Mortgage Refinancing

Mortgage refinancing is paying off your mortgage and securing a new one, usually with terms that are more beneficial than the old terms. People also refinance to take advantage of the equity in their home.

There are four main reasons to consider refinancing:

1. To save money on monthly payments. If you have a 30-year fixed-rate mortgage at 7% on a $70,000 loan, you’d pay $79 less a month in principal and interest with the same loan at 5.25%.

2. Refinancing helps you “own more” of your house by paying off the mortgage faster. If you changed to a 15-year mortgage at 4.5% on a $70,000 mortgage from a 30-year mortgage at 7%, your monthly payment would rise from $466 to about $536, but you’d pay off the mortgage in half the time (depending, of course, on how much of the 30-year mortgage you’ve already repaid).

3. If you now have an adjustable-rate mortgage, refinancing could let you lock in an affordable fixed-rate loan with fixed monthly payments, or even an adjustable-rate loan with lower rate caps.

4. Another reason some homeowners get a new mortgage is to increase receive cash back at closing to cover remodeling costs or to consolidate other debts.

Weigh the costs against possible benefits

Underlying any reason to refinance is how long you intend to keep your house. The benefit increases the longer you stay. Refinancing costs typically include fees for origination, credit report, property appraisal, attorney fees and title insurance. You might even owe a penalty for paying off your current mortgage early. Just to illustrate, if those fees amount to $2,000 and you save $100 in monthly payments by refinancing, refinancing would start to pay off in about 20 months.

LendingLeaders will match you lenders who specialize in mortgage refinancing loans. The lenders will work with you to help decide what refinancing mortgage options are right for your situation. To have one of our lenders contact you to help decide what type of mortgage refinancing is right for you, simply fill out the quick, no obligation loan form by clicking here.