If your current mortgage has high payments...or alternatively if you can pay off the loan faster, you might want to refinance. In fact, there are any number of reasons why refinancing might be a good idea for you.
Refinancing is replacing your current home loan with a new one. The new loan will have different terms, which should be more favorable to you and your goals. For example, you might refinance because your current loan has a high fixed interest rate and interest rates have come down.
Or you might refinance to get a cash influx from your home's equity to, say, build an extension, or to pay off other debt which is at a higher rate. If you are stuck paying insurance on an FHA loan, refinancing can be your only way out.
In fact, now is a particularly good time to refinance because interest rates are particularly low.
Refinancing is pretty simple. With your initial mortgage, the bank pays the seller and then you pay the bank. When you refinance, the new loan pays off the old loan.
It still requires a similar qualifying process, although if the amount is smaller it may be easier to get the new loan. You will still file an application and go through the same process as with a new mortgage. You can refinance with your existing lender (which is what most people do) or with a new one. Be aware that refinancing will cost you money; there are closing costs and fees that can amount to thousands of dollars. Make sure that it is worth it, for whatever your goals are.
Generally, you should consider refinancing if:
If you are refinancing to get money, always compare the costs with those of a personal loan. Often, but not always, refinancing is favorable, but it does reduce your equity.
Your first step is to establish your refinancing goal, whether it is lower monthly payments, a shorter loan term, getting rid of insurance, or getting an influx of cash.
Once you have done this, you will:
When making your decision, bear in mind that there are four types of refinancing.
If you are considering refinancing your home, contact Lend Smart Mortgage today. We offer all types of refinancing with competitive rates and can advise you on the best course of action for you.
We are a direct lender and a broker who will work one on one with you to exceed your expectations. If we don’t have a product that makes the most sense for you, we’ll find the lender that does. We’ll make sure you have the best loan at the best price. Choose Lend Smart- it’s the smarter way of doing business.