As Americans take a break from their usual work this Labor Day, they should consider how to make their money work harder for them. One way to do this is by refinancing their mortgage into today’s historically low interest rates. Here’s how homeowners can benefit:
— Lower their monthly payment: The money saved from refinancing can lower monthly mortgage payments, freeing up cash to pay off debt or apply towards savings.
— Get a lump-sum of cash: Homeowners that refinance into a lower interest rate can do a “cash-out refinance,” where they receive the difference between their old and new loan terms. Smart homeowners can then apply the cash to paying off higher-rate debt, such as credit cards, making home improvements or investing at a higher interest rate.
— Gain stability from a fixed rate: Those with adjustable-rate loans can refinance into a fixed-rate loan, meaning the interest rate remains the same for the life of the loan. This allows homeowners to budget accordingly without worrying about an interest rate—and thus monthly payment—that may increase.
— Pay off their home faster: Homeowners may be able to shorten the life of their loan while only slightly increasing their current monthly payment, due to lower interest rates on shorter-term loans. For example, converting a 30-year mortgage into a 15-year mortgage will garner a lower interest rate, though it could increase the payment amount simply because there are fewer periods to pay off the debt. The shorter lifespan allows homeowners to build equity faster and be free from the mortgage debt sooner.
Even homeowners that are “under water,” or owe more than their home is worth, may qualify for -refinanced mortgage loans. To learn more, visit bankaf.com/mortgage or speak with a Bank of American Fork mortgage professional at 801-642-3127.