Posted Wed, Sep 29, 2021 at 3:46 pm ET|Updated Thu, Sep 30, 2021 at 1:11 pm ET
With interest rates so low, refinancing your mortgage can provide you with significant savings over the life of your loan.
Thinking about refinancing your home loan, but not totally committed yet? Here are six good reasons why homeowners refinance their loans and why you may consider doing so, too.
1. Reduce Your Interest Rate
When rates drop, you could reduce your monthly mortgage payment. For example, on a $200,000 mortgage with an original interest rate of 5.5 percent, refinancing to a 30-year fixed rate mortgage at 4.0 percent would reduce your monthly payment by $679.34/month. Use our refinance calculator to run the numbers for your own scenario.
2. Shorten Your Loan Term
If you've been making mortgage payments for several years, you may be able to refinance to a shorter loan term and pay about the same amount each month. For some homeowners, it may even be possible to shorten your loan term AND pay less each month. As a borrower, you should inquire about your options and term availability to see if refinancing makes financial sense for you.
3. Consolidate Your Home Loans
If you have both a mortgage and home equity loan or line of credit, consider refinancing both loans into one. Depending upon the interest rates, you may be able to lower your total monthly payment amount and/or the total amount of interest you pay over the life of your loan.