Regain Control with Refinance Loans
Refinance loans allow you to change the structure of existing debt. If you are like many Americans your monthly expenses have probably increased over the past few years. Higher grocery bills, increased insurance rates, variable rate mortgages resetting and a host of other expenses can take a toll on any budget. Learn how to regain control of your household finances with refinance loans.
Types of Refinance Loans
Here are the most commonly available refinance loan types with tips on who is likely to benefit the most:
- Mortgage refinance loans. People with high interest rate mortgages, adjustable rates or other expensive monthly mortgage payments might benefit from a mortgage refinance. Since current mortgage interest rates remain near their historical lows, you could save hundreds of dollars off the monthly mortgage payment with a refinance loan. If interest rates are 1 percentage point or more lower than your current rate then it could make solid financial sense to refinance and lock in these ultra low rates.
- Car refinance loans. Outside of buying a home, vehicles are the second largest expense in most people’s budget. Reducing the interest rate by refinancing a car loan can cut monthly expenses by $100 or even more. Shop around to find the best rates, then determine if a car refinance is right for you.
- Student Loan Refinance. Paying for college is expensive and often requires a combination of grants, scholarships and student loans. Unfortunately, that can lead to a situation where students (or parents) take out multiple small loans each with a minimum monthly payment (usually starting at $25 per month). Refinancing or consolidating student loans allows all of the small individual student loans to be wrapped into one larger loan with a minimum payment that is often much lower than the individual loan payments. It’s a great option for those seeking to minimize monthly expenditures.
- Cash-Out Refinance Loans. If you happen to have several of the above situations and also have substantial equity in your home, it may be possible to obtain a cash-out refi then use the additional funds to pay off all of the other loans and/or high interest rate credit cards or other debt. The benefit of a cash-out refi is the ability to dramatically reduce monthly expenses, combine payments into one convenient payment and eliminate high interest rate debt. Just keep in mind, you will be paying for a car or other credit card debt for up to 30 years instead of just a few years. In the long run it could cost you even more if not used wisely.