Recent data has confirmed that more homeowners are paying down their mortgage in order to refinance at a lower interest rate.
During the last quarter approximately 22% of homeowners who refinanced their initial mortgage, paid more than they needed in order to lower the outstanding balance. Many homeowners are using a mortgage calculator to see the potential savings they could make.
The average 30-year loan rate dropped to 4.54 percent in the week ending July 22 compared to 4.56 percent from the previous
week and 5.25 percent from this time last year.
More homeowners have decided to refinance their home to consolidate debts, make home improvements or to pay off their mortgage faster.
Home mortgage refinancing means that you will get a secured loan in order to pay off an existing loan. In most cases, the loan will have been secured by your home.
The most common reason for refinancing is a lower interest rate. Even if interest rates have gone down that much since you bought your house, even a small amount of interest reduction can make a big impact in your monthly repayments. If your credit rating has improved, you may qualify for a lower interest rate when refinancing your home.
Many borrowers have to pay down principal in order to lower their loan-to-value ratio. This will then make them eligible to refinance their mortgage. More and more people are doing this because mortgage rates are at near all time lows.
Another reason mortgage refinancing is to reduce the length of your current mortgage. This allows you to pay off your mortgage sooner and save money.
Another reason many Americans are mortgage refinancing is to pay off credit card bills and other loans with high interest rates.
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