Refinancing

When you refinance your mortgage, you're actually replacing it with a brand new loan. In doing this, you will go through a mortgage application process similar to what you experienced with your original mortgage.

Refinancing is often a sound financial choice that can allow you to meet a variety of needs:

• Reduce your monthly payments by taking advantage of lower interest rates or extending the repayment period
• Reduce your interest rate risk by switching from an adjustable-rate to a fixed-rate loan or from a balloon mortgage to a fixed-rate loan
• Reduce your interest cost over the life of your mortgage by taking advantage of lower rates or shortening the term of your loan
• Pay off your mortgage faster (accelerating the build-up of equity) by shortening the term of your loan
• Free up cash for major expenses or to consolidate debts and provide cash-flow relief.

Sometimes a home equity loan or line of credit can help you achieve some of these same goals. Contact me to see if you should refinance or get a home equity loan.

Rate-Term Refinance vs. Cash-Out Refinance

A rate-term refinance is a new loan for the same amount of money as is owed on the existing mortgage. The new loan pays off the old one, and you now have a loan with new repayment terms. The purpose of the loan could be to reduce your interest rate, adjust your loan term, or both.

Since you've owned your home, you've probably built up equity through your principal payments on your current loan and home price appreciation. A cash-out refinance allows you to access this equity to finance a home improvement, college tuition, another real estate purchase, or just about anything else.

With a cash-out refinance, your new loan amount exceeds your current mortgage balance plus the new loan's closing costs. That difference is cash that's given to you at loan closing. Your new loan will have new repayment terms.

In most cases, you can refinance your mortgage with NO OUT OF POCKET EXPENSE! If you decide to finance your closing costs, as most homeowners do, your new loan amount would be the sum of the outstanding principal plus your closing costs.

The Right Time to Refinance

Many homeowners consider refinancing when interest rates suddenly fall, there's a change in financial circumstances, or to leverage equity for some goal or purpose.

But even though a large decline in rates or an opportunity to pay off debt might make refinancing seem like a no-brainer, you shouldn't consider any single variable on its own. Think about how long you plan to stay in your home, how you plan to use your equity, and how a refinance will support your overall financial goals.

Call me today @ 1-888-544-6635 to talk about your scenario and to see if a refinance is right for you!