Refinance

When you refinance your home loan, you replace your existing mortgage with a new one. A refinance can give you the chance to secure a lower interest rate, shorten or extend your loan term, convert an adjustable rate mortgage to a fixed rate mortgage, or use your equity to meet financial goals. While refinancing isn’t the best choice for everyone, there are some signs that might indicate you would benefit from this strategy. You may want to consider a refinance in the following situations.

Interest Rates Have Gone Down

A number of factors, like inflation, the economy, and the U.S. Federal Reserve cause mortgage rates to fluctuate. If mortgage rates are lower than they were when you took out your original mortgage, you can potentially refinance to a lower rate and save money on interest charges and monthly payments.

You Want a Lower Monthly Payment

Whether your income has gone down or you simply need some extra cash each month, you may extend your term and lower your monthly payment through refinancing. Just keep in mind that you may pay more in interest in the long run.

You Want a To Modify Your Mortgages Term (in years)

A 30-yr. fixed-rate mortgage is the most commonly applied-for mortgage in regard to term; however, other fixed-rate term options are available as well – such as 15-yr., 20-yr., 25-yr., and even 29-yr. A shorter term will mean a larger monthly payment obligation, but the rate offered will be lower, and the mortgage will be paid off faster; therefore, you’ll gain equity at a faster pace than you would on a longer term, and you’ll pay less in interest over the life of the respective loan.

Your Home’s Value Has Increased

If property values in your area have increased or you’ve performed some major home improvements, you may want to consider a refinance as your home’s equity position is another factor that lenders consider when evaluating creditworthiness.

You’d Like to Access to Your Home’s Equity (Cash-Out)

This is when you take out a new mortgage that’s larger than what you previously owed on your original loan and pocket the difference in cash. You can use this cash to pay off high-interest debt or meet another financial goal. Oftentimes homeowners will reinvest the cash into the home through home improvement renovations or the like to increase the home’s value.

Your Credit Has Improved

Your credit score has a significant impact on the interest rate that will be offered to you. Therefore, if your credit score has improved since taking out your current mortgage, you may be eligible to refinance into a lower rate mortgage and save hundreds or even thousands of dollars in interest.

You Have an Adjustable Rate Mortgage (ARM) and Prefer a Fixed-Rate Mortgage

If you have an ARM home loan but rates are going up, you might want to switch to a fixed-rate mortgage through a refinance. Not only can this allow you to budget your monthly payments, it may also save you a lot of money on the overall cost of your home.

Refinancing FAQ’s

Can I refinance with the same lender?

While you can pursue a mortgage refinance with your current lender, it’s a good idea to shop around and compare refinance offers from various lenders. By doing so, you can land the best possible deal for your unique situation. As a mortgage broker, I have access to over 50 different wholesale mortgage lenders, whose rates I will shop on your behalf to locate the best offer for your given scenario.

How much does it cost to refinance?

If you decide to refinance, you’ll pay closing costs, which include origination fees, home appraisal fees, recording fees, and others. In general, you can expect to pay between 2% to 5% of the loan amount. Depending on your circumstances, the cost to refinance may be well worth it.

How do I start the home loan process?

Whether your goal is to take out a new loan or refinance your existing loan, I’ll be here for you every step of the way. To get the process started, don’t hesitate to fill out my convenient online form.