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How + Why to Refi...


Refinancing can be a valuable tool for homeowners and borrowers, it's important to carefully consider the potential benefits and drawbacks before making a decision. Most homeowners consider refinancing when they are looking to access equity to preform home renovations or debt consolidation while some to simply wish to reduce their monthly payment.


We recommend assessing your needs and the goal of the refinance against current market trends and rates. If rates have dropped below your current mortgage rate or you have paid down a considerable about of your principle owed, a refinance may decrease your monthly payment. Another option when refinancing is potentially removing mortgage insurance charges or switching up your loan program. Some borrows choose to change from a shorter loan length to a longer loan duration, others want to switch from an adjustable rate to a fixed rate, these updates can impact the payoff and predictability of your payment.


One of the most common reasons homeowners refinance, aside from a rate or principle recast, is for Cash Out. This allows homeowners to pull their equity out of the property and use it for a multitude of things; from weddings and once-in-a-lifetime vacations to home renovations, pools and debt consolidation.


While there are many benefits to refinancing there are also some items you should prepare for. Just like your purchase, refinances have Closing costs. It is important to do your due diligence and compare fees across a few lenders. Refinancing could also extend your loan term, if you are prepared for this change or anticipating it, this is not something you are concerned about but if you only owe 5 more years and didn't release your new program is 15, you should discuss options with your lender. Something you might not think about is the potential impact to your credit score by assuming new debt, increasing the term or changes to payment history. One last thing you should consider and absolutely look into is whether your current loan has a prepayment penalty. Depending on your current loan agreement, you may be subject to prepayment penalties if you refinance your loan, which can offset any potential savings from refinancing.


When it's time to refinance, reach out to your credit unions, bankers or the lender you used to purchase. Most purchases lenders also offer refinances sometimes for a repeat client discount or special fee.

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