There are a lot of reasons you might want to refinance your home. Among the most attractive could be reducing the term (aka getting a shorter loan). Imagine your house being paid off before the kids go to college, or before you retire. You might be able to wake up on your first day without a mortgage a lot sooner than you planned.
Interest rates have been extremely low for several years. If you haven’t yet refinanced, now is the time. Interest rates are heavily dependent on the Federal Reserve’s interest rate, and that has gone up a little in the last year and is predicted to continue going up over the next few years. It will happen very slowly, but there’s no reason to wait because rates are far more likely to go up than down.
- $200,000 for 30 years at 4.5% is roughly $1,013 per month. But the total interest paid over the life of the loan is $164,813.
- $182,000 for 20 years at 4.5% is roughly $1,265 per month. But the total interest paid over the life of the loan is $103,362.
If you borrowed $200,000 with a 30 year loan at a 4.5% interest rate, and can now come up with just $250 extra each month, you may be able to refinance to a 20 year loan, cutting years of your mortgage! And what’s more? You’re you could save up to $60,000 in interest over the life of the loan. That’s a much shorter loan and some serious savings.
Better Interest Rates
You might also have achieved a higher credit score through diligent payments, increased income and access to credit, longer credit history, or all of the above. If so, congratulations! You may now have access to lower rates and find that financing all sorts of things is much easier now.
- $250,000 for 30 years at 6% is roughly $1499 per month. But the total interest paid over the life of the loan is $289,595.
- $250,000 for 20 years at 4% is roughly $1515 per month. But the total interest paid over the life of the loan is $113,588.
If you financed your home with a 30 year loan at a 6% interest rate and now qualified for a 4% interest rate, could refinance to a 20 year mortgage, hardly touching your monthly payment. And better yet, you could save up to $175,000 in interest over the life of the loan. Woah.
How We Can Help
At McLellan Financial Mortgage, we have access to a wide range of lenders, which gives you more choices and possibly access to better rates and a shorter loan. Even with all the savings, going through the process of refinancing might sound like a lot of work, but we’re here to help it go smoothly. Because at McLellan Financial Mortgage, we do more than close loans. We open doors.
See If You Qualify
If you like saving money over the long term, refinancing a mortgage could help you do just that. Give us a call to review your loan and see if you qualify for a refinancing package that could save you thousands!