Are you curious about refinancing and why homeowners go this route? More importantly, is it a good option for you? Depending on your goals, a refi could result in
- Lower Mortgage Payments,
- Shorter loan term or
- Cash into your checking account
You can use the cash out to put toward college tuition, consolidate debt or home improvements.
These are just a few of the benefits a refinance can offer, but the timing has to be right. Want to learn more? Here are four things to know about refinancing:
1. What is a refinance?
Basically, a refinance pays off your old mortgage and gives you a new mortgage.
With the new mortgage you to change your
- Loan term – make it shorter, longer or keep it the same.
- Rates- hope fully lower
- Loan Amount
- Remove or add a co-borrower/co-owner
and other details.
2. Would it benefit you?
Refinancing might be a good choice if:
- You have an adjustable rate loan and your interest rate is about to change.
- Current market interest rates are lower than the rate on your current loan.
- Your credit score has greatly improved since you took out your mortgage.
- You want to shorten the length of your loan or lower your monthly payment.
- You need cash, refinancing is a great source of funds.
3. When should you refinance?
It depends on a variety of factors:
- Your lifes needs and goals.
- Your financial needs and goals.
- Your ability to refinance will depend on how much equity you have in your home.
What is Home equity?
Home equity is the financial amount of your property that you truly “own.” If you borrowed money by putting a lien on your home, your lender has a financial interest in your property. If you sell your property the cash amount you receive after paying off the loan is your equity. Equity is amount of cash you’d receive at the sale.
So…To get access to your homes equity you can either:
- Borrow against your property and get cash out, or…
- Sell your property.
So if and when you should refinance depends on
- how much you’ve paid off on your loan,
- what your rate is compared to the current market rate,
- the type of loan you have and your financial goals.
4. What options are out there?
Some common refinances include:
- Rate and term refis, which aim to change your interest rate, loan term or both.
- Cash-out refis, which give you cash based on your home equity.
Not sure if a refinancing is right for you? Or want to learn more about how they work? Get in touch so we can talk about your financial goals and options.
Call Marc Giles (917) 721-5415
