5 loans you should refinance now

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Interest rates are incredibly low, but they will not remain low forever. The Fed is threatening to increase rates later this year. If you are a saver with a lot of money in a bank account, higher rates couldn't come sooner. But if you are in debt, low interest rates are a great way to keep interest costs down and get out of debt faster. Almost all debt can be refinanced, and now is a great time to consider your options. Here are five types of debt that you should consider refinancing now.

1. Mortgages

Interest rates on mortgages remain low. For example, Wells Fargo is charging 3.625% on 30-year fixed rate mortgages, and only 3.00% on 15-year fixed rate mortgages. Many Americans have already taken advantage of low rates to refinance. But if you haven't taken advantage of the low rates, now is a good time to consider it.

Just make sure you don't fall for a common trap. Far too many people just continue to refinance into yet another 30-year mortgage. While that might give you the lowest payment, you are actually extending the term and could end up paying more over time. Try to refinance into a 15-year term loan. Not only will you get an even lower interest rate, but you will be able to own your home that much faster.

2. Student Loans

After mortgages, student loans and Parent PLUS loans are some of the biggest financial burdens facing people today. But now you can actually refinance student loans to take advantage of lower interest rates. If you have private student loans, refinancing makes perfect sense. If you have federal loans, you should be careful before you proceed. When you refinance, you give up access to the federal government's income-driven protection plans.

But if you want to refinance, you can find rates as low as 2.14% variable and 3.50% fixed. Use a site like MagnifyMoney to compare and get the lowest rate. You should feel comfortable shopping for the best rate: all credit inquiries in a single shopping period only count as one inquiry. You do not need to worry about the impact on your credit score.

3. Auto Loans

Many lenders offer the opportunity to refinance an auto loan. You might want to consider shopping at your local credit union. If you have good credit, you can find auto loan refinance rates as low as 1.49% at a credit union like PenFed. PenFed will refinance up to 100% and you should be able to apply online and get an instant decision.

You can also shop for a loan at one of the many online lenders which have been created over the last few years. Use a site like NerdWallet to shop for the lowest interest rate.

4. Credit Cards

Credit card interest rates are high. The average credit card interest rate is 13.5%, according to the Federal Reserve. There are many ways that you can refinance and reduce the rate. The best way is to use a balance transfer. With a balance transfer, you can reduce the interest rate to 0% for up to two years, depending upon the offer. Shop for the best balance transfer rates here.

In addition to balance transfer offers, you can also use personal loans and home equity loans to refinance your debt. If you decide to use your home equity, just make sure you pay enough to eliminate the debt in a few years. The biggest temptation and risk of a home equity line of credit is to pay only the minimum due and keep the debt for twenty or thirty years.

5. Any Other Debt

Interest rates are low, and now is the time to lock in low rates on any type or debt or obligation that you might have. For example, if you have medical bills consider applying for a low rate personal loan from your credit union or online. Eventually interest rates will increase. And you will kick yourself if your debt costs more as a result.
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