Refinancing your mortgage is the best way to get out of a high interest Indianapolis home loan and into a lower interest mortgage. When rates are low, you can save thousands of dollars on your mortgage.
There are lots of reasons to refinance your mortgage. You can lower your total monthly payment, shorten the life of the loan, pay off other debt, take advantage of tax incentives, turn an adjustable rate mortgage into a fixed to reduce your overall risk, and more.
1. Lower Your Interest Rate
If you have a 30-year fixed loan with a balance of $200,000 and an interest rate of 6%, your monthly principal and interest payments would be $1,119.10 per month. Since interest rates have dropped considerable since then, you can refinance with an annual percentage rate (APR) of just 4.2%.
On the new loan, your principal and interest payment is $978 a month – so doing a mortgage refinance could save you $221 a month in mortgage payments.
2. Chop Off That ARM
An adjustable rate mortgage (ARM) usually comes with a fixed interest rate at first, and then changes to a floating rate for the rest of the life of the loan. A fixed-rate mortgage has the same exact interest and principal payment schedule for the whole loan.
Converting to a fixed mortgage from an adjustable rate can be a wise financial decision, especially if you plan on staying in your home for the long term. Having that same monthly payment allows for proper budgeting and helps keep your finances secure.
3. Ditch PMI
Any loan that has less than 20% down requires PMI, or Private Mortgage Insurance, to be added to the loan.
Current PMI on an FHA Loan, for example, is .85%.
Once you have 20% equity in your home, you may be able to get rid of PMI by doing a mortgage refinance. This way, you can reduce your monthly payment by removing PMI and reducing your interest rate at the same time!
4. Pay Off High Interest Debt
A cash-out mortgage refinance is used to consolidate high-interest debt like credit cards, student loans or car loans. You can reduce the interest rates on your debt by a large margin using this loan program.
The APR on the new mortgage is usually much lower than the rate on credit cards, student loans and other debt. You can end up saving a ton of money on the total interest you pay using this strategy.
To refinance with any of these loan programs, you need to apply with The Home Loan Expert, Ryan Kelley. With his no application fee policy, and letting you skip a couple of months of payments, there’s no excuse not to take advantage of these lower interest rates and save yourself thousands of dollars now. Call our Indianapolis office at 317-550-1515 or apply online at www.thehomeloanexpert.com today. Nobody makes it easier to refinance and save thousands of dollars than The Home Loan Expert, Ryan Kelley.