Five Ways Refinancing Your Mortgage Can Help You Save Money

Paying your mortgage every month will help you remain in your home, but it is also the biggest expense you have on your budget. Saving money on your mortgage is easy to do with a mortgage refinance. Other than the obvious ways a refinanced mortgage can help you to save money, not everyone is fully aware of how you can benefit from restructuring the loan in this way. On the next slides there are five ways listed that can help you save money with a refinanced mortgage.

Government Refinance Loans

According to Entrepreneur, getting either a loan through the Home Affordable Refinance Program (HARP) or the Federal Housing Authority (FHA) makes it possible for you to get a much lower rate. It is even possible for you to use these programs when you are underwater on your loan.

Resetting Your Debt to Income Ratio

Use a mortgage refinance calculator to see just how much money you are going to save on your mortgage payments every month. This gives you an idea of how much your DTI ratio will change. After all, when you are spending less money on your mortgage, you have less financial responsibility per month.

Reducing the Length of Your Loan

When you refinance your loan, you can shorten the length of your loan. Once paid off, you will get a massive boost to your credit score. Additionally, you will save money overall with the amount you are spending on the loan. The fewer months you are paying interest, the less you will spend overall.

Boosting Your Credit Score

As mentioned above, you will get a boost when you pay everything off, but you will also get a boost when you attain a new loan. Having a lower interest loan allows you to have a higher credit score. Use the mortgage refinance calculator to see just how much your payment will decrease after you attain the new loan.

Changing from Variable to Fixed Rate

Another great way you can save when you get a loan after using a mortgage refinance calculator is the ability to change from a variable to a fixed rate. Keep in mind while there is the possibility of saving money using a variable rate, this is not a guarantee. The only guarantee you can save money is to use a refinance with a fixed rate interest rate lower than what you have now.

These are just a few of the ways you can save money when you use a mortgage refinance.