What is Refinancing?
Refinancing is the process of obtaining a new loan on an existing mortgage. By choosing to refinance your mortgage, you are choosing to replace your current mortgage with a new one, which means new terms and conditions, new closing costs, and potentially a new lender.
If the value of your home has increased, or if interest rates have dropped, you may want to consider refinancing your mortgage loan. There are many good reasons to consider refinancing, however, doing so is not always the best options for every homeowner.
When should I refinance my mortgage?
Rate & Term Refinancing
Refinancing allows you to take advantage of decreases in interest rates and/or changes in your personal financial situation to optimize your mortgage term, payment amounts, and rate. Depending on your financial goals, refinancing can potentially result in lower monthly payments or a quicker payoff of your mortgage.
A “Cash-Out” refinance is when you leverage the existing equity in your home by refinancing, which allows you to “Cash-Out” a portion of your equity. For example, if your home is valued at $200,000 and you owe $90,000 on your existing mortgage, you could refinance and “Cash-Out” a portion of your equity.