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Refinancing Your Mortgage

Refinancing Your Mortgage

When you refinance your mortgage, you pay off your existing mortgage and replace it with a new mortgage that typically has a lower interest rate or lower monthly payment. If a borrower changes from a 30-year loan to a 15-yea loan, then payment might actually increase even if the interest is lower.  If you currently have a first and a second mortgage, you could refinance both with one new mortgage. You can also consolidate your higher interest rate debts and credit cards into one lower interest rate mortgage. But refinancing has costs, so it isn’t always right for everyone.

What are the benefits of refinancing?

Here are some of the benefits of refinancing:

  • Get a lower interest rate or lower your monthly payment.  Your situation may have improved since you got your last mortgage and you may qualify for a lower interest rate or lower monthly payment.
  • Change the mortgage term.
    – By decreasing the term of your mortgage, you will usually have a higher monthly payment but a lower interest rate. You will likely pay off your mortgage sooner because you are paying more of the principal each month. Mortgage loans are simple interest so the total amount of interest you pay throughout the shorter mortgage term will typically be less.
    Note: Mortgage interest, unlike credit card debt, is often tax-deductible so be sure to consult a tax professional for more information.
  • Build equity more quickly. With lower monthly payments, you may be able to make additional payments and build up equity or pay off your home more quickly.
  • Get cash from the equity in your home. If you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment. You may use this CASH OUT for any reason including home improvements, college funding, retirement supplement or bill payoff.
  • Convert from an Adjustable-Rate Mortgage (ARM) to a Fixed-Rate Mortgage. Interest rates for an ARM can increase or decrease, so monthly mortgage payments can locked in by refinancing to a Fixed-Rate Mortgage that has a fixed interest rate and stable monthly payment.
  • Refinancing costs may be included in the loan.

Who may benefit from refinancing?

With interest rates at historic lows, now is a good time for every homeowner to consider and evaluate the option of refinancing. However, refinancing is typically a benefit only if you plan to stay in your home for a minimum of two to five years, in order to recover your refinancing costs. Whether you are refinancing to a lower rate and payment, taking cash out or reducing the term of your mortgage, there needs to be a benefit to you in order to consider refinancing.

For more information:

Contact Doug Bullwinkel today at (800) 636-8910 or email him at: doug.bullwinkel@academymortgage.com to see if refinancing may be right for you. We take pride in delivering great service to homeowners across the United States. It would be a pleasure to serve you.