Refinancing Home

Want to Retire Early? Consider Options for Refinancing Homes

Here's a dilemma. All your life you've heard the importance of paying your bills and saving for retirement. Perhaps you've had it deeply ingrained into you by your parents that you need to pay off your home so you are debt free by retirement time. But low interest rates make you seriously consider the option of a refinancing home loan. This seems contrary to the idea of paying of the loan is quickly as possible. Should you even consider refinance home loan, especially if you are trying to become debt free?

It may seem surprising, but refinancing your home may be a great way to get you out of debt, and save you money - long term. Let's say you have 20 years left on your 30-year, fixed-rate loan. If interest rates are 2 percent less than your original rate, you can realize some significant monthly savings if you refinance your home for a 30-year-fixed loan.

But let's say you try another approach. Consider refinancing home loans for a 15-year-fixed loan. While your monthly payment may stay the same, or even slightly higher, you'll pay your home off early. In fact, using our example, you'll save seven years of interest payments to your home loan. What does that really mean in dollar terms? Let's take a look at an example.

Suppose, you owe $200,000 on you home and you have 22 years at an interest rate of 6 percent. If you refinance your home for 15 years, even if the interest rate stays the same, you'll save $43,886.40 in interest. By reducing the number of years you are repaying your loan, you save an incredible amount of interest over the lifetime of the loan. And of course, if the interest rate on your home loan is higher than current rates, you can realize even more of a savings.

Your home is a great investment for the future and you can use that investment to save you money for your future, simply by considering refinancing home loans.

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