Refinancing a mortgage doesn’t simply adjust a home loan, but creates a new one to replace it. The new agreement may have a different interest rate, monthly payment, and term length. There are several practical benefits of doing this. Consult the following information to decide whether this option is right for your circumstances. 

Your Guide to Refinancing a Mortgage

Why do people do it?

You might be able to save money with reduced interest rates and lower monthly payments if your original loan’s interest rate was high. Refinancing also allows you to work with another lender, get cash in exchange for home equity, and change an adjustable-rate loan to a fixed-rate option for the same payments each month.

Does it cost money?

Yes, refinancing requires you to pay between 2 and 5% of the mortgage balance. You can avoid this fee upfront by adding this to your total balance, which increases the amount you must eventually pay. Some lenders also waive these fees if you agree to keep higher interest rates.

What are the risks?

If you don’t plan to stay in your home for more than a few years, refinancing the mortgage may leave you with higher closing costs than savings. Additionally, you might lose your original mortgage’s protections against foreclosure, so make sure your new loan offers the same security. 

Does my credit score matter?

Yes. Refinancing creates a new loan, which means you must first be approved. As part of your application, your lender checks your income and credit report.

If your score is on the lower end, work to improve it before submitting your application. Some ways to boost your credit score include paying utility and phone bills on time, maintaining low balances on credit cards, and keeping unused credit cards open for a longer credit history. 

If you’re ready to refinance your mortgage, contact the team at Dan Main. They provide refinancing, home loans, and down payment assistance to clients throughout O’Fallon, MO. They serve the community with integrity and true expertise, helping homeowners every step of the way. Call (636) 284-4144 to discuss your needs, or visit their website to read what past clients had to say about their services.

Dan Main: NMLS # 502036
Flat Branch Mortgage Inc: NMLS# 224149
947 Waterbury Falls Dr., O'Fallon, MO 63368
(636) 284-4144