You may have heard the term refinancing at some point whether you are a homeowner or not. Refinancing your home is done typically by homeowners who would like a better interest term and rate. Often times, when rates are low, many homeowners actually end up with a lower monthly mortgage payment. Homeowners can also refinance their homes to cash out on their home equity. These types of refinancing products are used for homeowners that are in need of liquid funds.
How Does Refinancing Work?
When homeowners refinance their home, the first mortgage loan gets paid off, which allows for a new second loan to be created. If the homeowner is looking to refinance for cashing out on their home equity, it usually means that they have to qualify for a new loan that is higher than the current balance of the original mortgage loan. If a homeowner would like a no cash-out refinance option, they essentially are changing their interest rate and or shortening their repayment term.
Things to Consider
- In some cases, refinancing can include the same closing costs as your initial mortgage
- Refinancing is a lot easier and takes up less time than when you first got your home
- Before you refinance, speak to an expert loan officer to understand all your options and learn about current rates
If you'd like to know more about how to refinance your mortgage or to learn about current rates, reach out to one of our expert loan officers today and get started.