When Does Refinancing Your Home Make Sense?
Refinancing a mortgage is the process of replacing an existing home loan with a new one. During a refinancing, the original loan is fully paid off which allows a new loan to be created. Usually, homeowners seek to refinance their home in order to obtain one with a lower interest rate.
Determining whether you should refinance your home mortgage largely depends on your financial goals. Refinancing is an ideal option if you seek to:
- Shorten the term of your loan
- Lower your interest rates
- Lower monthly payments
- Switch from an adjustable rate mortgage to a fixed loan
- Cash out home equity
What Are My Refinancing Options?
Term and interest are the most popular forms of refinancing. However, there are other financing options available to you which include:
Cash Out – If you have equity in your home you may wish to proceed with a cash-out refinancing which involves taking out a large home loan. Most homeowners choose to go forth with this refinancing option to pay off debt or to fund home improvements.
Dissolve Mortgage Insurance – The best way to get rid of mortgage insurance is to refinance your home. This is an ideal option if you’ve managed to pay down a good portion of the debt and the value of your house has increased.
Shorten the Term – If your original mortgage was for a thirty-year term you might wish to refinance in order to pay off the home loan in a shorter period. You’ll find that even private mortgage lenders often decrease interest rates with lower term mortgages.
How Do I Start the Refinancing Process?
While refinancing a mortgage is “no walk in the park” we can make the process much easier. Use our mortgage affordability calculator to first determine if refinancing can help you meet your financial goals. Also, you can use the refinancing calculator to generate a list of recommended loans based on the current market rates.
Whether you take out a new loan with private mortgage lenders or a government-backed program, you’ll have to first fill out a loan application along with a host of other paperwork. Before you can secure a loan you will have to have an appraisal conducted to determine your home’s value, which is necessary for a mortgage refinance.
Are You Ready to Refinance Your Mortgage?
If you have decided to refinance your mortgage then let our mortgage advisors guide you through the process right now. We service Houston, TX and surrounding areas.