What it means to refinance your mortgage
Refinancing can save you money, both on your monthly payments and in the long term.
The type of refinance you choose will depend on your goals and the kind of mortgage you have.
What is a mortgage refinance?
When you refinance, you re replacing your original mortgage with a new one. Your new mortgage comes with a different interest rate and monthly payments. You ll probably refinance into a new term length, and you may even switch from an adjustable rate to a fixed rate.
Refinancing can help you achieve several financial goals. You could lower your monthly payments so you have more room in your monthly budget, lower your interest rate to save money in the long run, or switch to a shorter term length to pay your home off faster.
Self-made millionaires share the same major savings goal
In his book, Corley wrote 80% of the self-made millionaires he studied didn t get wealthy until after age 50 but that almost all of them started the same way. The self-made millionaires in my study all set a goal of saving 10 to 20% of their income during their pre-millionaire years, Corley wrote. The average American has a savings rate of about 8%, according to the St. Louis Federal Reserve .
Using a bucket system to save
More importantly, the pre-millionaires were intentional about where they put their savings. Using a strategy Corley calls the bucket system, they siphoned their savings into four general categories: retirement savings, specific expenses, unexpected expenses, and cyclical expenses.
Those who are able often take care of the elderly people in their families themselves, or hire caregivers to assist in the home. Many people expect that their children will eventually take care of them, but I do not intend to have children, so I will almost certainly have to fend for myself in my old age.
I will certainly need savings to take care of daily needs, and I will need a place to live. Paying rent does not seem like the best plan for an elderly person with limited funds, so I ve decided I need to purchase or build a house.