One of the best ways to save money on your mortgage is to refinance it at a lower interest rate. With interest rates at an all-time low, you can end up saving thousands of dollars in interest payments. Here are some other reasons you may want to use refinance mortgage loans in Knoxville.
Shorten Loan Terms
If you took out a 30-year mortgage when you bought your home, you could take advantage of lower interest rates by refinancing your loan to a shorter 15-year term. By shortening your loan, you will save thousands of dollars on interest payments and own your home sooner. The lower interest rates will make your new payment about the same as your current one.
Switch to a Fixed-Rate Loan
If you originally had an adjustable rate mortgage, you should consider refinancing your mortgage to a fixed-rate loan. With an adjustable rate mortgage, your loan payments will fluctuate based on current interest rates. Therefore, if the interest rate lowers, your payment will lower, but if the interest rates go up, so will your payment, due to the higher interest rate. By taking out a fixed-rate loan, you can lock in a low-interest rate for the life of the new loan.
Cash Out Home Equity
By refinancing your mortgage, you can take out the equity that you have built up in your home. If there is a good reason for needing the money, whether it is to invest in a property or your child’s college education, taking out refinance mortgage loans make sense if you are responsible with your other debts.
Pay Off Debt
Another way to use refinance mortgage loans is to cash out the equity in your home to pay off high-interest credit cards. The interest rates on credit cards are much higher than that of your home and are not tax deductible like mortgage interest. By using the cash from your home’s equity, you can pay off your credit cards and save thousands of dollars in interest payments. It will help improve your credit rating as well.
Reduce Monthly Payments
With refinance mortgage loans, you can lower your monthly mortgage payment by refinancing while the interest rates are low. Shop around for the lowest possible interest rate, compare loan fees and closing costs in order to get the best loan terms that you can. By shopping around, you can save money each month with your new mortgage payments. You can usually offset the costs of taking out a new mortgage within three years.
By keeping an eye on the mortgage interest rates, you can save hundreds, if not thousands, of dollars over the life of your loan by refinancing at a lower interest rate.