Refinancing a Mortgage 101
When you refinance a mortgage loan, you will obtain a new mortgage loan that pays off your existing loan. Although there are many reasons to do this, the most common reasons tie back to change. A change in mortgage interest rates that are currently available and may be lower than when you first obtained your original mortgage. A change in the value of your home, it has increased (yay you!). A change in the amount owed on your current mortgage (i.e. considerably less than the original amount borrowed). And maybe a life change like a child going to or graduating from college.
Let’s explore some of the possible benefits of refinancing your home:
- Lower Interest Rate: Refinancing may allow you to lock in a lower interest rate for your home loan. This may translate into less interest paid over the life of the loan and lower monthly payments.
- Different Loan Term: Through refinancing, you can alter the length of your loan term. Perhaps, your income has improved and you would like a shorter term that will allow you to pay off your principle and build equity in your home more quickly.
- Fixed-Rate Loan: Perhaps you want to change to a fixed-rate loan, with more predictable mortgage payments, from an adjustable-rate loan that allows your interest rate and monthly payment to change over time.
- Cash-Out Refinancing: If you’ve built up equity in your home, a cash-out refinancing allows you to convert a portion of that equity into cash.
Want to know more? Check out all our refinancing loan types or Find a Branch near you today!