Are you curious about refinancing and why homeowners go this route? More importantly, is it a good option for you? Depending on your goals, a refi could result in smaller payments, a shorter loan term or even cash to put toward college tuition or home improvements.
These are just a few of the benefits a refinance can offer, but the timing has to be right. Want to learn more?
Here are four things to know about refinancing:
1. What is a refinance?
Essentially, a refi replaces your old mortgage and allows you to change your loan term, rates and other details.
2. Would it benefit you?
Refinancing might be a good choice if:
- You have an adjustable rate loan and your interest rate is about to change.
- Current market interest rates are lower than the rate on your current loan.
- Your credit score has greatly improved since you took out your mortgage.
- You want to shorten the length of your loan or lower your monthly payment.
- You need a source of funds.
3. When should you refinance?
It depends on a variety of factors -- things like how much you've paid off on your loan, what your rate is compared to the current market rate, the type of loan you have and your financial goals.
4. What options are out there?
Some common refinances include:
- Rate and term refis, which aim to change your interest rate, loan term or both.
- Cash-out refis, which give you cash based on your home equity.
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