Will refinancing my mortgage lower my monthly loan payments?
Whether or not you can save money depends on the terms of your existing mortgage and other loans. Many homeowners save quite a bit of money on a monthly basis, or over the life of their loan, by refinancing a mere 1% below their existing rate. Again, it all depends on the terms of your existing loans.
Some ways to save money on refinancing your loans with a new home mortgage are:
- Interest on your mortgage.
Interest is the amount of money above the amount you borrow for the use of your borrowed funds. IF you lower this rate over the same term of the loan, you will save money on the cost of your mortgage.
- Interest on your other installment loans.
If your existing mortgage is less than the current value of your home, you may be able to bundle other loans such as credit cards, car loans, and other consumer debt into your home mortgage. This could cut the interest rate you pay on these balances by as much as 50%.
- Your federal and state income taxes.
For most home mortgage loans, the interest you pay is deductible on both federal and state income taxes. However, most interest on all other personal loans such as auto and consumer debt is not deductible. By consolidating your other loans into a home loan, you may save on taxes depending on your tax bracket. Check with your financial advisor for more specific information on what is and isn't deductible.
We have been provided with a chart that may help calculate your monthly savings if you decide to refinance. Call the Credit Union for more details and to make an appointment.
