When people want to save money on their home loans, one solution they often think of is to refinance home mortgage loans. Depending on your particular loan, you may be able to take advantage of a lower interest rate or lower monthly payments through a refinance home mortgage loan. While it would be great to pay a little less each month, consider an even smarter alternative. Why not refinance home mortgage with a new loan, but continue to make the same payment amount as you were in the past? By refinancing plus pre-paying, you could save money in two ways.
First, you’ll save when you refinance home mortgage to a lower rate. Even a rate drop of just 1% can make a huge difference in the amount of interest you will pay over the life of your loan. By pre-paying, or paying extra on your home loan each month, you’ll also shorten the life of your loan. By doing so, you’ll lessen the amount of interest you pay on your refinance home mortgage loan in a second way.
Combining a refinance home mortgage loan with a lower interest rate with pre-payments is a great way to save thousands or even tens of thousands of dollars on your home loan. But even if a refinance home mortgage loan isn’t right for you today, you can still save money on your home loan by pre-paying as much as you can, whenever you can. Pre-paying is easy when you refinance and your monthly payments drop, but if you can manage to pay extra on your present loan, the savings will still be substantial.