Benefits of a 2021 Refinance | St. Johns Bank
With mortgage rates at all-time lows, plenty of people are weighing their refinance options. If you’re in that group, you may be able to realize significant savings by making the move, but there are some considerations.
Federal mortgage agency Freddie Mac reports mortgage rates continued to slide so far in 2021, hitting another record low in the opening days of the year. As of Jan. 7, the rate on a 30-year fixed rate mortgage was 2.65%, which is likely significantly lower than the rate you got if you purchased your home before last year.
Obviously that opportunity to save a pretty penny is enough of a motivator to make a refinance attractive for many people, but there are a lot of other potential perks to the move:
Consolidate debt. With a cash-out mortgage refinance, you can capitalize on the equity you’ve built in your home by borrowing more than the cost of the refi. You can use that money to pay off high-interest debts into one low-interest payment. As an example of what that could mean, you could trade in a credit card interest rate topping 20% for one below 3%, which would yield significant savings if you have a large balance.
Get money for home projects or other needs. Those same cash-out loan options can be used to put money in your pocket for other financial needs. Obviously you have to have equity in the home for that type of loan to be an option, but if you do and you’re approved for one, you can use the extra cash for home improvements or other needs.
Make the switch to a different mortgage product. Maybe you immediately regretted not opting for a fixed rate mortgage when you got your mortgage. Maybe you’re ready to trade in your loan for a shorter term so you can retire that debt earlier. Whatever the reason, refinancing gives you a chance to check out and maybe switch to a different option that better fits your current situation.
Accelerate your equity building. If you opt to go for a shorter term, you may be able to use that decision to build home equity. Since equity is all about the value you own from your home, the more you pay on your loan the more equity you have. With a shorter-term loan, you’ll be able to grow that difference more quickly. Home equity is an asset and can be borrowed against, so there’s a reason it’s good to have more of it.
If you’re interested in refinancing your mortgage, St. Johns Bank has the options and expert advice you’re looking for. Let’s get started on your new financial future today!