Is now the right time to refinance?
A lower rate can save you a lot of money, but there are additional reasons and factors to consider if it’s time to refinance. A Licensed Lending Officer at (888) 983-3270 is well equipped to review your options.
- If you have an adjustable rate mortgage (ARM), you may want to refinance into a fixed-rate loan in order to get payment stability and lock in your low rate so it can’t increase with the market.
- If you need cash to renovate your home, finance a business or pay college costs, you can refinance to access the equity in your home without having to sell it.
- If you are at risk for rising monthly costs or foreclosure due to a resetting home equity line of credit or home equity loan, refinancing can save your home and lots of money.
Breaking barriers: ‘No-cost’ refinancing
One of the main barriers to refinancing can be the up-front closing costs. However, you may be able to avoid some of the closing costs and maybe all of the out-of-pocket financing costs many borrowers pay.
Loans where lenders pay closing costs are sometimes called ‘no cost’ refinances, but there usually is a cost. Instead of paying an upfront cost, you’re paying the cost over time. However – and this is the key point – with a ‘no cost’ refinance, you could get a new loan with a lower rate even if you don't have the cash for closing at the moment.
Less paperwork can cut down on the hassle
Getting a mortgage often involves a lot of paperwork. The good news is that refinancing can be far less complex than a purchase. For instance, with FHA Streamline Refinances and the VA’s Interest Rate Reduction Refinance Loans (IRRRLs), you can often get replacement financing without income verification or an appraisal.
Such options mean that for many borrowers, refinancing is possible today with less documentation and fewer worries about property values or a recent income decrease.
Refinancing to combine a home equity line of credit that has reset is another major consideration for when to refinance. With a home equity lines of credit, there's usually a ‘draw’ phase and a ‘repayment’ period. If the full amount of a home equity loan was borrowed, the borrower still owes that money as a second mortgage.
Refinancing your first mortgage to combine your home equity loan or credit line into one payment can create lower monthly payments, while saving you money by avoiding a skyrocketing payment.