Refinancing is the process of taking out a new loan to replace an old one. The steps you take are similar to those you took when obtaining your original mortgage. You fill out a mortgage refinance form and submit it along with financial documents and credit information, and then wait for the lender’s approval. If approved, the new lender pays off the old loan, and you begin making payments to your new lender. Homeowners choose to go through the process again for several reasons, but the main reason is usually that the new loan offers key advantages over the old one.
Lower Your Monthly Payments
Refinancing your mortgage at a lower interest rate or extending the term could lower your monthly payments and literally put hundreds of dollars in extra cash back in your pocket each month. If your financial situation changed recently and you’re struggling to manage your bills, this process could help ease some of the burdens. Extending the term of the loan means you make payments for a longer period, but it can keep you from falling behind on your financial obligations.
Pay Your Mortgage Off Sooner
If you currently have a 30-year mortgage, you could refinance and shorten the loan term to 15 years. The shorter loan term comes with a lower interest rate, so you also save thousands of dollars in interest in addition to paying off your mortgage sooner. On the downside, a shorter loan term typically means a higher monthly payment, but you may find the increase to be both reasonable and affordable.
Cash In on Your Home Equity
If you have made payments on your mortgage for some time, then you probably have substantial equity in your home. You can cash in on that home equity with cash-out refinancing. This type of loan refinances your mortgage at a higher amount and pays you the difference in cash. You can use that cash to pay for many things, including a major home remodeling project to add value back to your home, buying a second property, starting a business, paying off debts, or investing in another opportunity.
Get a Better Interest Rate
Interest rates change over time, especially over the course of 30 years. If you originally obtained a mortgage when interest rates were high, then it may be time to refinance. You could save thousands of dollars in interest by filling out a mortgage refinance form to start the process.
Consolidate Other Debts
A mortgage is often a large debt, but it typically comes with a lower interest rate and lower payments than other types of debt. A cash-out refinance is available to people who have at least 20 percent equity in their homes. You can use this cash to pay off your other debts, lower your monthly bills, and save money on interest. But be careful with your cash-out refi. Pay off those other debts and enjoy the savings, but don’t use it as an opportunity to spend more.
Refi has a large network of lender partners and is ready to match you with a mortgage refinance that can save you hundreds of dollars. Click the link below to start pre-qualify for a new mortgage.