Refinancing your loan can be a great way to consolidate debt and save money on interest, but it is not always the best option. You need to make some considerations before refinancing that will help you decide if this is the right decision for your household. For example, if you don’t have any equity in the home or a significant change in income, refinancing might not be worth it for you. This article will go into more detail about these considerations and help make your decision easier!
1. What is refinancing?
Refinancing is the process of paying off your current mortgage and taking out a new one to lower your interest rate or pull out money from the home’s equity. Refinancing can be difficult if you have little equity in the home or a significant change in income, so you need to understand all the possible variables before making this decision.
2. What are the benefits of refinancing
The benefits of refinancing are that borrowers can often take advantage of historically low rates, which means they will pay less on their monthly payments each month. However, there are costs associated with refinancing, such as closing costs. Often, the refinance costs can be rolled back into the loan, making the borrower able to achieve their refinance without bringing any cash to the closing table.
3. How do you know if you should refinance
Before you start the refinancing process, ask yourself the following questions:
• Do I have any high-interest debt that I am struggling to pay off?
• Do I want to shorten the term of my loan?
• What are my long-term financial goals?
• Have I made any significant improvements to the home?
Asking the questions upfront allows you to build a plan with your lender that is complete and considers your entire financial picture.
4. Refinancing myths and misconceptions
“The goal of refinancing is to make an old loan more affordable and shorter.”
“Refinancing your mortgage will require a cash payment at closing.”
“You can only refinance one time in the lifetime of your home.”
While you may have heard these myths before, they are all false. The misconceptions arise from a lack of understanding about how the process works or that banks want everyone on 30-year fixed mortgages for stability purposes. Instead, there are a variety of loan products to suit your family’s specific needs.
So, what do you think? Should you refinance your mortgage loan to save money and get a lower interest rate? If so, then contact us for more information about getting pre-approved. We’ll walk through the process with you and answer any questions that come up along the way. You may have heard some myths or misconceptions about refinancing your home loan before but don’t worry because we can help clear things up!
Click here to schedule your free consultation today and find out if refinancing is right for you.