To refinance is to replace (payoff) your current mortgage(s) with a new mortgage. The goal of any refinance is to better your life in one way or another. Generally, the refinance transaction is far easier and less intrusive than the purchase mortgage transaction. Read below for further education and we’d be delighted to discuss potential options with you.
What are the reasons home owners refinance?
By no means an exhaustive list, the more common reasons to refinance can be one or more of the following:
- Lower your interest rate and payment
- Remove or reduce mortgage insurance
- Replace an adjustable rate with a fixed interest rate
- Replace a fixed interest rate with a lower, adjustable rate
- Remove someone from the mortgage obligation
- Combine a first and second mortgage into one lower payment
- Pull out cash for debt payoff, home improvement, investment, college tuition or some other purpose
When is the right time to refinance?
It's not always easy to know when a good opportunity awaits and that's ok. Many times, all we need is a mortgage statement and a conversation with you to learn a few key pieces of information and we can provide useful feedback regarding your refinance prospects. Here are some instances where it wouldn't hurt to do a mortgage check-up:
- The value of your home (equity) has increased significantly
- Interest rates have lowered
- Interest rates have increased (and you have an adjustable mortgage or line of credit)
- Your non-mortgage debt payments are creating financial difficulty
- You've decided you want to embark on a home improvement project
- You've determined you will sell the home within 5 years
- Your credit scores have improved since your last mortgage financing
Sometimes, secondary financing is the answer.
Secondary financing is second mortgage, such as a home equity line of credit or a fixed rate second mortgage. When taking out a second mortgage, the first mortgage currently in place remains intact. When helping our clients analyze their refinance options, we include second mortgage options along with first mortgage refinance options, to ensure the best decision is made for the situation at hand.