By Brooke Chaplan
In a surging economy, many homeowners are thinking about updating mortgage loans to better suit their financial circumstances. There are several options to consider as you evaluate the balance of your home loan and current interest rate. Here are some ideas for refinancing your mortgage that may be worthwhile:
Lower Payments
Homeowner applicants that qualify for a loan modification may be able to extend the life of the loan for a longer period of time than currently remains. In that approach, the monthly payments could shrink and become more manageable, easing the family budget. Those who want to pay more on the principal balance of the loan can whittle the outstanding balance to pay off the loan in full before the end of the loan period. Smaller house payments that are always paid on time helps to keep your credit score healthy as well.
Shorter Term
Another refinancing opportunity is to restructure your home loan at a lower interest rate that will pay the mortgage in full over a shorter period of time. A homeowner with future plans that require funding, like college for the kids or early retirement for the breadwinners, can pay off their house loan early and use the monthly mortgage payment amount toward another future goal. Not having a mortgage payment will ease your monthly budget, so you can do other things with that money both now and in the future.
Better Interest Rate
When low interest rates are available, you can apply to have your loan refinanced. If approved, you can save thousands of dollars over the life of the loan by paying less for interest fees in your monthly mortgage payments. Since your loan will be reduced more quickly, you might also avoid compounded interest over the long term. Also, getting a low interest rate can pave the way for future credit at good interest rates if you make payments in full each time. Your credit score may also benefit as a result.
Cash Out
There are also other types of loan modifications that can help your finances. One solution is to apply for a home equity line of credit. If your home has equity, you may be able to get a credit line based on available equity at an interest rate that is lower than the commercial rate. You can use the equity line to fix up your house or pay bills, and you can take cash out for other purchases at the lower interest rate.
Take advantage of the current low interest rates to refinance your mortgage balance! You could reduce your budget concerns and save money with a more affordable home loan.
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She recommends researching loan modifications in your area. For more information, contact Chaplan via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan
