When Should I Refinance?
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Refinancing could be one of the best financial decisions that you make. The benefits of refinancing include: lowering your interest rate, shortening your loan term, lowering your monthly payments, consolidating your loans/payments, and more! The key to making refinancing work for you though, is making sure that it fits your personal financial situation. Here’s some more information on why you would refinance:
Refinance to lower your interest rate
Refinancing can be a great option for switching a high-interest loan to a low-interest one. For example, you may have improved your credit score since you bought your car and now with that new score you are eligible for a lower interest rate. Refinancing could lower that interest rate and result in hundreds of dollars in savings for you every month!
Refinance to shorten your loan term
If you’ve been keeping up with the news, you may know that interest rates have been falling in recent times. That means that now may be a great time to refinance! When you refinance after interest rates have lowered, you may be able to dramatically shorten your loan term (especially for your mortgage). For example, if you had a 30-year mortgage and interest rates have fallen significantly since the onset of your loan, you may be able to refinance and adopt a 15-year mortgage for roughly the same monthly payment! This could be a key financial decision for you and your family.
When Refinancing doesn’t make sense.
While refinancing can be a game-changing financial decision, there are situations where it doesn’t make sense or could harm you financially. Loans with an already short loan-term, for instance, may not make sense to refinance because the benefits of refinancing won’t have enough time to outpace the initial costs of doing so. Borrowers should also be aware that when they save money by refinancing, they use that money wisely and pay their payments on time. Even the relief that a well-executed refinance may bring won’t be able to solve all your financial problems if you have bad spending habits.
You should take a good look at your situation to figure out whether refinancing would be a good decision for you. Luckily enough, USMFCU offers wonderful refinancing options and is available to look at your individual situation to offer FREE financial advice.
Call 586-756-3300 to learn more!
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