Are you familiar with the benefits of mortgage refinancing?
There are many reasons to refinance your mortgage, like lowering your monthly payments, saving on interest, or simply paying off your loan faster.
But before you commit, it’s important you know how refinancing works. In this article, we’ll share all that you need to know to make the best decision based on your current situation and financial goals.
The Basics of Refinancing
Refinancing means that you are applying for a new loan on your property. Ideally, your new “refinanced loan” should have better terms than the old one.
The Benefits of Mortgage Refinancing
Here are some examples of better terms that refinancing may offer you.
Get a longer loan term.
If you realize that your monthly payments are too high, a refinance can help ease your burden.
You can refinance for a longer loan term, such as going from a 15-year mortgage to a 30-year mortgage which can significantly lower your monthly payments.
Lower the interest rate or switch to a fixed rate
For those who have adjustable-rate mortgages, switching to a low fixed rate may be the answer to your financial struggles. Many have already taken advantage of current low-interest rates, ensuring that no matter where the rate may go in the future, they will have a reliable monthly payment they can afford.
Things to Consider Before You Refinance
While mortgage refinancing has its benefits, there are a few things to consider before committing to a new loan. For example, similar to a regular mortgage, refinancing loans have closing costs including credit report fees, appraisal fees, title services, lender fees, survey fees, and underwriting fees --all of which could be an additional financial burden.
If your financial situation is not stable, it might be better to put your refinancing plans on hold until your situation stabilizes.
The road to refinancing: Steps to refi your loan
Be clear with your goals.
Lower monthly payments? Shorter loan term? It would be best if you decided what your goal is with refinancing right off the bat.
Calculate your savings.
Use a mortgage calculator to get an estimate of how much you can save. We have one on our website that calculates down to the penny!
Contact a trusted loan advisor.
The obligation-free consultation won’t impact your credit score, and you can get solid advice from a local mortgage pro.
Apply for a new loan.
After discussing several refi scenarios with your mortgage advisor, apply for a new loan.
Lock your interest rate.
Locking your interest rate means that it can’t be changed within a specified timeframe.
Close the loan
Pay the closing costs to seal the deal. You’ve now successfully refinanced your mortgage!
Are You Ready to Refinance?
Whether or not refinancing is for you depends on your goals and financial situation. If the rates are low and you have a stable income. then refinancing is worth considering. Do you need professional help with your refinancing situation? Connect with one of our mortgage experts today!