So, you’re making hefty monthly mortgage payments and seeing no change in your financial situation. Mortgage refinancing can take some load off your shoulders.
Let’s take a closer look at what mortgage refinancing is and how it works:
What is Mortgage Refinancing
Mortgage refinancing involves replacing your existing home loan with a new one to secure lower interest rates and favorable loan terms.
Keep in mind that not everyone can be eligible for mortgage refinancing. Lenders take a close look at your credit score, income, and value of your home to determine an amount that doesn’t incur heavy risk.
How Does Mortgage Refinancing Work
Now that you know the basics, here’s a detailed look at how refinancing a mortgage works:
- The lender assesses your credit history. This helps them determine your creditworthiness and assess your likelihood of making timely payments.
- You submit all the necessary financial documents. This includes bank statements, proof of income, ID, credit information, and W-2 forms.
- The lender will assess your application and determine if you qualify for mortgage refinancing.
- Your application will go through the underwriting process.
The entire process takes about 30 to 45 days to complete.
Types of Mortgage Refinance
Mortgage refinancing doesn’t follow a one-size-fits-all approach. Reliable lenders like AmeriSave offer numerous refinancing options. This includes:
- Rate-and-term refinance
- Cash-out refinance
- Cash-in refinance
- Short refinance
- Debt consolidation refinance
Always consider your financial situation and lifestyle goals to choose the right mortgage option.
Benefits of Mortgage Refinancing
Still feeling confused? Here are five benefits of mortgage refinancing you should know:
Lower Interest Rates
With fixed-rate mortgage refinancing, you can lock in a lower interest rate. This means your monthly payments won’t be affected by changing market conditions or lender policies. Mortgage refinancing can bring predictability to your financial life.
Flexible Loan Repayment Term
Let’s say you’ve acquired a second job or paid off your credit card bills. In such a situation, paying off your mortgage earlier makes complete sense. Refinancing can help change your repayment term so you can become debt-free much sooner than previously estimated.
Tapping into Home’s Equity
One of the standout benefits of mortgage refinancing is the ability to tap into your home’s equity. You will get a lump sum, which can be used for numerous urgent expenses. This could be a necessary home repair job or your child’s college tuition.
Consolidate Debts
Some lenders allow you to combine your personal loans, credit card bills, and mortgages into a single loan. As a result, mortgage refinancing will give you some breathing room in your budget and lead to potential savings.
Work With a New Lender
Choosing a lender for your first mortgage can be a daunting task. A lot of people don’t shop around and end up working with a lender who only drowns them in debt and hidden fees. Mortgage refinancing gives you the opportunity to choose a new lender. Shop around to find a lender with competitive rates and a supportive team.
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