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What does refinancing a mortgage mean?
Refinancing a mortgage is the process of switching your existing loan with a new loan term and rate. There are a lot of reasons home buyers refinance from reducing monthly mortgage payments to taking cash out of your home equity for a large purchase. This process is similar to the initial home buying process and you will likely have to pay closing costs to refinance your current mortgage.
How does refinancing work?
Refinancing anything, including a mortgage, is the process of applying for a new loan and using the money to pay off your original loan. This can change your monthly payments, interest rate, and loan term.
Talk to your On Q Mortgage Consultant today if you think refinancing is right for you.
What are the benefits to home refinancing?
Refinancing can be great for home owners for a variety of reasons based on their needs. Some home owners do it to get a lower rate and payment on their mortgage, some to adjust their loan term, and others may find additional benefits. Here is a list of some of the main benefits for a home owner to refinance:
Lower Interest rates and lower mortgage payments.
A lower rate could lower both the monthly principal and interest on a mortgage payment.
Use the equity in your home to borrow money.
Cash-Out Refinances may allow a borrower with sufficient equity in their property to refinance their mortgage for more than is currently owed and pocket the difference.
Adjust the term of the mortgage.
A decrease in the length of a mortgage term (say from a 30 year fixed rate to a 15 year) may increase the monthly principal & interest (P&I) payment, but the loan may be paid off sooner. Refinancing to a lower interest rate, with a longer term mortgage will likely provide a homeowner a lower monthly payment; however, the total amount of interest paid in the longer term could be more.
Convert an Adjustable Rate Mortgage (ARM Mortgage) to a Fixed Rate Mortgage.
Interest rates for an ARM mortgage can increase or decrease based on the housing market. Some people are more comfortable switching to a Fixed Rate Mortgage that has a steady interest rate and a steady principal & interest monthly payment.
Remove Private Mortgage Insurance (PMI).
In some cases, home owners may have mortgage insurance from when they first bought their home. Refinancing could potentially remove the mortgage insurance and lower your monthly mortgage payment.
When should I refinance?
People often refinance for a variety of reasons, so there’s no best time to refinance. Typically, home owners refinance when rates have dropped from when they bought their home to reduce the monthly payment. Some home buyers do it to lower the mortgage term to pay off their home quicker.
Talk to your On Q Mortgage Consultant to learn if now is the time to refinance for you and your home.
Why should I refinance my mortgage?
Refinancing your mortgage allows you to pay off your current loan and get a new mortgage in place. This can help you access equity in your home, consolidate debt, or simply take advantage of lower interest rates.
It is important to remember that there are costs involved with refinancing your mortgage and it is best to speak with a Mortgage Consultant to make sure that you will benefit!
Can I refinance an FHA, VA, Jumbo, or USDA loan?
Yes, you can refinance an FHA, VA, Jumbo, or USDA loan depending on your situation. There are multiple options for refinancing with these types of loans. There are options for a Streamline Refinance Loan. For example, an FHA Streamline Refinance Loan can cut down on the amount of documentation required because it doesn’t require employment or income verification.
Talk to a local On Q Mortgage Consultant to learn more about the loan types and if you could benefit from refinancing.
Should I refinance now?
It’s important to make sure it makes sense for you to refinance. Research rates and compare your current rate to the current state of mortgage rates. Check your credit score and be sure not to make any major purchases if you’re considering refinancing. If you’ve done your research and think refinancing would be a good option, contact your local On Q Mortgage Consultant to get started.
Use our free mortgage payment calculator to see your potential monthly mortgage payments
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