3 Questions About Mortgage Refinancing
Are you in need of some extra cash or reducing your monthly mortgage payment? If so, you may have heard about mortgage refinancing as a way to get they money you need. Before you start the process with a lender, here are some common questions you may have about refinancing.
Can Refinancing Save You Money?
The process of home refinancing is basically applying for a new mortgage to pay off the old one. It may not sound like the best idea, but it allows you to get a new mortgage at a lower interest rate. This can lead to saving money over the life of your new mortgage, depending on how long you've been paying your existing mortgage and what the new rate is.
It is best to consult with a mortgage lender to determine if the new rates are good enough to justify a mortgage refinancing. It may be several years before you're able to start seeing overall savings, but it can be worth it if you plan on staying in your home.
Is Approval of a Refinancing Guaranteed?
One misconception about mortgage refinancing is that the approval will be guaranteed. This isn't always true, since a refinancing involves applying for a brand-new loan. If there have been significant changes in your debts, income, or credit score, it can affect your ability to get the new loan you are looking for. You may be advised to get your credit in order before you apply for refinancing, which will delay when you can start the process. There is no guarantee what interest rates will be when you are finally ready to refinance, since they can always go up or down depending on the market.
Do You Need to Use Your Existing Lender for Refinancing?
Refinancing does not need to be done through your current mortgage lender. You may find it a bit easier to use your current lender though, since they have all of the information about your mortgage on file and it will be easy for them to pull the proper legal documents. That said, it is always worth consulting with multiple lenders for refinancing. Different lenders can offer different interest rates, and you may get a better deal by going elsewhere.
If you think you are ready to refinance, be sure to meet with a local mortgage broker for a consultation. They can let you know if it is worth it to refinance your home based on the current rates.