If you’re experienced in even limited portions of the mortgage world, chances are you know at least a few things about refinancing. Done for a variety of reasons, the most common of which is to lower monthly payments to make them more manageable, a mortgage refinance is often highly beneficial for homeowners.
At VIP Mortgage Inc., mortgage refinancing is just one of several quality mortgage services we offer to all our clients. We’ll walk you through all the prudent steps of the refinancing process, many of which you may be aware of already, helping you determine whether this is the right choice given your finances. We’ll also provide expertise on an area that can be overlooked in this realm: How do you proceed with your finances after refinancing a mortgage in ways that take advantage of the refinance? Here are a few common options to consider.
Now that you’ve gone through the process of lowering your mortgage payment through a refinance, one great use of these additional funds could b e to pay down more of your principal balance. One common method some homeowners use here is beginning to make mortgage payments every two weeks rather than twice a month or once a month – you’ll barely notice the difference each month, but over a period of a year or two, you’ll make several extra payments and build more equity in your home.
Now, it’s important to be clear on a few things with your lender if you make additional payments. For one, find out if extra payment amounts will be put toward principal or interest – the former is the desirable outcome. Also inquire about prepayment penalties or amortization factors you may need to know about.
Another common use of additional funds following a refinance is to begin an emergency fund, or to add to a current one. You never know when some kind of emergency might take place and require a financial commitment, and it’s better to have money saved up for this than to be forced to dip into other savings.
Another form of savings many look to bolster after refinancing a home is the retirement account. This is particularly common among those who are living in the home they plan to be in for the rest of their lives – adding to the retirement fund improves your potential comfort and lowers any risk of post-retirement concerns.
Finally, if you have significant outstanding credit card, student loan or other forms of debt, using the extra funds you’ve created by lowering your mortgage payment in a refinance toward this pursuit is always a good outlet. Look to pay down the highest interest rate debts you hold first, then move to lower interest rates later.
For more on what to do after refinancing your mortgage, or to learn about any of our mortgage refinancing or home loan services, speak to the staff at VIP Mortgage, Inc. today.