Guide to Refinancing
Thinking about remodeling your home? Need to lower your credit card debt? Desperate for a much needed vacation?
Refinancing is a quick way to reduce debt, lower your interest rate, and access cash equity from your home. At Myriad at My Home Group, we want to help make the refinancing process fast and easy. Here’s our guide to help you refinance your mortgage and save money.
What Is Refinancing?
Put simply, refinancing is replacing your original mortgage with a new one. It is typically done to allow a borrower to obtain a better interest rate, reduce monthly payments, take cash out of a home for large purchases, or change mortgage providers. In most situations, people refinance when they have equity in their home, which is the difference between the amount owed to the mortgage provider and the worth of the home.
For borrowers with a great credit history, refinancing can be an excellent option. Some borrowers may be able to convert their variable loan rate to a lower fixed interest rate. For individuals with not-so-great credit or even bad credit, refinancing may be more risky. Understanding the process is critical. That’s why choosing the right lender is an important first step if you are considering refinancing.
Advantages of Refinancing
Reducing Interest Rate
One of the major advantages of refinancing is reducing an interest rate. As individuals work through their careers, make more money, and continuously pay their bills on time, they increase their credit score. With that credit score increase comes the ability to procure lower loan rates.
Lowering Monthly Mortgage Payment
Lower interest rates over the length of a mortgage can potentially save you hundreds of dollars each year and thousands over the life of the loan.
Many people choose to refinance to obtain cash for a large purchase, such as a vehicle or college tuition. This can be done by taking equity out of the home using a home equity line of credit. The property is appraised, the lender then determines what percentage of that appraisal they will loan, and then the balance owed on the original mortgage is subtracted. Finally, the money is used to pay off the original mortgage and the remainder is loaned to the homeowner. Many homeowners improve the condition of a home after they purchase it and the value then increases, giving them that equity.
Many homeowners use the refinance process to reduce or pay off credit card or other consumer debt.
Eliminate Private Mortgage Insurance (PMI)
If you purchased your home with less than 20% down, then you were required to carry private mortgage insurance (PMI). PMI is designed to protect lenders from borrowers with a loan default risk. Once there is a history of consistent monthly mortgage payments, the balance owed will have decreased and the value of the home increased. At that point, many borrowers may be able to cancel their PMI during the mortgage refinance process.
Choose A Trusted Team!
At Myriad at My Home Group, we highly recommend these preferred lenders to all of our current, past, and even future clients. These mortgage professionals are guaranteed to make the process a smooth and easy transaction!
If you have questions about refinancing or would like to get in contact with one of our preferred lenders, please contact us at Info@MyriadAZ.com.