How Does Refinancing A Mortgage Work?
Are you looking to reduce your monthly payments and save money on interest? Mortgage refinancing could be the ideal solution.
When the market rates are competitive, it is possible to find attractive options that make refinancing worth considering. Whether you are looking to lower your payments, pay off your loan faster, or cash out some of the equity in your home, refinancing could be an excellent solution for achieving financial freedom.
In this article, we will explain the process of refinancing a mortgage so that you can make an informed decision about whether it is right for you.
What is mortgage refinancing?
A refinance mortgage refers to the process by which homeowners replace their existing mortgage loan with a new loan.
This may be done for various reasons, including reducing your monthly payment or interest rate, changing from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM), or getting cash out of your home’s equity.
You should be aware that as part of a mortgage refinance there are closing costs and various other fees related to the new loan. You may want to choose to pay these costs yourself, roll them into the loan, or have the lender pay them. It is crucial for you to fully understand the terms of your home refinance before choosing one of these options and signing on the dotted line.
Reasons to refinance
With the right strategies in place, homeowners can take advantage of competitive mortgage refinance rates to secure a better deal on their existing loan.
- Lower Monthly Payments – Refinancing your home loan at a lower interest can reduce your monthly mortgage payments, freeing up cash for other uses or savings.
- Lower Interest Rate – Refinancing at a lower interest rate can save you significant amounts of mortgage loan interest paid over time.
- Shorten Your Loan Term – If interest rates allow, you can refinance into a shorter loan term (from 30 year to a 15 year, for example), decreasing the number of your monthly payments and reducing the total amount of interest you will pay over the life of the loan.
- Change Your Loan Type – If you have an adjustable-rate mortgage (ARM) and want to switch to a fixed-rate mortgage (FRM) for long-term security, refinancing is the way to make that happen.
- Consolidate Debts – Cash-out refinancing allows you to combine multiple debts into one mortgage loan, reducing the total monthly payment and the total amount of interest you pay over time.
- Access Home Equity – A cash-out refinance allows you to access your home’s equity and use the money for various purposes, such as paying down debt, funding home improvements, making new investments or purchases.
By taking the time to understand all the options available and carefully weighing up any potential risks against rewards, you could end up significantly reducing your debt while increasing your long-term financial stability with mortgage refinancing.
How does refinancing work?
As with any loan application process, lenders will assess your credit score and financial situation to determine your eligibility.
The proceeds of a mortgage refinance, instead of going towards paying for the new property, are used to pay off the remaining balance of your original loan. In order to be approved for a refinance, you must meet all the same criteria that are required when buying a home. This includes submitting a loan application and undergoing loan underwriting before the closing.
You should familiarise yourself with the requirements specific to your type of refinance (rate/term, cash-out, etc.) to make sure you understand what you qualify for and what is needed to successfully conclude the transaction.
Your best refinance rate with Boris Cherner
With expert mortgage lender Boris Cherner, you will be able to find the best refinance rates that meet your individual needs.
Not only can Boris provide competitive rates and terms to reduce your interest rate, cut monthly payments, or tap into your home’s equity, but his experience in the mortgage industry will give you peace of mind knowing that you are making informed financial decisions.
You can rest assured that you are getting the best deal possible for your home loan refinance with Boris Cherner.
I have been in the mortgage industry since 1997 and I understand the anxiety that comes with making the most expensive investment of a lifetime. My objective is to be your advisor, to educate you and to make the mortgage loan transaction as transparent and as stress-free as possible. I enjoy establishing personal connections and work mostly by referral. I thoroughly explain the process and available options, and guide my clients to make choices that best fit their needs and financial goals. Once the underwriting begins I communicate regularly and keep my clients apprised of the loan status from the beginning through the end. My relationship with clients does not end at the closing table. You are my client for life and I am always available to answer your questions and provide you with guidance.