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Refinancing is the process of obtaining a new mortgage to replace the original mortgage. Refinancing allows borrowers to obtain a different interest term and rate. The first mortgage is paid off which allows the second mortgage to be created. For borrowers with a good credit score, refinancing can be a beneficial way to convert a variable loan rate to a fixed-rate mortgage and obtain a lower interest rate. In some situations refinancing can be risky so it is important to explore the options available to you. Refinancing your current mortgage may be the best option for you, so if you’re looking to refinance your home loan, then find the best mortgage rate!
Refinancing your home can possibly lower your monthly interest rate and you can even switch from a variable rate to a fixed rate. You can even use the equity that you have in your home to finance your other expenses. There are several advantages to refinancing your mortgage, including but not limited to:
- Reducing your interest rate;
- Reducing your monthly mortgage payment;
- Replacing your first mortgage with cash-out refinancing;
- Using available equity in home to finance major expenses; and
- Switching to a fixed-rate mortgage.
When considering refinancing it is best to contact your mortgage lender to discuss what options are available to you. It is also beneficial to consult other mortgage companies to see if they have other options. Most lenders require borrowers to maintain their mortgage for at least 12 months prior to refinancing. It may be easiest to refinance with your original lender, however, it is not necessarily required.
One of the obvious benefits to refinancing your mortgage is lowering your interest rate. You can talk to your current lender or speak with other lenders to obtain the best mortgage rate when considering refinancing. If you are able to refinance at a lower interest rate this will affect your monthly payments and save your money. Often people refinance their mortgage to secure money for large projects or expenses. A home equity line of credit is calculated and then the home is appraised. The lender will determine what percentage of the appraisal they are willing to loan. The balance owed on the original mortgage is paid and whatever remains is loaned to the homeowner.
As with any major change to a large loan like your mortgage, there are potential risks. One risk is the possible penalties you face in paying down your existing mortgage with a home equity line. Before refinancing make sure to look at your mortgage agreement and determine whether the refinancing will cover the penalty you may incur. When refinancing there are often fees associated. This can include an application fee, title insurance and a title search fees, and lender’s attorney’s fees. Before refinancing, you should take a look at the numbers and make sure refinancing makes sense for you.
Best Mortgage Rates
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