At Security First Financial, we know refinancing your mortgage isn’t a decision to be taken lightly. However, if it is right for you, refinancing comes with a lot of benefits...
Below are the answers to some of the most common refinancing questions. Hopefully, this will help you decide if refinancing your current mortgage would be beneficial to you and your family.
What is refinancing?
Refinancing your mortgage is essentially replacing your current mortgage loan with a new one.
Why consider refinancing?
There are many different reasons to refinance your mortgage, and they’ll vary for each situation. Common reasons include:
Interest rates have dropped and you may be able to reduce the amount you pay in interest over time
You’d like to consolidate debt or pay down high-interest debt
You’ve improved your credit and may qualify for more favorable terms
You’d like to reduce your monthly mortgage payment
You’d like to eliminate your monthly private mortgage insurance (PMI) payments
You need cash for projects, home improvements, unlikely expenses or other goals
You’d like to switch to a shorter-term loan term (for example, from 30 years to 15)
You’d like to switch from an adjustable-rate loan to a to fixed-rate loan
What will refinancing cost?
Like a purchase loan, refinances require closing costs, but these costs vary depending on your situation. In many cases, paying to refinance means you’ll spend less on your mortgage in the long run. Your Loan Officer can help you determine a break-even point so you can find out how long you’d need to plan on staying in your home for refinancing to be financially advantageous.
How much equity do you need?
If you’d like to eliminate your private mortgage insurance payments, you’ll need at least 20% equity in your home before refinancing your loan. However, you can often refinance even if you have less equity built up. Your Loan Officer can help determine whether you have enough equity to refinance.
How does the process work?
Because refinancing is replacing your old mortgage with a new one, the process isn’t that different from the process you went through when buying your home.
You’ll apply for a loan, provide documentation to your lender, get your home appraised to determine its value, go through the underwriting process, and close on your loan.
As always, one of our local Loan Originators will happily walk you through the process so you know what to expect
Contact us today to see if refinancing is right for you.
Original blog post by Primary Residential Mortgage Inc.: https://www.primaryresidentialmortgage.com/about-us/our-blog/detail?blog_id=175&fbclid=IwAR33dYN3ogfpzc_P-DQtyJLjULwecqrrNIZaPVOqMH6doXEuo6GRP1Nr7ZI&utm_content=&utm_medium=organic&utm_source=facebook&utm_trackingid=9aa99a4ec3424a24bf31e67c0d19534d-253468444750357