As a homeowner, you’re probably always on the lookout for ways to save money. One option that could be worth considering is a mortgage refinance.
Refinancing involves replacing your current mortgage with a new one that generally has a more competitive interest rate, better terms or more flexible features. This, in turn, means you could potentially save thousands of dollars over the life of your loan.
If you’re thinking about refinancing, the first step is to use a refinance calculator.
What’s a refinance calculator?
A refinance calculator is a tool that can help you determine whether refinancing your mortgage is a good idea. You simply input your current loan details, including your loan amount, interest rate, and remaining term, as well as the details of the new loan you’re considering.
The calculator will then provide you with an estimate of your new monthly payments, as well as the total cost of the loan over its lifetime.
How can it save you money?
By using a refinance calculator, you can compare the costs of your current mortgage with the costs of a new loan. This can help you determine whether the savings from refinancing are worth the upfront costs, such as home loan break costs and establishment fees.
Additionally, some lenders may offer cash back for refinance, which could further reduce your costs. This is when they give you a cash payment or other financial incentive when you switch your mortgage to them. This cash payment can be a great way to offset some of the costs associated with refinancing and put some extra money back in your pocket.
Five signs it’s time to consider refinancing your home loan
Here are five signs that it might be time to consider refinancing your home loan:
1. Interest rates have dropped: Interest rates can fluctuate over time, and if rates have dropped since you first took out your mortgage, it could be a good time to consider refinancing. Lower interest rates can mean lower monthly repayments and interest charges over the life of your loan, potentially saving you thousands of dollars.
2. You want to lower your monthly repayments: If your financial situation has changed, and you’re struggling to keep up with your current mortgage repayments, refinancing can help you lower your monthly payments by extending your loan term or negotiating a lower interest rate.
3. You want to pay off your mortgage faster: If you’re in a better financial position than when you first took out your mortgage, you might want to consider refinancing to a shorter loan term or a lower interest rate, which can help you pay off your mortgage faster and save on interest charges.
4. You want to switch from a variable to a fixed-rate loan (or vice-versa): If you currently have a variable-rate loan and are seeking more stability in your repayments, refinancing to a fixed-rate loan could be a good option. On the other hand, if you have a fixed-rate loan and interest rates have dropped, refinancing to a variable-rate loan could help you take advantage of lower interest rates and save on interest charges.
5. You want to access the equity in your home: If you’ve built up equity in your home, you might be able to access it through refinancing. This equity can then be used for various purposes, such as financing home improvements or put towards a deposit for an investment property.
Ultimately, the decision to refinance your home loan depends on your individual financial situation, goals, and priorities. So it’s important to do your research and get advice from an expert mortgage broker, such as Loan Station.
