Lowering Home Loan Costs Through Refinancing With A Cash-In Option–What Are The Benefits For Current Homeowners?

Homeowners have been turning to refinancing with a cash-in option as a way to lower their overall home loan costs as refinancing for a lower rate on a home loan coupled with applying money towards one’s mortgage principal can be helpful in not only reducing monthly payments, in some cases, but this type of refinancing could lower the total amount a homeowner will spend on their mortgage payment and home loan when they have completely paid off this debt.

Typically, consumers have used cash-out refinancing as a way to gain access to money from the equity built in their home to either make purchases or pay off debt, but there are indications that more homeowners are refinancing in order to take advantage of low mortgage interest rates at the present time, but also many are using this cash-in opportunity as a way to drastically reduce mortgage costs. Recently, financial adviser Clark Howard brought up the topic of refinancing and stated, “New data from Freddie Mac shows that in the fall of last year, just under half of all refis were cash-in refis.”

Obviously, not all homeowners are in the position to refinance their mortgage, nor are there always instances where homeowners can refinance for a lower mortgage rate and meet closing costs, as well as, apply money towards their mortgage principal. Last year, record low interest rates allowed for homeowners to refinance to a more affordable rate and mortgage payment, like a 30-year fixed rate mortgage, but many did this simply as a way to lower their monthly home loan payment.

While, again, refinancing has also brought opportunities for homeowners to consolidate debt when they take cash out from equity, new trends seen in refinancing where homeowners are using cash-in refinancing options are usually done by homeowners who want to simply lower the overall costs they will pay on their home loan. Some homeowners have been able to refinance for a shorter mortgage, like a 15-year fixed rate mortgage, get a lower interest rate, more affordable payment, and apply money towards their home that will further reduce the amount of time they are repaying their mortgage debt.

Yet, homeowners who are still looking for affordability may not find a lower monthly payment if they refinance to a shorter mortgage, even if cash is presented when they refinance to be applied to the principle, but even homeowners who may opt for a longer fixed-rate mortgage and still use a cash-in refinancing option can find that their overall mortgage costs are greatly reduced. Essentially, homeowners who can reduce the amount of time they are paying their mortgage will obviously pay less when it comes to interest, which has been one of the main benefits and reasons homeowners have been seeking to use cash-in refinancing to their advantage.