Are you thinking about refinancing, or wondering if now is a good time? To refinance your mortgage means your bank or mortgage lender approves you for a new mortgage loan that pays off and replaces the old one. The interest rates for refinancing are currently low, and many people are taking advantage of this.
There are several factors to evaluate when someone wants to refinance their mortgage; they are looking at the interest rates, the length in years for the payment, cost associated with refinancing, and the amount already borrowed.
There are three types of refinancing and the one you choose depends on your current circumstances.
Rate and term refinance allows for the new loan to have a different loan term and different mortgage rate but the borrowers are not allowed to take out more than $2000.00 in cash from the transaction. This is the most common refinance transaction. Cash-out refinance allows for you to increase in the amount that’s borrowed. With cash-out refinance, the new loan balance is more than the original loan balance. For these types of refinancing, you are evaluated on credit score, payment history, income, retirement assets, and cash reserves. Additionally there are streamline refinances for some types of loans that are rate term refinances with limited required documentation.
If you are still unsure whether or not refinancing is right for you, talk to one of our mortgage brokers today to see if you’re eligible for lower rates and payments!