Posted on: 11 January 2023
Home refinancing is a great way to lower your monthly payments, shorten your loan term, or take out equity to make home improvements or pay off debt. However, before you fill out a home refinance application online, it is important to understand the process and the legalities involved. Here's a closer look at home refinancing, when it could be a good time to refinance, and where you can go for help.
What Is the Benefit of Home Refinancing?
Home refinancing is the process of replacing your existing mortgage with a different one to meet your current needs. There are many benefits to getting another mortgage, including:
- Lower rate. Homeowners often choose to refinance to lower their existing interest rate. Experts state that if you can lower your interest rate by at least one percent, then a refinance is advantageous. By reducing your interest rate, you will also reduce the amount of interest paid over the life of the loan.
- Shortened term. Conversely, some homeowners want to keep their payments the same but lower the length of the mortgage. Refinancing from a 30-year mortgage to a 15-year mortgage is a popular option because you can pay off your house that much faster.
- Cash-out. Refinancing may allow homeowners to access additional funds by taking out equity from their homes to make necessary repairs or renovations or consolidate debt.
What Does 'Cash-Out' Refinance Mean?
A cash-out refinance occurs when you refinance your existing mortgage and replace it with one that has a larger balance, enabling you to 'cash out' the equity you have built up in your house and use it for other expenses such as repairs, renovations, debt consolidation, or even college tuition. Many people take advantage of this option because they simply fill out a home refinance application online and are one step closer to that new kitchen.
What Do You Need To Apply for Home Refinancing?
When deciding whether or not to refinance your home loan, your lender needs several key pieces of information from you, including:
- Credit score
- Proof of income
- Employment history
- Current appraised value of the home
- Balance on existing mortgage
It's best practice for potential borrowers to speak with a financial advisor before making any decisions to weigh all potential options and determine which one works best for their needs.
Home refinancing is a great way to lower your monthly payments, shorten your loan term, or access additional funds. Before you fill out a home refinance application online, make sure you understand the process and all of its legalities. If you are considering refinancing, talk to a financial advisor about a home refinance application online. Then, take advantage of this opportunity today.Share