Let's Dispel Some Myths about Refinancing
Common myths disguised as good advice often prevent homeowners from saving what could be big money. Play the video below to see for yourself.
Let's dispel some myths...
It's too expensive - I'd rather save my money
Refinancing is all about saving money. When rates are low refinancing might save you hundreds per month vs the few dollars you may earn on regular savings. Costs can often be included in the loan amount anyway. So, you will likely just leave your cash where it is and then start adding to it far faster than you would have otherwise. That is a GIANT opportunity you don't want to miss!
I heard that you'll add years to your loan.
The new loan term created when you refinance is only on paper. You determine the length of the loan by how much you pay. If lowering your interest rate saves you $100/month, add that money to your new payment. You'll reduce your balance more quickly and reach free and clear ownership faster than you would by keeping your current loan.
I've read that the rate needs to be 1 or 2% lower than my current one.
When average loan amounts were much lower, it took a much bigger drop in rates to achieve tangible savings. Today, even small rate differences can make a BIG impact. The best way to determine value is to divide your costs by your savings. This provides a break even period. And, if you know you'll be using your loan past this point, the rest is pure benefit!
I haven't even reached a break-even point from my last refi.
That may be okay. Refinancing again may require some costs, but it could get you to an overall break even point and greater savings more quickly.
Refinancing can have other benefits too!
A lower rate may mean not only a smaller payment, but also more paid towards principal each month. You may be able to free up cash to:
- Renovate your home
- Finance collage education
- Purchase a vacation home
- Invest in property without adding to your monthly expenditures
Ready to explore your refinancing options by the numbers? We're here to help! And that's NO myth!