Is Refinancing Right for You? | Trusted American Mortgage
When to Refinance
Before you decide to refinance your home, there are a few things to consider. Mortgage refinancing can allow you to lower your interest rate, tap into your existing equity, switch rate types or reduce your monthly payments. It’s a good idea to consider how long you plan to stay in your home and know what your current credit score is before moving forward with a refinance.
Refinancing is very similar to buying a home. You are required to qualify for refinancing, just as you did for the original mortgage. You will file an application, go through underwriting, and then you will go to closing.
Reasons to Refinance
There are a few reasons to refinance your home, and your financial goal will determine which process will work best for you.
• Early Pay Off - You may be in a better financial situation than you were when you originally bought the house, and in this case, you could refinance your 30-year mortgage into a 15-year mortgage. This will usually make your payments go up, but you will pay less interest over time.
• Change Interest Rate Types - You can choose to change your mortgage interest rates from an adjustable-rate mortgage to a fixed-rate mortgage. This means your interest rate will no longer vary, and will stay the same, no matter the market. If your goal is to obtain a steady payment, this process is a good fit for you.
• Lower Your Payment - Depending on your current financial circumstances, a lower monthly payment may be needed. In this case, you can refinance for a lower rate, or you can choose to extend your loan term. Of course, extending your loan means you will pay more interest over time, but reducing the stress of making your mortgage payment each month would make this process worth it.
• Utilize Your Equity - When you refinance and want to borrow more than you owe on your existing loan, you will receive a check for the difference. This is commonly referred to as a cash-out refinance. Generally, you can couple this process with a lower interest rate.
If you’re ready to refinance your loan, contact us to get the application started!