Using Refiance to Pay off Your Loan Early
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How can I pay off my loan early and save money on interest?
There are many ways to combine a refinanced loan with life events in order to pay off your home mortgage early. Here are just a couple of ideas:
- Combine a pay increase with low refinance rates. If you've received a pay increase and want to start paying your mortgage down more aggressively, you don't have to refinance. Instead, you can simply make larger payments each month. However, refinancing to a shorter duration and lower rates could save you even more money. Look for local refinance rates that are lower than your current mortgage rate and use a mortgage calculator to find the rate and loan duration combination that results in a monthly payment that takes up the entire amount of your pay increase.
- Combine a bonus with low rates. When you compare local refinance rates, you may find that the lower rates combined with a shorter loan duration can equal a payment that's exactly the same as the one you already pay. If you take advantage of this, you'll save thousands of dollars on interest on your loan. But, if you also take all the bonuses you receive at work and use them to pay down the principal, you'll not only save more money in interest, but you'll also shorten your loan duration even more.
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