REFINANCING A MORTGAGE
What Is Refinancing A Mortgage?
Refinancing is the process of getting a new mortgage to replace the original one. The intent is still to pay off the existing loan, albeit with a better interest rate and term. With this, you can switch to a different term (e.g. adjustable interest rate to fixed-rate) and pay less each month.
Refinancing a mortgage is also an option if, for instance, you are now at a position where you can pay more. This gives you a chance to get a lower interest and reduce the life of the loan.
On the other hand, it can also help those who may be struggling to pay the current mortgage. It can be because of a new expense (kid going to college) or an unforeseen circumstance (sickness or emergency). When this happens, you can talk to your current lender or to a new lender one about your refinancing options.
Refinancing can help you better manage your finances. You can use it to consolidate debts or to access the equity in your primary or investment property.
With refinancing, most people want to reduce or maintain the loan amount. But you can also increase the loan for other major expenses.
Refinancing for debt consolidation means you put your other loans (credit card, car, personal) under one mortgage. This is so you don’t have to pay multiple loans each month.
You just focus on one loan that pays off all your debts. Ideally, refinancing your mortgage will get you a lower rate on the interest.
How To Refinance A Mortgage
The process for refinancing a mortgage requires planning and research from your end.
First, you must define your goal. Why are you refinancing?
Next, shop and compare rates. You should also consider the fees that come with refinancing a mortgage. Talk to your current lender and discuss your situation. They would likely want to exhaust all possibilities to keep you as a client.
Check your options by shortlisting other lenders. Before you apply, set a meeting to see if their offer suits your specific needs. Ask for a loan estimate to help you compare in detail.
When looking at a lower interest rate, check if this applies to the life of the loan. Some rates are only applicable for a certain period. After that, it reverts to a higher rate and you may end up paying more.
When applying, schedule it within a short period. Avoid sending bulk applications to lenders because this can affect your credit score.
Once you find your lender, make sure to lock the rate you agreed upon. Interest rates are dynamic and change all the time.
Sun Mortgage Funding can help you achieve your financial goals through smart refinancing. We can refinance your home with a first or second mortgage.
We can also help you pull out equity from your property. If you’re not sure how to use a refinancing a mortgage calculator, we can break down the process to help you make an informed decision.
Is refinancing a viable option for you? Call us and let’s see how we can help.