Refinancing Your Loans During COVID-19
With all the uncertainty surrounding COVID-19 and the world’s financial markets, the Federal Reserve cut interest rates in the U.S. to nearly zero percent, making now an incredible opportunity for people considering refinancing loans of almost every kind.
In fact, with many people adjusting to life working from home and taking financial inventory in preparation for tightening belts while riding out the Coronavirus pandemic, this presents an opportunity to substantially trim expenses by reducing your interest rates.
That means you could pay less money each month on loans, freeing up critical funds to help with living expenses, or even invest if you’re thinking more long term. These are just a few of the ways you can refinance loans to create a brighter financial outlook for your financial situation.
Switching Your Auto Loan
If you currently have an auto loan financed with a dealership or other financial institution, refinancing it with the credit union may help you save significant money each month and over the life of your loan. With interest rates declining, even a modest rate reduction could put more money back in your pocket each month. Finding more disposable income during these times is an essential step in weathering the storm.
Mortgage Loan Refinancing
Your mortgage is probably your largest single expense each month. Most people consider the purchase of a home as a major investment in their financial security. Perhaps the one silver lining of COVID-19, if there is such a thing, is the fact that historic lows for interest rates are here. The reduction in interest rates at these current levels could easily put hundreds of dollars back into your pocket each month while simultaneously saving you tens of thousands of dollars, overall, on the cost of your home.
Is mortgage refinancing the right answer for everyone? Not exactly. However, if you can trim your current interest rates between 0.75 percent to one percent, it’s certainly worth considering. If you have an older mortgage with considerably higher interest rates and your credit is currently in good shape, it's a must to consider.
Credit Card Consolidation
Perhaps one of the most significant ways to help yourself and your financial outlook would be to consolidate all your high-interest credit cards into either a personal loan or one single, lower-rate credit card from the credit union. The personal loan would offer the greatest savings and convert your debt from revolving debt to debt that offers a fixed term and interest rate. Both of which is great news for your wallet. Even better, you’ll switch from multiple monthly payments, one for each of your credit cards, to a single monthly payment, making it much easier to manage your finances in the process.
HELOC: Your Emergency Lifeline
If you’re a homeowner, a Home Equity Line of Credit (HELOC) can provide peace of mind knowing you’ll be able to make ends meet financially in the longer-term. A HELOC allows you to borrow against a portion of the equity in your home, and it acts very similar to a credit card – you only repay what you spend.
The interest rates are lower because a HELOC is a secured loan with less risk for the lender. The best part, you can use the funds for just about anything, home repairs, debt consolidation, medical expenses, or even emergency money during a job loss.
We’re Here to Help!
Refinancing your loans may appear to be intimidating or even cumbersome, but our loan experts are here to help make the process as easy as possible. To learn more or to begin the refinancing process, please call us at 941-748-7704 or email us at information@financialaccessfcu.org
To expedite the process, please obtain copies of your current loan paperwork and your most recent paystubs.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.
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