Being a homeowner means learning and understanding a lot of different terms, acronyms, and procedures – but don’t fret, we have the information you need!
You’ve probably heard about a mortgage refinance at some point in your life – through your lender, your parents, or your friends. So, what is it exactly?
A mortgage refinance replaces your current home loan with a new one. Essentially, the new mortgage pays off the balance of the old home loan.
The (Possible) Whys
There are many reasons why you might refinance – maybe to:
- Lower your interest rate
- Cut monthly payments
- Receive some of your home’s equity
- Pay off the loan faster
- Get rid of Private Mortgage Insurance
- Switch from an adjustable-rate to a fixed-rate loan
In order to receive a mortgage refinance, you’ll need to qualify for the loan (usually these qualifications include having a steady income, good credit standing, and at least 20% equity in your home). After finding out whether you qualify, you’ll need to file an application and go through the underwriting process as well as an additional closing with closing costs.
Just like when you shopped around for your (first) mortgage, you’ll need to compare various lenders to ensure you’re getting the best deal for what you need. Research the loan details from each lender – and be sure you ask any questions you may have.
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