There are a few reasons one might like to refinance. It can be a concept that sounds complicated or daunting but can be extremely beneficial depending on why you would need to get one!

 

Refinancing is basically getting a new mortgage to replace the original. It can become difficult to make payments in any economic climate due to instability or high interest rates. Refinancing is not helpful to everyone as it can increase your interest rate instead of lowering it, so being informed is the best way to know whether it will be helpful to your situation.

Refinancing can help a borrower with a perfect credit history convert a variable loan to be fixed and have a lower interest rate. Some people can lower their rate by 2%! Some experts say even a 1% decrease is worth refinancing over. Refinancing can be risky for borrowers with bad credit or too much debt.

 

REDUCING INTEREST RATE

Many times, as people work through there careers and become more stable, their credit score rises. With a better credit score, lenders are more willing to offer lower rates. With a lower rate, you could be paying less in your monthly payment and end up saving hundreds of dollars through the life of your loan.

HOME EQUITY LINE OF CREDIT (HELOC)

Essentially using the equity that you have built in a house as a sort of credit card. It allows you to use what you need at a low rate taking from the secured equity of your house. The home is appraised, and the lender will determine how much of a percentage of that appraisal they are willing to loan.

CHANGE LOAN STRUCTURE

You may be able to reduce your mortgage from a 30-year loan to a 15-year loan or change from a flexible rate to a fixed rate loan.

 

Refinancing is not ideal for everyone and could even end up harming you. If you’re still unsure whether or not refinancing is for you, feel free to contact us to ask any questions you may have!