Budgets and Money

Refinancing Your Mortgage to Save on Your Monthly Budget

Refinancing your home when the rates are low can save you tons of money. You may want to consider refinancing your home if your mortgage is one full point lower than last year.

Refinancing Your Mortgage: What Are Your Options?

Recently, 30-year fixed-rate mortgages were at their lowest since 19711. If your mortgage was taken out within the past five years, you may be wondering if refinancing is a good idea. The fact is, refinancing your mortgage at a time when rates are low could save you hundreds of dollars on your family budget.

As a general rule, you may want to consider refinancing your existing home mortgage loan if you are able to get financing that is at least one full point lower than your current rate. Otherwise, it may not be worth having to pay the additional costs that often accompany a refinance such as points, appraisal fees, loan transaction fees, or financial advisor fees.

Should I be looking at a fixed or adjustable rate?

Interest rates may be low today, but that could quickly change without notice. If you're planning to stay in your home awhile and are fearful that interest rates may be on the rise, then you might want to consider a fixed-rate mortgage over an adjustable mortgage. That being said, an adjustable mortgage is better suited to people who desire a lower interest rate in the beginning, but plan on selling the home before the payments begin to increase and interest rates increase.

One way to refinance your home would be to take out your new mortgage for the same number of years as your existing mortgage loan. By doing this, you'll be able to immediately see the difference a lower interest rate will have on your monthly payments. That's extra money that you can either save or invest.

Another option would be to apply for a shorter-term loan. Yes, this will mean that your payments will be higher than your previous mortgage, but your home will be paid for all that much sooner. And just think of all that interest you'll save!

If you'd like to see how much you might be able to save by refinancing your mortgage, try giving one of the many online calculators a try. And if you're considering refinancing your mortgage and continue to have questions about whether or not refinancing is a good move for you, consult with your financial advisor or other mortgage professional.

1 http://abcnews.go.com/WNT/video/30-year-mortgage-rate-nears-time-low-29768136

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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Monthly Budget

Are you looking for ways to shrink your monthly budget? Thinking about refinancing your mortgage while interest rates are low? This article can help you better understand some of your monthly budget options when it comes to refinancing your existing mortgage loan. For more information, visit our learning center.

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