Refinancing 101
Refinancing Basics
When you refinance a mortgage, you’re basically replacing your home loan with a new one. That means you’ll be filling out a mortgage application and going through a similar process you did with your original mortgage. Not fun, but the results could save you big depending on your circumstances.
Why refinance?
Lower payments. Reduce your monthly payments with a lower rate mortgage.
Shorter terms. Save on overall interest costs and own your home free and clear faster by refinancing your 30-year mortgage into a 15-year term.
Reduced risk. Cut down on interest rate volatility by switching from an adjustable-rate mortgage or a balloon loan to a fixed-rate loan.
Get rid of PMI. If you now have enough equity in your home, refinancing could eliminate the private mortgage insurance charge.
Consolidate a second mortgage. Simplify mortgage payments by combining your home equity loan with your mortgage.
JUMBO no more. If your JUMBO loan is now considered conforming, you may qualify for the lower rates on those loans.
When to refinance.
Rules of thumb vary. Some advisers say if an interest rate is from 1/2 a percentage point to a full percentage point lower than what you have, it may make sense to refinance.
Of course it all depends on your circumstances and how long you plan to stay in your home. If you plan to sell your home within the next three years, it may be unwise to change your loan as you may not recoup the refinancing costs. And if you’re in the last 10 years of your current mortgage, it’s probably best to stick it out as you paid off the majority of the interest in the early years of your loan.
Have questions? Talk to a ViewPoint Mortgage officer today at 972-578-LOAN or locate an officer near you.
