You probably already know mortgage rates are at all-time lows, which makes this an especially attractive time to buy a home. If you already own your place, we may still be able to help you get in on this opportunity for savings by refinancing your existing home loan.
Federal mortgage agency Freddie Mac reports mortgage rates continued their slide to the end of 2020, with 30-year fixed loans at an average of 2.66% as of Dec. 24. One of the chief considerations for most people in deciding to refinance is whether the current interest rates are lower than what was available when they got their mortgages, and everyone can answer “yes” to that right now.
Advantages of a Refinance
There can be benefits to refinancing a mortgage beyond saving money, though that’s certainly enough of a motivator for the option to be attractive to most who pursue it. Among the other potential pluses you could realize from making the move are:
- A change to a different mortgage product. Taking another look at your loan gives you a chance to move from one loan option to another, such as trading in a variable-rate for a much-lower fixed one. With interest rates as low as they are, you may even want to consider going with a shorter term, which could enable you to pay off your loan sooner and at a rate comparable to or not much more than what you have now.
- Build equity more quickly. This one is related to the possibility of refinancing for a shorter term. Home equity basically means the value you own from your home, so the more you pay off your loan, the more equity you have. So, if you’re paying more toward principal each month, as you would with a shorter term, your equity will grow faster. Equity is an asset that counts toward your net worth and can be borrowed against, so having more of it is good.
- Put some money in your pocket. Whether you need cash for home improvements or to achieve a life goal, a cash-out refinance can help you get it while also locking in the current low rates. Cash-out loans take advantage of your equity by enabling you to refinance for more than you currently own on your home. This option is only available if your property is worth more than you owe and gives you the difference between what you owe and what you borrow in cash.
- Consolidate your debt. Cash-out loans also give you the opportunity to pay off high-interest debts, so you only have one payment each month and you pay less in interest on that other debt. Let’s say you’re paying 24% on a credit card but have enough equity to bring your balance to $0 and can secure a 3% rate on a mortgage. In that scenario, you could realize significant long-term savings over just getting by on that credit card.
If you’re interested in refinancing your mortgage, Journey Home Lending has the options and expert advice you’re looking for. Let’s get started on your new financial future today!
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