as possible to get out of debt. By refinancing, you can shorten your loan term, making it a lot easier to pay off your mortgage within a shorter period of time. As long as the interest rate is lower, it will be easier to pay off your mortgage loan.
3. Change Fixed Rate to Adjustable Interest Rate or Vice Versa
When you refinance, you can change the type of mortgage you have. For example, if you have a fixed rate of interest, you can refinance your loan to an adjustable-rate. Likewise, if you have an adjustable interest rate, you can refinance to a fixed rate. In doing so, you can get the type of mortgage you need for your requirements.
The Bottom Line: The Wonders of Mortgage Refinancing for Homeowners Who Want to Save on Money
Mortgage refinancing can be a very cost-efficient way to lower your monthly mortgage payments. It’s probably not the best thing to do if you are in need of a large amount of cash, but if you want to lower your interest rate, shorten your loan term or switch from fixed rate to variable rate, then it’s one of the best options for you.
Keep in mind though, refinancing your mortgage is not a decision to be made lightly. You will be changing your loan, so you will have to pay new loan fees and closing costs. You need to do the math and ensure that you are not going to cost yourself a whole lot of money by doing this.
Are You Interested in Mortgage Refinancing in Oklahoma and Florida?
If you want to learn more about mortgage refinancing in Oklahoma and Florida, we’re just a phone call away. Just dial 405-233-4321 to get in touch with us and find out how much you can save on your monthly mortgage payments!