How to Lower Your Interest Rates
If you are like most people, you have some debt, and chances are pretty good that the interest rate on that debt is pretty high. The Federal Reserve (the US central bank) reports the average interest rates for different types of credit, and the latest report shows that the average credit card interest rate is 16.3% and the average personal loan interest rate is 9.58%. Here’s a great way to lower the interest rate you are paying on your debt.
Almost everyone’s house has gone up in value the past few years, meaning you probably have a lot of equity in your house. Housing equity is the value of your house minus the amount you owe on your mortgage. If your house is worth $600,000 and you owe $320,000 on your mortgage, you have $280,000 in equity in your house.
The equity in your house is not being put to its best use if you just let it sit there and don’t use it to pay off your high interest rate debt. How do you get at it? As my mother used to say, “How do I get the money in my fist?” One of the best ways to get the money in your fist is to refinance your current mortgage and include enough money in your new mortgage to pay off some or all of your high interest rate debt.
Refinancing Your Mortgage
Here are some advantages of refinancing your mortgage:
- The interest rate may be lower than your current rate, lowering your monthly mortgage payment.
- If you take out some of your equity, you can use the money for anything at all: paying off debt, home improvements, college, buying a second home, or anything else.
- You can shorten the term of the new mortgage, paying off your mortgage sooner.
- If you are currently paying mortgage insurance because you have an FHA loan or you didn’t have 20% down when you got your conventional loan, you can get a new mortgage without mortgage insurance.
- You can include the closing costs in the new mortgage amount, meaning you won’t have to pay all the closing costs out of pocket.
If you own a house, you have all been given a gift from the mortgage gods the past few years. Your house has gone up in value (probably by a lot), and now is the time to use that equity to improve your financial life.
Contact us today to see how easy it is to get a great mortgage.