Whether you have owned your home for 1 month or 10 years, you may be considering refinancing your loan. Many homebuyers consider refinancing their mortgage if they see a big dip in mortgage rates because it is a chance to save money on their monthly payment (as well as the overall life of the loan). Mortgage rates have been historically low for the last few years but that will not last forever. And, if you bought your home before the rates dropped you may want to take advantage of refinancing with a lower rate before they go up. And, while refinancing may be a great option for many homeowners, it is not the best choice for every homeowner. Below are the pros and cons of refinancing your mortgage.Verify your mortgage eligibility (Aug 12th, 2022)
Reduce Your Mortgage Payment
By reducing your mortgage interest, even by .25, you can decrease your monthly payment by a noticeable amount.Verify your mortgage eligibility (Aug 12th, 2022)
Shorter Loan Life
If you had 25 years left on a 30-year mortgage but are going to be saving a significant amount on your monthly payment by reducing your mortgage rate you may consider refinancing into a shorter loan length. In that case, not only are you saving money in the long run but you can pay off your home much more quickly without straining yourself financially.
Cash Out Home EquityVerify your mortgage eligibility (Aug 12th, 2022)
If you have already built up equity in your home and you choose to refinance you could pull cash-out during the refinance for other expenses or renovations. You can borrow against the equity in your home but it is not without risk since you reduce the equity in your home and, should you need to sell, could find yourself in bad financial position or even lose your home.
New Mortgage ApplicationVerify your mortgage eligibility (Aug 12th, 2022)
Applying for a new mortgage is paperwork-heavy and time-consuming. Additionally, your income and credit may have changed since the last time you applied for a loan so you could face some unforeseen hurdles in qualifying.
Refinancing your home is just like buying a new home when it comes to fees and expenses. You will pay closing costs that may range between 3%-6% of the total loan.Show me today's rates (Aug 12th, 2022)