When the economy is suffering, one of the main steps governments and financial institutions take to encourage spending is to offer a lower interest rate to consumers interested in refinancing their mortgage. By reducing the interest rate by 1.00% or more (which is a very realistic reduction), a home owner with a mortgage of $200,000 can save about $10,000 over a 5 year period of time. By refinancing to lower interest rates, consumers are not only able to reduce their monthly payments, they are also able to decrease the total amount of interest they will be paying over the life of their mortgage (usually 25 years). This lower mortgage rate not only frees up cash flow for current financial needs, it also saves a significant amount of money over time. A reputable mortgage broker or agent, like the ones at Real Mortgage Associates, can explain all of the various refinancing options available to you.
If you have equity built up in your home, you may be able to access those funds as well to be used for other things like home renovations, debt consolidation, education financing or even purchasing a rental/investment property. Even without equity, refinancing to a lower interest rate will, at minimum, reduce your monthly mortgage payment. It is always wise not to re-amortize your mortgage further though. Although this will help save you on your monthly payments even further, it would be better to keep your payment the same as you are paying now but just put it towards the mortgage. By doing this, you will end up cutting years off of your mortgage — sometimes as much as 10 or 15 years.
Another way to take advantage of the new terms of your lower mortgage rate and potential equity is to use the money you may end up with in hand to pay off existing balances from other creditors and consolidate your debt as much as possible. Mortgage rates are often significantly lower than credit card or other loans rates so by using these funds to eliminate your other debt, you are using the refinancing process to save even more in the long run, not to mention the number of monthly expenses that you may be able to eliminate.
Working with a mortgage agent or broker at Real Mortgage Associates, can not only give you the best personal service, they can also help you compare all the refinancing programs available from all the financial institution, guaranteeing you the best mortgage rate in the end.