After finally saving up enough money to use as a down payment, I decided that it was time to hit the market. I met with a lender, got pre-approved for a loan, and then started visiting different properties. However, I quickly realized that I didn't know as much about real estate as I would have hoped. I wanted to find a great neighborhood and know what to ask the professionals, but I could tell that I needed a little help. To point me in the right direction, I started working with a great real estate agent who was familiar with the area. This blog is all about educating the general public on real estate matters.
When you refinance, you take out a new loan on your home, wiping clean the current mortgage loan you have. Why would you do this? A home refinance can work out well for you in times you may need it, and you can make your equity in real estate work for you in doing so.
Speak with your home lender to see if refinancing is right for you, keeping in mind that there are closing costs associated with this type of loan, just like there was with your original loan. Here are reasons you may want to consider this type of financing option.
You can get a lower interest rate
If interest rates are at a new low and your credit is good, check with your lender to see if you should consider doing a home refinance. If you can get a lower interest rate, you can keep the same mortgage amount on the home you have now, only have the interest on it be much lower, thus lowering your monthly payment considerably.
Some people choose to take the difference in their new mortgage payment from their old one after a home refinance to save for a rainy day, while others continue to pay the same amount, putting the difference into the principle to pay off their mortgage sooner.
You can take money out of your home's equity
Often referred to as a cash-out refinance, if you have some equity into your home, as in, you owe much less on your home than it's currently worth, you might be able to get a home refinance on your property while taking some money out at the same time. You can also do an equity line of credit, but often a home refinance is your best option if you can also get a lower interest rate at the same time.
Use the money you take out of your home for whatever you need, including home improvements, college, or just to put in savings.
You can add someone else to your mortgage
Have you gotten married and want to add someone to your mortgage? If you have another person you want to add, then you will need to do a home refinance so long as the other party has approval from your lender to do so. This way, you are not the only one responsible for the property, and you can both build equity in the home you are still financing.Share