Why Refinancing Your Mortgage Will Help You Pay Off Your Home Sooner

Owning your home free and clear may seem like a distant dream, but you can turn this dream into a reality when you have the right plan of action and when you make a concerted effort to follow through on that plan. Paying off your home may be a necessary aspect of your retirement plan, and you may simply want to enjoy the benefit of not having a mortgage payment each month. You may be thinking about selling your home and getting out from under your mortgage in order to meet your financial plans for the future. However, by refinancing your existing mortgage, you may be able to pay off your home sooner and achieve the goals you have for the future.

What You Can Accomplish By Refinancing

Refinancing an existing mortgage provides you with the opportunity to close out your current mortgage and to replace it with a brand new, first position home loan. This means that you can refinance to take advantage of today’s low-interest rates, and you may be able to save a tremendous amount of money in interest charges each month. Keep in mind that your loan will be paid off more quickly when more money is applied to principal than with interest with each payment. In addition, you can adjust your loan term. For example, you may close out a loan with a 30-year term and exchange it for a loan with a 15-year term. This establishes your monthly payments so that the principal balance will be paid in full much more quickly. Some people will also use a refinance loan to tap into their home equity. Home equity may be used to pay off credit card debt, car loans or student loans. It may also be used to fix up your home, to go on a nice vacation or for any other purposes.

Getting a Quote for Refinancing

As you can see, you can enjoy a number of tremendous benefits when you make the decision to refinance your home mortgage. However, this is not the best decision for everyone. Before you make a decision about what is right for your future goals and current financial status, it is important to request quotes from a few different lenders or mortgage companies. By doing so, you can learn more about the actual costs associated with refinancing a mortgage as well as the rate you may qualify for and what your monthly loan payment will be. You can request multiple quotes for different terms to determine which monthly payment may be most affordable for you.

Making Your Final Decision

When you have the refinance loan quotes in hand, you can compare the options to determine which is best for you. Focus on monthly payments as well as how the term will impact your plans for the future. Once you have settled on a refinancing option that may help you to achieve future goals, you can then compare the refinancing plan against a selling plan. After all, rather than refinance, you can list your home as for sale by owner and take advantage of these same benefits with a new home loan. When you stay in the home, however, you will benefit from avoiding moving costs, keeping the neighbors you love and staying in an area of town you are comfortable in.

Living a life free and clear of mortgage debt may seem too good to be true, but it is a status that is possible for most to achieve. Refinancing your existing loan may be a smart idea that can establish your loan on terms that are easier to pay off quickly. By following these steps, you can more easily determine if refinancing is the right move to make with your current home loan.

This article is contributed by Damien Justus

Damien Justus is a business consultant and writer who’s passionate
about real estate, finance, investing and business technology trends. When he’s not writing or investing he enjoys traveling, hiking and skiing. You can contact him through his Google+ account.