Many people are looking for opportunities to save money on the cost of a mortgage. If you want to save money on your home loan, you might be thinking about refinancing. During the refinance process, you will replace your current home loan with a new mortgage. Some people want to refinance their homes to free up cash for a renovation project, while other people want to pay off their homes sooner. How can you pay off your home loan early through a refinance?
Reduce Your Interest Rate
During the refinance process, you might qualify for a lower interest rate. There are numerous reasons why you might get a lower interest rate when you refinance your mortgage. The average interest rate may have come down, your credit score may have improved, or your debt to income ratio may have gotten better. If you were due to your interest rate, more of your monthly payment will go towards the principal, shrinking your balance faster. As a result, you may pay off your mortgage more quickly.
Reduce The Term of the Loan
If you refinance your home, you might be able to reduce the term of the loan. The term is how many years it takes you to pay off your mortgage. For example, you may be able to reduce your 30-year mortgage to a 15-year mortgage. If you shorten the term of your loan, you may qualify for a lower interest rate, which can help you save money; however, directly shortening the term of the loan could cause your monthly payments to go up. You could work with a professional who can help you with the math. That way, you understand exactly how much you owe every month.
Consider Paying Off Your Mortgage More Quickly
If you want to save money on interest during the life of your loan, one way to do so is to pay off your mortgage faster. You might be able to do this if you refinance your home loan. Reach out to a professional who can take a look at the balance of your home loan. You might qualify for a refinance that can help you save money on your mortgage.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.