Spilling the Tea on Refinancing

Spilling the Tea on Refinancing

Spilling the Tea on Refinancing

You’ve heard the term refinancing, but do you really know what it means? 


What is Refinancing?

To review, refinancing means taking out a new loan to replace your existing loan. The new loan pays out the balance on the existing loan, so all you have to worry about is your new loan. The most common reasons to refinance are to:

  • Lower your monthly payments
  • Decrease your interest rate
  • Take cash out of your home equity
  • Change mortgage lenders

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, refinancing could extend the amount of time you have to pay back your loans as well as help you consolidate your debts.


The “Tea” on Refinancing

Refinancing is not all sunshine and rainbows. Just like when you first purchased your home and had to pay closing costs, when you refinance your mortgage, you also have to pay additional costs.


Some loans have penalties for breaking or making changes to the original agreement. There may also be legal fees associated with making a new loan agreement. Lastly, in order to determine the amount of equity you have built up in your home, you will need to have a home appraisal, which also costs money.


To determine if the benefits outweigh the costs, allow our experts to crunch some numbers for you. Connect with one of our mortgage experts to see how much money you can save by refinancing!