REFINANCE

YOUR MORTGAGE

Refinancing is similar to getting a mortgage, and that includes the application process. However, there are a few differences that can sometimes appear as hurdles. Our office is committed to helping you find real solutions to refinancing, so we put together this list of the top refinancing hurdles and how to overcome them.

Thinking about cash out?

If you have available equity in your home, you could get cash at closing with a cash-out refinance loan.

If you’re interested in borrowing against your home’s available equity, you have choices. One option would be to refinance and get cash out. Another option would be to take out a home equity line of credit (HELOC).

 

Here are some of the key differences between a cash-out refinance and a home equity line of credit:

Loan terms

Cash-out refinance pays off your existing first mortgage. This results in a new mortgage loan which may have different terms than your original loan (meaning you may have a different type of loan and/or a different interest rate as well as a longer or shorter time period for paying off your loan). It will result in a new payment amortization schedule, which shows the monthly payments you need to make in order to pay off the mortgage principal and interest by the end of the loan term.

Home equity line of credit (HELOC) is usually taken out in addition to your existing first mortgage. It is considered a second mortgage and will have its own term and repayment schedule separate from your first mortgage. However, if your house is completely paid for and you have no mortgage, some lenders allow you to open a home equity line of credit in the first lien position, meaning the HELOC will be your first mortgage.

Considering a refinance?
Make informed refinancing decisions with help from Mary Mac Mortgage

When I should refinance?

It's generally a good time to refinance when mortgage rates are 2% lower than the current rate on your loan. It may be a viable option even if the interest rate difference is only 1% or less. Any reduction can trim your monthly mortgage payments. Example: Your payment, excluding taxes and insurance, would be about $770 on a $100,000 loan at 8.5%; if the rate were lowered to 7.5%, your payment would then be $700, now you're saving $70 per month.

 

Your savings depends on your income, budget, loan amount, and interest rate changes. Your trusted lender can help you calculate your options.

Thinking about refinancing your mortgage? Learn the facts before you decide if that's the right choice for you! Although refinancing offers the financial relief, rate stability, and access to money that you may not be able to get by other means, there are occasions that we caution our clients against it. 

Should You Refinance? 

There's no easy yes or no answer to this question. Refinancing, as it is with all your finances, is a personal choice. Our lending goal is to present the facts to borrowers with clarity so that they can take charge of their homeownership and financial future. 

Want to find out which mortgage option is right for you? Call my office today for an obligation-free home loan consultation!

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