You have probably heard that a mortgage refinance can result in saving you thousands by lowering your monthly mortgage payment, but how does refinancing work? Determining if a refinance is the right choice for you depends on your specific financial situation. Consider these reasons to refinance if you are in the middle of determining your options.
A refinance can be a great financial decision if you understand the full benefits and your financial expectations, especially if interest rates are trending downward. Here are a few reasons to consider a refinance:
Opting for a refinance means that you wish to pay off your current mortgage loan with a new mortgage loan. Since you already have a loan, a refinance will typically require less paperwork and will close faster than a purchase transaction. Here are two types of refinance choices and their benefits:
If the current mortgage market is offering competitive rates and your budget could benefit in the long run from a shorter or longer loan term or a lower monthly mortgage payment, this is the option for you. With this option you can switch your 30-year mortgage term to a 15-year mortgage term or opt for a lower interest rate.
Choose this refinance option if you need to increase the amount you are currently borrowing. This mortgage loan pays you the difference between your loan balance and the current equity in the home. The extra cashflow can help fund many things, such as, a home renovation project, medical bills, a dream vacation or help repay credit card or student loan debt.
Your needs as a homeowner constantly change as different events happen in your life. Envoy Mortgage is here to help you determine if a refinance is the right choice for you.