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When you think about refinancing your mortgage, you might only be considering the immediate benefits. Of course, there are plenty of reasons to refinance, and some of those might be to achieve short-term goals. The appeal of paying less and clearing debt are super tempting. However, refinancing can also help you build your financial future.
Refinancing has a lasting impact on your finances. For this reason, it’s good to fully consider and understand your options before deciding on a refinance. When you secure a lower rate, for example, this will help you in the long run as well as in the moment. So, here are a few of the top ways refinancing can help you with your finances long-term!
First, refinancing is a popular method of debt consolidation. Of course, this method of debt consolidation involves owning a home and having an active mortgage on it. If you’re reading this, you likely already meet these requirements.
Debt consolidation takes all your active debts and puts them into one monthly payment. This helps you keep track of your debt, since it’s now all in one place. You can also often secure a lower interest rate than the rates you had on some of your other loans. This means you’ll get the opportunity to pay less than before, which of course will save you money. Since interest rates are so low right now, you can refinance your mortgage into a debt consolidation mortgage with a more desirable rate. This method of debt consolidation will definitely build your financial future by making you more secure in your financial situation.
Just a reminder: debt consolidation doesn’t clear your debt for you, but it can be a great way to help you manage your debt and save you money with a better rate. At the end of the day, though, you still have to make your payments.
Save money with new interest rates
You don’t necessarily need to be in a situation where you have to consolidate debt to refinance your mortgage. Refinancing just to secure a lower interest rate can save you a lot of money, and it could definitely be worth the process to take advantage of today’s rates. Is your current mortgage more than a few years old? Odds are, you began with a much higher interest rate than what we’re seeing today.
You might still be enjoying low rates if you are locked into a variable-rate mortgage, but eventually, rates will increase again. However, you still have the option of refinancing to a fixed-rate mortgage. While these rates have recently increased, they are still relatively low and worth sticking with long-term. This helps build your financial future by saving you money down the road. Refinancing can leave you feeling more confident with your mortgage payments, and more content with your financial situation.
Pay your mortgage off faster
Refinancing can also be a good option if you’re looking for a way to pay off your mortgage faster. Owning your home free and clear, without worrying about mortgage payments, is the dream for many people. Home ownership also helps you build equity. You’ll probably feel safer with your finances knowing you’ve successfully paid off your mortgage.
A refinance can involve renegotiating your mortgage terms to allow for more flexibility with payment frequency and amounts. If you have the option to pay more often, this, of course, means you’ll reach the finish line sooner. Contributing higher amounts is another way to fast track your mortgage and pay it off early. You might also be able to refinance your mortgage for a shorter term, meaning you’ll pay it off more quickly. You can find more information on how to pay your mortgage down faster here.
Talk to a broker first
No matter how certain you are about wanting to refinance your mortgage, make sure you talk to an unbiased mortgage professional first! They can give you additional information on your mortgage, and might even point out factors you haven’t thought about yet. Brokers will make sure you have enough equity built up to make a refinance worthwhile. They will also compare your current rates to the ones you could expect to secure today. You need to ensure the rate difference will be worth the process it takes to get there! Finally, brokers can assist you with getting the best deals possible. Since they have access to several lenders, they know your options better than anyone.
Refinancing provides many opportunities to build your financial future, and there are tons of paths you can take. If you have questions about refinancing your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.