Refinancing

Refinancing

Due to the costs involved, refinancing is typically a benefit only if a borrower plans to stay in their home for a minimum of two to five years.

Benefits of refinancing
  • Get a lower interest rate and lower payments: a lower interest rate may be available due to changes in market conditions. A lower rate could lower the monthly principal and interest mortgage payment
  • Get cash from the equity in your home: cash-out refinances may allow a borrower with sufficient equity in their property to refinance their mortgage for more than is currently owed and pocket the difference.
  • Change the mortgage length: A decrease in the length of a mortgage term may increase the monthly P&I payment, but the loan may be paid off sooner. Refinancing to a lower interest rate, with a longer term mortgage will likely provide a homeowner a lower monthly payment; however the total amount of interest paid in the longer term could be more.
  • Build equity more quickly: with lower monthly payments, it may be feasible to make additional payments and build up equity in the property more quickly.
  • Convert an Adjustable-Rate Mortgage  (ARM) to a Fixed-Rate Mortgage: Interest rates for an ARM can increase or decrease. Some people are more comfortable switching to a Fixed-Rate Mortgage that has a steady interest rate and a steady principal & interest monthly payment
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