Does home loan refinance actually help lower monthly payments?
Yes, home loan refinance does help in lowering monthly payments. With a home loan refinance, you have the option of selecting a mortgage plan that provides you a lower rate of interest or just increase the payment tenure so your monthly payments can be reduced. Even a ½% difference in interest rates can help you lower your monthly payments by $300 to $400.
By going for a home loan refinance, you get the much-needed flexibility to get additional money at the time of closing. For example, if you owe a certain amount towards your present mortgage and apply for a new refinancing at a much bigger amount, you are going to get the cash at the time of closing.
Adjustable Rate Mortgage
If your main objective is to save money in the short-term, it is recommended that you opt for an adjustable rate mortgage. An adjustable rate mortgage gives you the opportunity to take advantage of the lower interest rates for a certain period of time. You do not need to spend too much money in this scenario. There are a number of people who prefer fixed rate mortgages over adjustable rate mortgages because a fixed rate mortgage provides more peace of mind. In addition, you can control your finances much better in fixed rate mortgage compared to the adjustable rate mortgage.
Refinance as Debt Consolidation
One of the main advantages of opting for a home loan refinance is that you can consolidate your present debts. You should choose a lower interest refinance plan when you have huge credit card bills. Lower interest refinance plan can also be quite useful when you have three or four loans to pay off. You can save plenty of money with a lower interest refinance plan. Apart from saving money, these plans also offer a simple payment routine of one monthly payment.
If you are presently paying fixed amounts on your current mortgage, home loan refinance can help you immensely in repaying the loan amount because home loan refinances lower your liabilities. In addition, since the rate of interest on the new refinance loan is going to be lower, you are bound to save a decent amount of money.