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How to Save Money Simply by Refinancing

One of the greatest satisfactions in life is having a sense of control over your finances. Some ways to gain and keep that control are reviewing your approach to borrowing money and using credit properly. The proper use of credit can offer great financial advantages: it can boost your financial flexibility, increase your net worth, or improve the quality of your life. But poor credit management can impact your credit history and cause you to pay more interest than you need to unnecessarily. You should always be on the look-out to improve the rates and terms of any loans, mortgages, lines of credit, or credit cards you might have. “Refinancing” means paying off a loan and securing a new one on terms that are more beneficial. Now is a great time to review all of your loans because interest rates are low. 

Making even small adjustments to any of your loans could yield big results in the form of better rates, shorter term lengths, lower monthly payments, or a reduction in overall annual finance charges — all freeing up extra cash for you each month. Refinancing is easy and it involves many of the same steps you took to get the original loan. Here are a few areas to consider: 

Auto Loans – Many people don’t realize that you can refinance your car loan even if you have had the loan for a year or two. The only real criteria are that the value of the car must be equal to or more than the new loan amount requested. The areas that can potentially be improved on an auto loan are the monthly payment amount, the interest rate, and the length of the loan. 

Mortgages – The underlying factor to consider for refinancing your mortgage is how long you intend to keep your house. The benefits of refinancing increase the longer you stay. If you have an adjustable-rate mortgage it is vitally important to have a mortgage review before the rate resets and you are locked into a higher monthly payment. 

Home Equity Lines of Credit – Home equity lines of credit have variable rates, which are usually pegged to the prime rate. Even as those rates come down, you still might have a better outcome if you refinance that line to one with better terms or a fixed Home Equity. So even if you have a good mortgage, it’s important to review your equity line, especially if you are carrying a big balance. 

Credit Cards – Do you know the rate on your credit card? It might surprise you. It is not unusual to see rates as high as 30%! Don’t get fooled by introductory teaser rates because there are many restrictions which could cause that rate to jump. Find a card with a permanent lower fixed rate and no fees.