Mortgage Refinancing Offers a Wide Variety of Benefits
With mortgage rates remaining near record lows, you may be considering refinancing your current mortgage to lock in a lower rate or tap into your home equity for renovation projects.
Home office, anyone?
Whether you’re a relatively new homeowner or you’ve been in the process of paying off your mortgage for quite some time, there are aspects of refinancing you should carefully consider before embarking on the mortgage approval process again.
Fortunately, with Homestead Financial, refinancing your mortgage is easy. As a direct lender, Homestead Financial’s mortgage experts are with you every step of the way as you complete the refinancing process, and without the hassle of dealing with a middleman.
There are plenty of reasons to refinance your mortgage, and today’s historically low rates are just icing on the cake.
Refinance for lower interest rates
One of the main reasons people choose to refinance their home is to secure a lower interest rate on their existing loan. The idea here is to save money on the remaining loan term, but how much you save depends on how much you can reduce your interest rate on your loan. Another driving force behind the decision to refinance your mortgage is the added perk of lower monthly payments, giving you another avenue to come out ahead financially.
Switch from an ARM to a fixed-rate mortgage
Refinancing to change your mortgage from an ARM to a fixed-rate mortgage, or vice versa, could be the right move for your financial security.
An ARM is an adjustable-rate mortgage and typically has a lower monthly payment than a fixed-rate mortgage. However, it’s worth noting that with an ARM your rate will only remain the same for the first few years and then it will change annually. If you’re purchasing your home with the knowledge that you intend to sell and upgrade to a larger one in just a few years, an ARM may still be a good option for you.
For those who are approaching the end of their ARM’s intro rate period, you may be considering what the next steps should be. Maybe you purchased the home with the vision of selling to upgrade but circumstances have changed – you may consider refinancing with a fixed-rate mortgage to lock in these historically low mortgage rates. Not only would making the switch secure you a potentially lower interest rate, but it would also eliminate any concerns over future spikes in interest rates.
Eliminate mortgage insurance
If you put down less than 20 percent for a down payment when you purchased your home, you are likely making monthly payments toward private mortgage insurance (PMI).
It may take some time to reach 20 percent equity, but once you have, an appraisal can verify that your refinanced mortgage is for less than 80 percent of your home’s value. From there, a Homestead Financial home refinance loan officer can take the reins.
Refinancing with Homestead Financial allows you to continue building up your home equity while eliminating your PMI. Pair this with locking in a lower rate, and this could be a wise move to free up some of your cash flow.
Tap into your home equity
What are home prices looking like in your neighborhood? If you notice that the cost of the houses on your block has increased substantially, now may be the time to see how much value your home has gained since you purchased it. If the value of your home has increased, you may be in a position to tap into its equity for a cash-out refinance.
In short, this type of mortgage refinance allows you to take out a loan larger than the amount you still owe on your home. This gives you the flexibility to pay off your current mortgage while still allowing you to receive a portion of your home’s gained value in cash.
There are no legal restrictions on how you can spend the money from your cash-out refinance, but it’s wise to have a plan for it before applying. You’ll have to pay fees when you refinance, so you’ll want to make sure it goes towards purchases that could improve your quality of life, such as paying off high-interest credit card debt or boosting your ROI with home improvements. A seasoned refinance lender at Homestead Financial Mortgage can answer any questions you may have about cash-out refi loans.
Debt consolidation
As previously mentioned, if you’re looking for ways to streamline your efforts in paying off high-interest debt on credit cards or personal loans, a cash-out refinance could be the right move for you.
When it comes to debt consolidation mortgage refinancing, a cash-out refinance is a wise option to consider. This type of refi loan allows you to make fixed payments over a set period instead of paying a revolving credit card bill payment every month, and although cash-out refinancing does increase your mortgage by the amount of the other debt that you are looking to pay off, your mortgage interest rate is likely lower than those you’re currently paying on your other debts.
Overall this tradeoff may help you improve your cash flow and save money in the long term, but there are drawbacks. It’s always wise to consult with a financial professional to ensure you qualify for a cash-out refinance of your home loan, and that it’s the right move for you.
Get pre-approved from a mortgage refinancing lender today
Thanks to Homestead Financial Mortgage’s online pre-approval form, starting your pre-approval process has never been easier.
Our mortgage specialists are always ready to help you refinance and achieve your goals. You can expect to hear from a loan officer within 24 hours of submitting your form, and it costs no money to find out your approval status!
If you have additional questions prior to filling out the pre-approval form, you can call Homestead Financial Mortgage at any of the following locations to get started on your home loan refi today:
For Missouri residents
14897 Clayton Rd, Chesterfield, MO 63017 | (636) 271-4663
For Kansas residents
8585 College Blvd #110, Overland Park, KS 66210 | (913) 317-1000
For Illinois residents
4215 IL-159, Glen Carbon, IL 62034 | 618-288-7904
3005 Godfrey Rd Ste A, Godfrey, IL 62035 | (618) 980-3860
Have some additional questions? You can chat with one of our friendly financial professionals online. These great rates won’t last forever – start your refinance today.