Any financial decision, if you make it correctly, can positively affect your future for the long-term. Refinancing a home is the same in many ways. Indeed, it’s easy to see that when used properly a refinance can restructure your finances, decrease your overall cost of living and even make paying off debts simpler. However, the benefits of a mortgage refinance must first be approached strategically as a goal. Throughout the refinancing process and the research it entails, you should be asking yourself what you want from your refinance in the long-term. To make that process easier and a little more refined, we’ve laid out a couple ideas for how you can pursue long term financial health through a refinance. With this guide, you’ll be able to plan the long term intentions associated with your refinance beyond a lower monthly payment on the property.
Refinancing is a serious financial decision that you simply can’t afford to take lightly. Many people jump at the chance of a lower interest rate thinking only of their monthly mortgage payments and what they could spend that extra money on elsewhere. However, truly financially savvy individuals will look at the pros and cons inherent in each different type of refinance and make a determination.
There are several long-term strategies that you can adapt to and that you can combine with to craft a larger picture of your financial future. Learn more about some of the long-term advantages below!
It takes a long time to pay off a mortgage. For some, it takes way too long. A desire to control the timeline of your loan and your loan payments often results in you searching out shorter timelines through refinancing options. For example, if you find that you’d like to start investing in real estate, but in order to do so you’ll need the excess capital you’re spending on housing payments in order to start building up enough for a down payment on an investment property, it might be time to lower your monthly payment. The best way to lower your monthly payment on your mortgage is through a refinance. You can explore a variety of options including different term lengths, types of refinance, and more to help you determine what step is right for you first. This is a great solution also for folks who are planning on retiring sooner and would like the house paid off before they retire. Whatever your timeline is that you have in mind, a freshly refinanced mortgage can help get you there.
If COVID-19 has taught us anything, it’s that you can’t have too much money in an emergency savings account. In fact, if you’re finding that you’d feel safer with more long-term savings at your disposal for those inevitable rainy days, then a refinance might be an excellent way to access that peace of mind. Cash-out refinances can work by adding a very large sum of capitol to your savings account right away. You’ll be able to funds into your account and you can even choose to invest a portion of it into an easily accessible investment account that won’t lock up your money if you’re ever in real need of it. If you don’t have enough on hand to take care of deductibles from an insurance claim, or if you are unable to afford a new appliance with ease should one break, then it’s probably a good idea to pad that nest egg a little. If you’re not interested in taking a large part of your equity out of your home via a cash-out refinance, you could just simply opt-in for a lower monthly payment. When you refinance, you’ll likely be able to bring down the interest rate as well as the monthly payment. It’s a great way to start building your savings slowly, month-by-month.
Having a well-padded retirement feels great. After all the years working, you’ll be able to rest and enjoy everything for which you've worked so hard.. However, having a retirement fund that feels like it’s lagging behind doesn’t feel so great. If you’d like, you can always plan for the far-off long-term future with a refinance today. You could bolster your retirement savings and therefore it’s earnings with a cash-out refinance. You could, in one strategic move, lower your monthly payment, your interest rate on the loan, and increase your retirement savings account in a meaningful way so that money can start really doing something for you, rather than merely sitting as equity in your home. It’s a great way to free-up more funds, and make yourself feel a little more financially secure for the future.
Another way you might be able to use a refinance for the long-term well-being of you and your family is through investments. You could use a cash-out refinance to start purchasing rental properties, or you could invest in a variety of different types of investments. You could even save money on the monthly expenses with a refinance meant to bring down your monthly cost of living and put away the excess cash in a savings account.
If your monthly savings is suffering because of the amount of debts you have to pay off, you might be able to grant yourself a little long-term and short-term relief with a refinance. Through a cash-out refinance, you could pay off your other loans and therefore, roll your debt all into one place. Plus, the cash-out refinance you pursue will likely have a much lower interest rate than your other debts, whether they’re car payments, student loans, or credit card bills. In short, you’ll be able to save money while paying back your debt through a lower interest rate and in turn, lower monthly mortgage payments.. Plus, the less debt you’re paying off throughout your life, the more money you’ll have around to do with what you want, like retiring early, buying a new home, and more.
College keeps getting more and more expensive. If you’ve only just had your first child and you’re worried about being able to help them with ever increasing college tuition and expenses, we understand the stress.. Lending Studios provides a host of refinancing options that you could use to strategize a new savings plan that ensures your child has the option of college without having to take on heaps of debt.
Refinancing is an excellent way to increase your overall quality of life, simply because you’ll have access to a large amount of savings during the process. Regardless of whether you’re including one of the above suggested strategies, or if you’re simply looking for month-to-month savings, you'll be able to put more of your money where you want it, rather than straight into your living expenses. Reimagine your budget and start taking control of your finances the easy way. Start with a refinance.
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