What is Refinancing?
Getting a new mortgage loan to replace the original is called refinancing. Refinancing is done to allow a borrower to obtain a different, and even better interest term and rate. The first loan is paid off, allowing the second loan to be created, instead of simply making a new mortgage and throwing out the original mortgage. For borrowers with a perfect credit history, refinancing can be a good way to convert a variable loan rate to a fixed, and obtain a lower interest rate.
One of the main advantages of refinancing regardless of equity is reducing an interest rate. Often, as people work through their careers and continue to make more money they are able to pay all their bills on time and thus increase their credit score. With this increase in credit comes the ability to procure loans at lower rates, and therefore many people refinance for this reason. A lower interest rate can have a profound effect on monthly payments, potentially saving you hundreds of dollars a year.
Second, many people refinance in order to obtain money for large purchases such as cars, education or to reduce credit card debt. The way they do this is by refinancing for the purpose of taking equity out of the home. A refinance with cash out is a great way to fund expenses at a low interest rate.
Choose Your Term Mortgage
Choose Your Term simply means you can pick the number of years you would like for your term. You can choose 8 years up until 30 years and any term in between! By having the ability to Choose “Your Term Mortgage” you can make your mortgage fit your needs by one or more of the following methods:
- Save money on your monthly payment
- Decrease your mortgage term to get your mortgage paid of sooner
- Increase your term to make your monthly payment lower
- Cash out to pay debt items or make improvements in your home possibly keeping or still saving money on your payment
Remember you have the option of doing all of this with no out of pocket closing costs!!