How a Loan Conversion Can Save You Money
When it comes to managing your finances, timing is everything. The key to unlocking savings, optimizing your financial health and ensuring a prosperous future is knowing when to initiate a loan conversion.
As interest rates become more favorable, we’re starting to see a rise in opportunities for Compeer Home clients to exercise their conversion option and save.
What is a Loan Conversion?
Converting your existing Compeer Home loan can help you reduce interest rates, lower payments, improve cash flow and achieve long-term financial success.
Most Compeer loans are eligible for an interest rate conversion 12 months after the most recent rate lock date. For a minimal fee, clients can convert their interest rate without negatively affecting their original loan terms, meaning converting your rate doesn’t have to extend your loan.
Benefits of Loan Conversions
What converting your home loan does is provide borrowers with a couple opportunities. You could qualify to save money via a lower interest rate, potentially saving you hundreds of dollars per month, depending on your loan size.
You could also take advantage of new loan terms with a lower rate and a shorter maturity date, keeping your payments similar to previous terms while directing more toward principal instead of interest.
Compeer Home clients who have saved money with a loan conversion have been able to put that money towards achieving life goals such as making home improvements, paying off high-interest debt and sending their child to college.
Is a Loan Conversion Right for You?
When Compeer Home’s loan officers work with you to ensure you benefit from a conversion, here are just a few of the things we may discuss:
- Does the conversion fee offset the benefit? Even with a lower interest rate, you’ll want to know the initial conversion fee is manageable in your budget and will be offset by future savings. Our team will make sure you understand the time it takes to recoup the small upfront fee to benefit your loan long term.
- Do you plan to make additional principal payments? For clients who want to reduce their overall loan term, converting to a lower rate with the same term lets more of your payment go directly toward the principal, helping you save on interest.
Why Timing Your Loan Conversion Matters
Waiting for the right rate or conversion opportunity can make a greater impact. The experts with Compeer Home monitor rate trends, so we’ll reach out when it’s clear converting will benefit you. Here are some factors we consider:
- Rate movement over time: While the trend might be downward, small fluctuations can impact your potential savings. We assess rates continually and can alert you when we identify meaningful savings potential.
- Your loan specifics: Each loan has unique terms and maturity, so converting isn’t always a one-size-fits-all solution. We analyze your individual loan to provide tailored guidance.
Long-term Benefits of Waiting for the Right Conversion Opportunity
Deciding to convert is often about balancing short-term gains with long-term financial health. For some, the right conversion might come with a lower rate but shorter term, helping you build equity faster.
For others, a smaller rate drop could reduce monthly payments, boosting cash flow for other priorities. We consider both your immediate and future financial goals in our recommendations.
Compeer Home is dedicated to taking care of our clients and loan conversions are just one of the many ways we add value to our client relationships. As a cooperative, we want our members to be successful. By keeping you front and center in everything we do, we ensure you can be.
Author Bio: As director of lending at Compeer Financial, Chad McGlothlen is dedicated to helping clients find smart ways to save money. With 23 years in the mortgage and financial services industries, Chad combines expertise in financial acumen and strategic planning to empower clients to achieve their financial goals. He remains active in industry groups like MBA and WMBA to stay current with trends and builds valuable connections in the financial sector by serving as a panelist at the Farm Credit Services Home Lending Conference and contributing to Compeer’s Home Sweet Home podcast. NMLS #712114
Compeer Home is a division of Compeer Financial who is an Equal Opportunity Provider and Employer, and an Equal Credit Opportunity Lender. Mortgage Account Errors and Credit Reporting Disputes – If you believe there is an error on your mortgage account or that Compeer Financial has furnished information to your name reporting agency on any of your account(s) that is not accurate, you will need to send a written statement to us describing in detail the information you believe is in error or inaccurate along with your name, address, and account number to Compeer Home Services, PO Box 4459, Mankato, MN 56002-4459.NMLS #619731.(c) 2024. All rights reserved.