refinancing
Your Home is an Investment
Refinancing is one way you can use your home to leverage that investment.
There are several reasons you may want to refinance, including getting cash from your home, lowering your payment, and shortening your loan term.
When you refinance the mortgage on your home, you’re trading in your current mortgage for a newer one. Often this new mortgage will have a new principal and a different interest rate. Your lender will use the new mortgage to pay off the old one, so you are left with just one loan and one monthly payment.
There are a few reasons people refinance their homes. You can use a cash-out refinance to make use of your home’s equity or a rate-and-term refinance to get a better interest rate and/or lower monthly payment. A refinance could also be used to remove another person from the mortgage, which often happens in the case of divorce. Finally, you can even add someone to the mortgage.
When Should I Refinance my Mortgage?
There are a lot of factors to consider when deciding if you should refinance.
Consider market trends and current interest rates, as well as your personal financial health, especially your credit score. Talk with a Premier specialist today so he or she can calculate this for you.
Refinancing a Mortgage, Step-by-Step
1. Set your goal
Common reasons homeowners refinance their mortgage include, reducing monthly payments, shortening the term of the loan, and removing FHA mortgage insurance.
2. Choose a refinance lender and apply
After you apply, you will receive a Loan Estimate document. This will tell you how much cash you’ll need for closing costs. Most people choose to include the closing costs in the loan, so they don’t have to pay anything out of pocket.
3. Lock your interest rate
When locking the interest rate, there is a specified period of time during which the rate cannot be changed. The lender and you will close the loan before the rate lock expires. If you decide you want to make a change to your original rate, you can raise or lower it during escrow. You are able to go back to the day you locked your rate and use that day’s rates.
4. Close on the loan
You will have the option to choose to pay or include closing costs in the loan.
When the time is right, refinancing is a great way to use your home as a financial tool. You can adjust your loan term, get a better interest rate, and change your loan type to save money in the long term. You can also utilize your home’s equity to pay off student loans, credit cards, or other high interest loans.