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During the time that you repay a mortgage, a lot can happen to your financial situation that may impact your ability to meet the monthly requirements of your home loan. Fortunately, mortgage refinancing allows you to adjust your lending terms to benefit your finances both in the short- and long-term. Whether you’re worried about foreclosure or want to pay off your loan in a shorter amount of time, here are a few points to know about the refinancing process and its benefits.

How Does Mortgage Refinancing Work?

In simple terms, mortgage refinancing is the process of replacing an existing home loan with a new one. If it’s a good time to refinance, you’ll first need to figure out your total equity—or how much value you own—of the home. For example, if your home is worth $300,000, and you owe $200,000, your equity will be $100,000. You’ll also want to gather relevant financial information that may impact your new loan terms, such as your credit score.

Before you apply to refinance, you should compare interest rates by getting quotes from various lenders. After choosing the most advantageous option, your lender may require an appraisal to confirm the current value of the home.

Once you’ve locked in a rate, the lender will work to close the new agreement to pay off the existing mortgage and begin the new one. Similar to your original purchase, you will need to pay closing costs. Generally, it’s best to have cash set aside for these costs. However, you can sometimes finance them if necessary.

What Are the Advantages of Refinancing?

Lower Your Rate

mortgage refinancingLowering your interest rate on a mortgage can reduce your monthly payment amount—a benefit that could save you from financial hardship or foreclosure. You can also potentially lower your rate if your credit score has improved, market conditions have changed, or if you switch from an adjustable to a fixed rate.

Pay Off Mortgage Sooner

If you want to pay off your home sooner than you expected, refinancing can allow you to shorten the period terms.

Access Equity

When you refinance, it’s possible to borrow against the equity you’ve already invested in the home. Many homeowners use these funds to pay for remodeling costs or cover other debts.

 

If you’re curious about refinancing, Deuane Woodard, Loan Consultant – loanDepot® will explore your options in detail. As an experienced loan officer of North Richlands, TX, Woodard is qualified to assess all the variables that may impact your new mortgage—such as market conditions and credit improvements. Along with helping you find solutions that meet your needs, this loan consultant will also work swiftly and precisely to deliver a stress-free mortgage refinancing process. Visit this professional online or call (817) 875-6043 to learn more about his in-depth assistance for current and prospective homeowners.

Deuane Woodard NMLS# 1769807
loanDepot# 174457

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