Everything You Need to Know About a Home Refinance
There’s been a lot of talk in the news lately about home refinance. You might be surprised to hear that all the chatter about mortgage refinancing is largely because of consumers’ high debt load. Even though a homeowner might have a low-interest rate on their mortgage, their other high-interest consumer debt makes their lives miserable.
Before deciding whether to refinance, you should find a mortgage lender near you who can help you decide whether or not a refi is the best option for you.
To help get you started on this decision, let’s talk more about why you should refinance when you should refinance, and what your home refinance options are.
#1 Why should I refinance my mortgage?
Refinancing is the process of working with a mortgage lender (like Homestead Financial Mortgage) to take out a new home loan that replaces your current one.
The primary reason to consider refinancing your mortgage is to save money. You can do this by
- Lowering your interest rate
- Removing private mortgage insurance (PMI)
- Getting cash out to pay off debts
A mortgage refinance can also give you money for home improvements like a kitchen remodel. The great thing about reinvesting in your home is that you’re building equity. You can also pull out money to buy another property. The rental market has been strong for years, and that’s another way of putting your equity to work.
#2 Can I refinance to get another borrower off my mortgage?
Sometimes, in a divorce or dissolving partnership, a mortgage held by two people isn’t feasible any longer. One of the borrowers wants off of the mortgage. So, in that case, the only way to do that is to refinance. You’d get a cash-out refinance if you have to buy the other borrower out.
Also, maybe there was a co-signer. But now, the borrower who lives in the home has improved their credit enough to qualify. In that case, they can refinance without the co-signer.
#3 When should I refinance my mortgage?
As soon as you’re considering refinancing, you should talk to a trusted mortgage lender like Homestead. Zillow reviews are a great source if you’re looking for a new lender.
Sit down to do a break-even analysis. Consider whether you’ll be in your current home long enough to benefit financially from a mortgage refinance. Do the math on how long it will take you to cover the closing costs on the refinanced mortgage. If the numbers come out in your favor, it’s time to reach out to a loan officer to start the process.
Homeowners who are ideal for a mortgage refinance have 10 to 20 percent or more equity in their home. The percentage of the value of your home that you have paid off to the mortgage lender is your “equity.”
How do you build equity? You can place a down payment of 10 percent or more on your home; you can make monthly mortgage payments to increase your equity and pay down your principal. Or you can see the value of your home increase following improvements or simply through appreciation.
#4 What are my mortgage refinancing options?
Home loan refinancing can help you lock in a lower interest rate. You will pay less on your monthly mortgage with a lower interest rate. Be sure that the amount of money you save is enough to cover the closing costs on your new home loan and other expenses that arise from the refinancing process. We can give you an estimate of your closing costs.
Additionally, you may be able to save money with a reduced mortgage term. One example of a reduced mortgage term is changing your 30-year mortgage loan to a 15-year mortgage loan. This change could mean you make higher monthly payments, but you’ll be paying off your loan faster. In the long run, you’ll save money by paying less interest.
Cash-out refinancing can also help you free up money by borrowing against the equity you hold in your home. In other words, cash-out refinancing allows you to borrow more than what you currently owe on your home mortgage. What you get out of this deal is immediate cash that you can use for a big life expense like a whole house remodel or college tuition fees.
#5 How much does it cost to refinance?
With Homestead, there’s No Out of Pocket (NOOP). That means you don’t have to come up with any money to refinance. We can wrap any fees into your new mortgage.
#6 How can Homestead Financial Mortgage help?
There are lots of factors to consider when it comes to mortgage refinancing. At Homestead Financial, our knowledgeable mortgage refinancing officers will happily walk you through the entire process. Together, we’ll discuss your financial needs, run the math, and choose the best home refinance option for you and your family. Plus, we’re fast. We can close your refi in 30 days. Contact us today at one of our many convenient locations:
Homestead Financial Mortgage in Chesterfield, MO | (636) 271-4663
Homestead Financial Mortgage in Overland Park, KS | (913) 317-1000
Homestead Financial Mortgage in Glen Carbon, IL | (618) 288-7904
Homestead Financial Mortgage in Godfrey, IL | (618) 980-3860
Homestead Financial Mortgage in Eureka, I MO | (314) 283-7816
Homestead Financial Mortgage in Dallas, TX | (469) 708-5277