Spilling the Tea on Refinancing
You’ve heard the term refinancing but do you know what it really means? We’re spilling the tea in this easy to understand article.
Refinancing Means You Take Out a New Loan to Replace Your Existing Loan.
The new loan pays out the balance on the existing loan. The most common reasons to refinance are to lower your monthly payments, decrease your interest rate, take cash out of your home equity, or to change mortgage lenders. When you refinance you don’t have to stay with the same lender, but sometimes your current lender will make you a better offer when they know you are refinancing.
Over time, as you build up your credit score and improve your financial situation, you are more likely to qualify for a better interest rate. Likewise, if you find yourself in a difficult financial position and are struggling to meet your debt obligations, it could help to extend the length of time you have to pay out your loans or to consolidate your debts which helps improve your cash-flow.
Some Other Things to Think About When Refinancing.
Just like when you first purchased your home you had some closing costs, when you refinance your mortgage there are also costs. Sometimes, your lender has a penalty or fees for canceling or making changes and there will be legal fees associated with the new loan agreement. In addition, in order to determine the amount of equity you have built up in your home you need a home appraisal. The difference between your home appraisal and the balance on your existing loan is the amount of equity you have. To determine if the benefits outweigh the costs our experts can crunch the numbers for you.
If you’re ready to refinance your mortgage or want to see if it would be beneficial to you, connect with one of our mortgage experts now so we can show you how much money you could save on your payments or take out of your equity!