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Refinancing
Homeowners refinance not just to take advantage
of low rates, but to reduce their mortgage costs,
pay off their mortgage earlier, or help pay off
debts.
If the rate you pay on your existing mortgage
is higher than current interest rates, you may
save money by refinancing. You may most benefit
from refinancing if:
- You plan on living in your home for
a number of years
- You’ve built up considerable equity
in your home
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Refinancing makes sense
for many reasons:
Lower your monthly payments.
If interest rates are lower than when you bought
your house, refinancing may lower your monthly
payment and the finance charges you pay over the
life of the loan.
Stabilize your monthly payments.
Converting from an adjustable to a fixed rate
mortgage may keep your monthly payments from changing
over time.
Consolidate debt.
If you’ve built equity in your home, you may use
refinancing to consolidate your personal debt
into one easier payment. Refinancing may reduce
your monthly payments by decreasing your monthly
interest charges. In addition, unlike with personal
debt, the interest on a refinanced mortgage is
generally tax-deductible (consult your tax advisor),
giving you attractive tax advantages for refinancing.
Convert equity/cash out.
If you’ve built up considerable equity in your
home, you may be eligible to refinance your existing
mortgage to a larger loan amount. This would provide
you additional cash that could be used for debt
consolidation, home improvement, or for personal
use. The interest paid on your "cash out"
refinance, unlike personal loans, could be tax
deductible (consult your tax advisor).
Reduce the length of your mortgage.
Reducing the number of years on your existing
mortgage often provides a significant reduction
in interest costs over the life of the loan. Although
this strategy may mean higher monthly payments,
you will own your home faster and become free
of mortgage debt quicker.
Closing Fees
Because refinancing involves taking out a new
mortgage, you will usually have to pay many of
the same fees you incurred with your existing
mortgage, such as points, title insurance, and
loan origination fees. To minimize the refinancing
costs, consider a loan with a slightly higher
interest rate and fewer discount points, or finance
your closing costs as part of your total new loan
amount.
What You Need to Know:
Contact a Mortgage
Loan Officer to go over any questions you
may have or call our Mortgage Call Center at 1-888-993-8754.
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