4 Reasons to Consider Refinancing
Refinancing is a tool you can use to get a better hold on your finances. Here are four ways you can deploy it.
If getting on top of your financial health is on your to-do list, you might wish to consider refinancing some of your debt.
Refinancing is a way for you to replace an existing loan with a new one whose terms are more beneficial to you based on your goals. Plus, refinancing is available for many different loan types, including auto loans, student loans and even mortgage loans.
People consider refinancing for all kinds of reasons, whether their financial situation has changed or not. Let’s explore a few of those reasons:
Secure a lower interest rate
If your financial situation has improved since you first initiated your loan, your lender may qualify you for a lower interest rate – saving you money in the long-run. With a lower interest rate, you may be able to pay more toward the principal each month.
Lower your monthly payment
If you need to free up a little bit more cash each month, you can refinance to extend the term of your loan. By extending your term, you’d lower your monthly payment – but could still have the option to pay larger amounts when you’re able. This method would result in you paying more in interest over the life of the loan, but could be helpful in certain situations.
Pay off your loan faster
Conversely, if you find that you can afford to throw a bit of extra cash at your loan each month, refinancing to shortening you the term of your loan can offer you that opportunity – once again saving you money on interest.
Consolidate your debt
Student loan borrowers often have multiple loans with different lenders – each with their own payment deadlines and dates. Refinancing to bring all of your student debt under one loan could make managing your payments easier, in turn making it less likely for you to make a mistake. Consolidating your debt through refinancing is a helpful way to dodge common repayment pitfalls which could wind up damaging your credit.
How refinancing works
Depending on the type of loan you wish to refinance, the process can vary slightly. Generally speaking however, the process flows a bit like this:
First, submit an application for refinancing. You’ll need to have some information about your current loan on hand for this. You can apply over the phone, online or in-person at a UW Credit Union Branch.
Once your application is approved, you’ll go over the details and sign off on the new loan. UW Credit Union will then pay off your old loan and establish a new one with us. From there, you simply begin making payments on your new loan – which can be done conveniently using Web Branch or the UW Credit Union Mobile App.
Refinancing is a great way to tailor your financial situation to best suit your life, and now is a great time to do it as rates remain low. However, it’s probably best to act quickly, as rates are poised to rise in the coming months. If you’re ready to jump in, fill out an application today. Click the link for the loan you’d like to refinance to get started: auto loan, student loan, home loan or mortgage.
If you’ve still got questions, or are curious to learn more, don’t hesitate to reach out to a UW Credit Union team member. We’re here to help crunch the numbers, answer questions and provide advice specific to your situation and with your best interest in mind (even if what’s best for you is to not open a new loan with UW Credit Union!)
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