3 Benefits of Refinancing Your Mortgage
When the Federal Reserve reduced interest rates earlier this year in response to COVID-19, it also impacted the real estate market. Mortgage rates lowered to keep pace in stimulating the economy and remaining competitive in the marketplace.
The significant mortgage rate reduction means big savings for homeowners. With no guarantee of how long the rates will remain at their historical low, it’s a great time to refinance.
Refinancing your mortgage saves you more than the interest, the benefits also include:
An interest rate decrease on your current mortgage means more of your monthly payment goes towards your principal. If you’re still paying for mortgage insurance, which is usually required until your mortgage is at least 20 percent below your home’s value, having more money applied to your principal hits the insurance threshold sooner, and eliminates the insurance payment faster.
Refinancing may also reduce your monthly payment. Homeowners typically see a $100 - $200 savings monthly. With tighter budgets stemming from COVID-19, extra savings can make a big difference.
When more of your payment goes towards the principal, you’re building equity much faster. Equity is the difference between what you owe on your home and what your home is worth. The more equity you have in your home when it comes time to sell, the more money that goes back into your pocket.
Your home is a valuable asset. Building home equity opens doors to opportunities, such as using your home’s equity, usually through a Home Equity Line of Credit (HELOC), to borrow money at a low rate for home improvements that can significantly boost your home value. Your home’s equity can also be used to consolidate high-interest debt such as credit cards and other loans, reducing your monthly payment obligations.
The process to refinance your home is similar to the process of buying a home. It requires an appraisal, proof of income, and other personal information. Take a moment to review the list of what you may need to get started.
First Florida Credit Union has helped countless individuals with the refinancing process. If you’re interested in exploring your options to save and take advantage of our low rates, our team is ready to assist you.
For more information, speak with a First Florida loan professional by calling 800-766-4328, ext. 5, or by visiting a branch near you.
First Florida Credit Union is an Equal Housing Opportunity/Lender. We do business in accordance with Federal Fair Lending Laws.