Refinancing a mortgage just means that you’ve decided to take out a new home loan to replace your old one. Many people decide to refinance to account for lifestyle changes or in order to to take advantage of the financial incentives that a different mortgage can provide.
In some cases, homeowners refinance for better interest rates or to do away with their private mortgage insurance. In others, it’s to change the terms of their existing mortgage. Refinancing makes it possible to move from a 30-year to a 15-year mortgage, to switch from an FHA to a conventional loan, or to change who is on the mortgage note. Additionally, you can refinance to take equity out of your home to payoff credit card debt, buy a car, make house repairs or take that vacation you've always talked about.
Good candidates for refinancing tend to be in a better financial situation than they were when they originally applied for a loan. They may have paid down enough of their current mortgage to forgo the PMI requirement (more than 20% of the loan’s value), substantially improved their credit score, have earned a higher salary, or have increased the value of their home through improved market values or renovations.
On the other hand, if you’ve hit some hard times since buying your home, you may be better off waiting to refinance your mortgage. If, for example, you’re behind on your current mortgage payments, you’ve lost a job, or property values have dropped, refinancing may not be in your best interest.
Refinancing with less-than-stellar credit is a bit more work, but it’s not impossible. Before starting the process you’ll want to do your research to get a sense of the loan programs that are available to you and decide if their benefits outweigh those of your current mortgage. You may also want to look into alternatives such as adding a co-signer to your loan.
That said, The Paul Abair Team has access to a wide variety of loan programs, including those geared toward individuals with lower credit scores. If you’re interested in discussing your options more in-depth, give us a call to schedule an appointment to meet with one of our team members.
Refinancing does come with a few costs. There’s a mortgage application fee, the fee for an appraisal, and other closing costs. Depending on which loan program you choose, you may be able to role many of fees into your new mortgage.
Everyone’s financial situation is different. One of our team members would be happy to talk you through securing financing that suits your needs. Give us a call today to get started. 719.694.5317
