Refinancing your home can have many benefits, but the main one that typically entices borrowers is the potential to save money on monthly payments. For some, a refinance could result in a decreased interest rate and subsequent savings on their monthly payment. If you’re fortunate enough to have that result, don’t spend that extra money just yet! Consider one of these options to make the most of your refinance savings.
Pay off debt with high interest rates
Do you have have any loans or pesky credit cards with high interest rates? Consider paying those off first. Doing so can free up funds for you to invest in other ways.
Build your emergency savings
Having money set aside just in case is always a smart idea. Should a financial emergency occur, having a savings account ready for use in this situation could be a lifesaver. If your emergency savings fund is lacking, or if you don’t have one at all, you may want to set aside the money you’ve saved through refinancing.
Why not make some smart investments with your savings? Increase your 401K contribution or even look into buying some stock. Perhaps you can even start a college fund or mutual fund for your children. Consider consulting a financial adviser who can guide you on the best ways for you to make investments with your refinance savings!
Pay off your loan
For some, the smartest move may be to make additional payments toward your mortgage's principal in order to pay it off more quickly. The relief that comes with paying off your home loan may be worth it!
Revisit your insurance policies (life, disability, property, etc)
If you haven’t reviewed your insurance policies lately, this may be the best opportunity. Take some time to meet with your insurance company and reevaluate your coverage. If any of your policies are insufficient, boost the coverage now to properly protect yourself and your family.
While it may be tempting to treat yourself with the extra money you’re seeing after a refinance, making one or more of these smart financial moves could be better in the long run. Explore some of these options and do your best to maximize the savings from your refinance!
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