Use the cash to pay off your debts, make home improvements, or other expenses.
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Refinance and stop paying mortgage insurance or choose to pay a lower interest rate.
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Homeowners who refinance to a shorter-term mortgage can save on interest costs and reach the goal of owning their home outright sooner.
A cash-out refinance can lower your interest rate and help you pay for home improvements by giving you a lump sum of cash.
Interest rates are alwasy changing so it might make sense switching loan types, such as switching from an Adjustable Rate Mortgage (ARM) to a fixed-rate mortgage, or vice versa.
You can refinance your home for a number of reasons, most of which typically result in a more favorable financial situation. Some of the benefits of refinancing include:
Lower your monthly payments: By obtaining a lower interest rate, you may lower your monthly payment – keeping more money in your pocket. Refinancing can reduce your monthly payment initially, but that doesn’t always mean it will save you money in the long run. Fees and interest rates need to be considered when calculating if your new mortgage will save you money over the entire life of the loan. A licensed loan officer will be able to help you decide if refinancing is right for you. We’ll help you calculate at which point you will break even and begin to save.
Shorten your loan term: Maybe you’re making more money now than you were when you first got your mortgage and can afford to put more money toward it. By shortening your loan term, you’ll pay off your mortgage sooner. Short term means you’ll pay less interest over the life of your loan. An example would be refinancing a 30-year mortgage into a 20-year or 15-year mortgage.
It really depends upon the circumstances of your case. If your current interest is higher than the prevailing market rate, refinancing makes sense to get that lower rate which will decrease your monthly payment. The exact amount saved will depend upon the difference between the previous and the new interest rates. To find out the savings in your unique situation, contact us now!
Fees associated with refinancing tend to vary from lender to lender, depending on what they charge. However, there are certain costs that are always standard when you refinance. These include third party fees such as title insurance, notary, credit report fee, escrows, and other recording fees. Appraisal and lender fees, including processing and underwriting charges, also apply. If you decide to pay points to lower the interest rates, each point costs 1% of your revised loan amount. Apart from the closing costs, there are other pre-paid costs for interest, homeowner’s insurance, and property taxes involved. If you have sufficient equity in your home, you can easily roll these closing costs into your new loan, paying virtually nothing out of pocket to refinance.
There are multiple loan programs that allow qualified homeowners to take cash out of their primary residence. Typically, lenders will require that the borrower have an above average credit score, full-time employment, and an acceptable equity position in their home.
Your credit history is only one factor in qualifying for a mortgage, so late payments or other credit report blemishes don't necessarily disqualify you. There are a variety of mortgage options to help people with less-than-perfect credit obtain the right mortgage and leave credit challenges behind.