Whether it’s your mortgage, credit card bills, or student loan debt, those monthly payments can get a little overwhelming–especially if you have all of the above and more. Fortunately, there’s a better way. Refinancing your loans can simplify and reduce your monthly payments, lower your interest rates, and consolidate your debt. If you’ve been juggling multiple loan payments or think you might be able to get a better rate somewhere else, refinancing might be your answer.
What Does it Mean to Refinance Your Loans?
Refinancing entails taking out a new loan to pay one or more outstanding loans. Most traditional lenders also offer refinancing options in addition to loan options, so you can often refinance your loans with the initial lender. Many borrowers, however, choose to refinance with a new lender for various reasons, including better service and terms.
Types of Loans to Refinance in Ohio
As of 2021, the average American has nearly $100,000 in consumer debt. Chances are you have some form of debt right now, likely one of the options below. Read on to see how someone might refinance each loan type in Ohio.
Student Loans
Student loans are one of the biggest sources of debt for many Americans. College students typically take out a mixture of private loans, subsidized federal loans, and unsubsidized federal loans to pay their tuition. Once they’ve graduated, they might find themselves with a handful of loans with various interest rates and monthly payments that are slowly overwhelming them. Refinancing these student loans can simplify the monthly payments, generate one low interest rate, and even reduce overall monthly payments in the long term.
Mortgages
Lenders often refinance their mortgage to either get a better interest rate or shorten their term length from a 30-year mortgage to a 15-year mortgage. Refinancing to achieve a lower interest rate lowers your monthly payment and increases the rate at which you build home equity. On the flip side, many homeowners choose to maintain their interest rate and shorten the term of their mortgage to pay off their homes sooner.
Car Loans
Lowering your monthly car payments can help you save money and prevent you from possibly defaulting on your debts. Keep in mind that some lenders take certain details into consideration, such as the age of the car, total mileage, and more.
Learn more: Ohio Car Loans for All Kinds of Credit
Credit Cards
Refinancing with a personal loan is a great way to handle credit card debt. Consolidating credit card debt with one personal loan simplifies your payments and makes tackling your debt much more manageable. Additionally, personal loans typically have lower interest rates than most credit card companies so lenders end up saving in the long term.
Learn more: Poor Credit Refinancing Loans for Ohio
Small Business Loans
Many small businesses refinance their debts to increase margins. Refinancing small business loans, like others, yield lower interest rates and lower monthly payments, allowing small businesses to relax and concentrate on running their business without worrying about their debt.
5 Reasons to Refinance Your Loans
Refinancing your loans can have many benefits. Here are the top five reasons to refinance your loans in Ohio and reclaim control over your personal finances.
1. Lower Interest Rate
Refinancing can often unlock lower interest rates for borrowers. When you refinance a loan or multiple loans, you have the opportunity to borrow from a new lender. That lender will reevaluate your income and credit history. You might be in a better financial situation than you were when you first took out the loan and can therefore qualify for a much lower interest rate.
2. Lower Monthly Payments
Refinancing your loan can also yield a lower monthly payment. If your principal loan had a ten-year repayment term but you refinance to a twenty-year repayment term, your monthly payments will naturally decrease. Lower monthly payments and a longer repayment term may cost more in the long term, however, as interest accrues.
3. Debt Consolidation
Debt consolidation is a common reason people refinance their loans. Whether you have significant credit card debt or multiple student loans, you understand the pain of paying back and keeping track of multiple loans. Consolidating your debt through refinancing simplifies the process so you only have to worry about one payment a month rather than several.
4. Quicker Loan Payoff
Though some people might refinance their loans so they have longer to pay them off, others refinance their mortgages to pay them off quicker. Switching your mortgage from a 30-year term to a 15-year term ensures you will pay off your loan and own your home faster. Keep in mind that this method may increase your monthly payment–weigh your options and decide what’s most important to you.
5. Switch Lenders
If you’re unhappy with your current lender, refinancing your loan gives you the opportunity to switch to a different lender with better service. Many student loan lenders, for example, have much more efficient online payment portals than their competitors and have incredible customer service support. The convenience alone might be enough for anyone to switch from a traditional lender to a more modern option.
Conclusion
Refinancing your loans can relieve a huge amount of stress from your shoulders. Refinancing can also prove more cost-efficient in the long run, more efficient, and overall better for your current situation. If you’re considering a refinancing loan in Ohio, reach out to our team today with any questions you might have. We’ve been helping families and individuals in Ohio master their finances since 2004 and are eager to help you as well.
Ready to take control of your finances? Apply for a refinancing loan today!