Here’s what you need to know and consider when refinancing your mortgage
Mar 1, 2022, 5:59 PM | Updated: Mar 2, 2022, 1:43 am
Refinancing your mortgage has many benefits that mainly save you money or can ease a difficult situation. But before starting the process, it’s important to know how refinancing works.
Some pros to changing loans on your home include a lower monthly payment or saving on interest, while other options can help you pay off the loan faster.
The basics of refinancing
Refinancing means that you are applying for a new loan on your property. Ideally, your new “refinanced loan” should have better terms than the old one.
Benefits of mortgage refinancing
Here are some examples of better terms that refinancing may offer you.
Get a longer loan term
If you realize that your monthly payments are too high, a refinance can help ease your burden.
You can refinance for a longer loan term, such as going from a 15-year mortgage to a 30-year mortgage which can significantly lower your monthly payments.
Lower the interest rate or switch to a fixed rate
For those who have adjustable-rate mortgages, switching to a low fixed rate may be the answer to your financial struggles. Many have already taken advantage of current 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 you refinance
While mortgage refinancing has its benefits, there are a few things to consider before committing to a new loan. For example, similar to a regular mortgage, refinancing loans have closing costs including credit report fees, appraisal fees, title services, lender fees, survey fees, and underwriting fees –all of which could be an additional financial burden.
If your financial situation is not stable, it might be better to put your refinancing plans on hold until your situation stabilizes.
The road to refinancing: Steps to refi your loan
1. Be clear with your goals
Lower monthly payments? Shorter loan term? It would be best if you decided what your goal is with refinancing right off the bat.
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 loan adviser
The obligation-free consultation won’t impact your credit score, and you can get solid advice from a local mortgage pro.
4. Apply for a new loan
After discussing several refi scenarios with your mortgage advisor, apply for a new loan.
5. Lock your interest rate
Locking your interest rate means that it can’t be changed within a specified timeframe.
6. Close the loan
Pay the closing costs to seal the deal. You’ve now successfully refinanced your mortgage!
Are You Ready to Refinance?
If you’re at a place in life where refinancing is an option, it’s well worth considering. One of our mortgage experts are available to connect with you today to help you with your refinancing situation. Call 480-459-4500 or visit us at https://www.barrettfinancial.com/