What is Mortgage Refinancing and how it will be useful
What is mortgage refinancing?
Mortgage refinancing is when the property owner decides to replace their existing mortgage with a new one having completely different rates and terms and conditions. Many individuals refinance their mortgage to reduce their mortgage payments and get a lower rate of interest, which could save thousands of dollars in interest. However, that is not the only reason for a person to refinance a mortgage. You can refinance the cash out of the equity of your house to pay for the mortgage or refinance a new loan term. The interest can also be fixed or adjustable, and the loan type can be different, like a conventional mortgage or any other kind of mortgage. The main goal of refinancing your mortgage is to ensure that your lower your monthly mortgage payments.
It is highly advised that you do your due diligence or get expert help from brokers like the ones at 1One Fund Financial. Below-mentioned is a few reasons why refinancing a mortgage is useful:
- You can lower your interest rate by at least o.5%
There is no definitive rule that ensures a drop in interest rate when you decide to refinance. Based on the lender’s offer, you have to calculate how much you will end up saving. If the current interest rate is lower than your existing interest rate, it is high that you seek an expert opinion. Homeowners that refinanced their property in 2020 lowered their interest rates by 1.2%. If you are a loan applicant with a good credit score, you will immediately qualify to get the best interest rates, as you can prove to the lender you can make the monthly payments.
- You can pay off your mortgage quickly
Refinancing a mortgage can potentially save you money by helping you pay off your mortgage faster.
- You want to switch to a different kind of mortgage
If your existing mortgage has an adjustable rate, but you decide to change the interest to a fixed rate, that is a logical reason to refinance a mortgage. If you have initially taken out a housing loan and your credit was poor, but now you have managed to get your credit score up to a decent level, you might want to refinance into a conventional mortgage to stop paying high mortgage insurance premiums.
- If you decide to cash out a large portion of your home equity
As of June 2020, the value of properties across the country has risen 15% compared to last year. If you are looking to remodel your home, renovate, carry out a few repairs, or even pay off your high-interest debts, a cash-out refinance is the best way for you to lower your mortgage interest rate.
To find out more information on mortgage refinancing, or if you are looking to refinance a mortgage, please do not hesitate to reach to our expert team members at 1One Fund Financial. We have years of experience in the mortgage industry in helping clients with their needs.