Refinance

What Is Refinancing?

Refinancing is the act of taking out a new Mortgage loan to pay off an existing mortgage, usually to take advantage of lower Interest rates or to accelerate the payment schedule.

So you have decided to refinance your current mortgage. Good for you. There are so many reasons why people refinance. Sometimes they refinance for home repairs or to save money on a lower Interest Rate. You may have been lucky enough to purchase your home when mortgage rates were low and have no interest in refinancing your present loan. But, perhaps, you bought your home when rates were higher. Or, maybe, you have an adjustable Rate loan and would like to obtain different terms. So now you are wondering if you should refinance or not? Hopefully, we will answer your questions.

If you do refinance, the process will remind you of what you went through in obtaining the original mortgage. In reality, refinancing is really taking out a new mortgage under new terms. You should encounter many of the same procedures and the same type of costs the second time around.

Is Refinancing Worth It?

It can be worthwhile, but sometimes it does not make financial sense for everyone. If the current interest rate on your mortgage is at least 2 percentage Points higher than the prevailing market rate, then it is sensible to refinance. This figure is usually accepted as the safe Margin when balancing the costs of refinancing a mortgage against the savings.

You may want to consider a few things when you are preparing to refinance. How long are you planning on staying in your home? Most sources say that it takes at least three years to realize the full savings from lower interest rates, given the costs of refinancing. Depending on your Loan Amount and the particular circumstances, however, you might choose to refinance a loan that is only 1.5 percentage points higher than the current rate. You may even find you could recover the refinancing costs in a shorter time.

Check out our Refinance Calculator!

Refinancing can be a good idea for homeowners who:

• Want to get out of a high interest rate loan to take advantage of lower rates. This is a good idea only if the homeowner intends to stay in the house long enough to make the additional fees worthwhile.
• Have an adjustable rate mortgage (ARM) and want a fixed rate loan making it easier to know exactly what the mortgage payment will be for the life of the loan.
• Want to convert to an ARM with a lower interest rate or more protective features (such as a better rate and payment caps) than the ARM currently has.
• Want to build up Equity more quickly by converting to a loan with a shorter Term.
• Want to draw on the equity built up in their house to get cash for a major purchase or for their children's education.

You may decide that refinancing is not worth the costs. If so, ask your Lender whether you may be able to attain all or some of the new terms you want by agreeing to a variation of your existing loan instead of a refinancing.

Speak with one of our lenders to refinance NOW!

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