What Is Home Refi?
With a home mortgage, you have a lot to consider. Balancing payments, accruing equity and incorporating your payments into your larger financial plan can all be a bit of a headache. Add unfamiliar terms like “home refi” and it can get overwhelming fast.
Top Ten Things to Know: Home Refi Edition
- Home Refi (refinancing) is the process of closing out your initial loan and taking out a new mortgage to pay off the balance of your previous loan.
- People generally opt to refinance their home A) To acquire better interest rates for a number of years that suits their budget or B) To take out a mortgage for more money and use the remaining cash to pay off another debt.
- Refinancing often can be cheaper overall, but comes with several fees, such as survey, attorney, and closing fees.
- You can refinance with the same lender you took out your initial loan with, or with a new lender.
- Often times, lenders will charge you “points” to obtain a lower interest rate when paying off the current mortgage (generally $1000 per $100,000 remaining in the balance).
- In order to refinance your mortgage, you will need a credit report and a fully completed application. Additional documentation will be required once the application is reviewed.
- Having a solid credit score and accrued equity in your home can improve the rate the lender offers you.
- Often times, when you inquire about refinancing, your current lender will offer you a competitive rate to keep your business.
- A home refi may not be the best option for you if you intend to move in the near future–homeowners generally stay in homes they’ve refinanced.
- It’s important to be aware of the terms of your current loan and the loans offered you when you negotiate a home refi, in order to get the best interest rate and term conditions possible.
There’s a lot to consider here. For more information, or to get the best answers to your questions, contact Paramount Equity today. We look forward to helping you.