Three Reasons to Refinance Your Home Loan
It’s easy to get comfortable once your loan is closed. You finally made it through all the paperwork, set up your automatic payments and you’re building equity. Comfortable is great, but saving more money every month is even better. Mortgage rates are incredibly low, and if you haven’t considered refinancing, it’s time to give it some serious thought. Take a look at these three reasons to refinance your home loan, today.
- Reduce Your Monthly Payment
Refinancing your home loan at a lower interest rate can help you reduce your monthly payment. Why pay more interest, when you could be using that money to help with your monthly expenses? A lower mortgage payment can be a big help to you, no matter your situation. When you refinance, you’re likely to have more breathing room to pay bills, take care of other debt, and even save more for retirement.
- Reduce Your Loan Term
For some, becoming debt-free is a bigger concern than a lower monthly payment. If this is true for you, refinancing to a 15-year mortgage is a great option. You could potentially save hundreds of thousands of dollars by refinancing your loan to a shorter term. Even though you might end up with a higher monthly payment, it might be worth the tradeoff for long-term savings and debt elimination.
- Eliminate Private Mortgage Insurance (PMI)
Refinancing to save on interest and eliminate PMI is a win-win! If you’ve been paying on your loan for some time or your property has increased substantially in value, you may be eligible to cancel your PMI. No PMI and a lower interest rate? That’s a double-whammy of savings!
To calculate whether your loan balance has fallen below 80% of original value, divide the current loan balance (the amount you still owe) by the original appraised value (most likely, that’s the same as the purchase price).
Example: Joe owes $170,000 on a house that cost $216,000 several years ago.
$170,000 / $216,000 = 0.79.
That equals 79%, so it’s time for Joe’s mortgage insurance to be canceled.
Don’t miss your change to save big money every month when you refinance a loan with River Region Credit Union. We’re ready to help, just contact our mortgage lending department to get started today.