You may hear the term “refinancing” and individuals saying that they need to refinance their home. Well what does refinancing exactly mean? Refinancing your home can seem confusing and a little overwhelming, but it doesn’t have to be that way as our well-seasoned mortgage lenders are happy to answer any questions you may have regarding refinancing your home.
What is Refinancing?
Refinancing your home is the process of replacing your existing mortgage with a brand-new home loan. Refinancing your home gives you the opportunity to make changes or improvements to your original mortgage loan. Essentially, refinancing your home is getting a new home loan to pay off your old loan with any new updates included in your new home mortgage loan.
Why do Individuals Refinance?
Most individuals refinancing their home if they are planning on doing major construction, obtain a lower interest rate, to shorten their mortgage term or to change to an ARM (adjustable-rate mortgage).
With recent record-low interest rates, refinancing a 30-year mortgage into a 15-year mortgage may give you similar monthly payments as your original loan with a lower interest rate. The interest rate for a 15-year fixed loan is quite often significantly lower than a 30-year fixed-rate loan but the monthly payments can be higher. If you finance a shorter-term home loan, the monthly payments can be higher but you are paying off your mortgage in less time and you will build and gain equity faster. If you are considering switching a 30-year to a 15-year fixed-rate loan it’s crucial you find your break-even point before deciding if refinancing is the best option for you and your home.
Is Refinancing Right for You?
Deciding to refinance your home should not be taken lightly and talking to a financing advisor is highly recommended before making a large change such as home refinancing. There are many different factors that come into play when deciding to refinance your home as well. There are a few questions that you need to ask yourself when considering refinancing your home.
- How is your credit score?
- How long are you planning to stay in your home?
- Considering any home improvements or large construction?
If your credit score is under 650, or you are planning on selling your home in the near future it is most likely not the right time to consider refinancing your home. Quite often individuals use their new home loan to make renovations to help increase the homes’ value and curb appeal. We make it easy to refinance your home with simple processes and streamlined service to provide you with all your home refinancing needs in one place. If you think it may be time to consider refinancing your home, call Amerifund Corporations to speak with one of our knowledgeable and seasoned mortgage brokers today and find out your options.