Refinancing your mortgage has many advantages that mainly save you money or can ease a difficult situation. But before you start the process, it’s important to know how refinancing works.
Some advantages of modifying loans on your home include a lower monthly payment or interest savings, while other options can help you pay off the loan faster.
The basics of refinancing
Refinancing means that you apply for a new loan on your property. Ideally, your new “refinanced loan” should have better terms than your old one.
Benefits of Mortgage Refinancing
Here are some examples of the best terms that refinancing can offer you.
Get a longer loan term
If you find that your monthly payments are too high, refinancing can help ease your burden.
You can refinance for a longer loan term, such as switching from a 15-year mortgage to a 30-year mortgage, which can significantly reduce your monthly payments.
Lower the interest rate or switch to a fixed rate
For those with variable rate mortgages, switching to a low fixed rate may be the answer to your financial woes. Many have already taken advantage of today’s low interest rates, ensuring that no matter where the rate may go in the future, they will have a reliable monthly payment they can afford.
Things to consider before refinancing
Although mortgage refinancing has its advantages, there are a few things to consider before committing to a new loan. For example, like a regular mortgage, refinance loans have closing costs, including credit application fees, appraisal fees, title services, lender fees, survey and underwriting fees, all of which could be an additional financial burden.
If your financial situation is not stable, it may be best to put your refinancing plans on hold until your situation stabilizes.
The road to refinancing: steps to refinance your loan
1. Be clear with your goals
Lower monthly payments? Shorter loan term? It would be best for you to decide what your goal is with refinancing upfront.
2. Calculate your savings
Use a mortgage calculator to get an estimate of how much you can save. We have one on our website that calculates down to the penny!
3. Contact a trusted credit counselor
The no-obligation consultation won’t affect your credit score, and you can get solid advice from a local mortgage professional.
4. Apply for a new loan
After discussing several refi scenarios with your mortgage advisor, apply for a new loan.
5. Lock in your interest rate
Locking in your interest rate means that it cannot be changed within a specified time.
6. Close the loan
Pay closing costs to seal the deal. You have now successfully refinanced your mortgage!
Are you ready to refinance?
If you’re at a time in life where refinancing is an option, it’s worth considering. One of our mortgage experts is available to contact you today to help you with your refinancing situation. Call 480-459-4500 or visit us at https://www.barrettfinancial.com/