Mortgage Refinancing 101
There are many reasons why people refinance or replace their original mortgage with a new mortgage. Homeowners may want to secure a better interest rate and term, switch from a variable to a fixed rate, consolidate debt or get cash for home repairs.
You’ll have refinancing options depending on which route is more appropriate for your needs, such as a loan modification, a mortgage refinance or a home equity loan. Discussing your situation with one of our mortgage loan officers may save you time and money.
Here are some points to consider:
Determine how long you intend to own the home. Three years, on average, is a good rule of thumb for how long it takes to recoup the cost of refinancing.
It’s a smart financial move if you can reduce your interest rate by two percent or more, but that depends on your situation. The balance of your mortgage, the remaining term and the current interest rate all affect whether or not refinancing makes sense.
Pay off your loan faster. Save money by paying a bit more toward your principal each month, or, if refinancing, choose a shorter term.
Ask your current lender if you will have to pay a prepayment penalty for paying off your mortgage early. If you are refinancing with the same lender, this penalty is often waived.
Check with your mortgage loan officer to discuss whether paying off your mortgage early actually will make sense for you, considering your current financial and tax situation.
Doing your homework and carefully researching your options is the best way to know how your goals can be achieved.
When you are ready to discuss your current situation, talk to us. Stop by your local Northwest office or call us at 1-877-672-5678 to connect with a mortgage professional.