What do you call it when someone buys a house and is responsibly paying off their mortgage every month? You could call it “adulting.” But what if there was a way to be even more responsible and pay less? Or what if there was a way to take advantage of all that value in your new home? That would truly be adulting. Well it’s possible there could be a way—through a mortgage refinance.
When you refinance your mortgage, you’re essentially paying off your existing loan and taking out a new loan at new terms. Generally, there are two types of refinances – No Cash Out Refinance: to get a lower interest rate or a different repayment period, or Cash Out Refinance: to take advantage of the equity in their home. If you refinance with a lower interest rate or term, it could save you thousands.
For example, using an online amortization calculator, if you pay on a $300,000 mortgage loan at a 5% fixed interest rate over 30 years, you’ll end up paying $279,767. With a 4% interest rate, you’d pay only $215,608 in total interest over the life of the loan.Read more