What is Refinancing and When is it a Good Option?
Refinancing a Home Loan to a lower interest rate can save a lot of money over the life of your loan, but locking in a lower rate is just one reason homeowners decide to dive in. When you refinance your home loan, you don’t just change your rate; you can also change the term of your mortgage, and even the type. In actuality, you’re revising your previous mortgage with a potentially different rate, structure and payment schedule.
Is refinancing the right for you? Here are some of the most common reasons people decide to refinance their homes:
- To lock in lower rates are just one reason people refinance; and second, depending on the amount of your home loan and how long you plan on holding it, even a fraction of a point can result in substantial savings.
- To change to a different type of loan. Many homeowners with adjustable rate mortgages (ARMs) may decide to convert to a conventional mortgage when their initial low rate is set to expire. Or, they may want to lock in steady payments over the life of their loan.
- To cash out some equity. If you’ve had your home loan for a good time and you’ve paid down a large bit of the principal or the value of your home has increased since you took out your mortgage, you may decide to refinance to pull out some of that equity – essentially, the difference between what you owe and what your home is worth. What you use those monies on is completely up to you.
Refinancing your home loan shouldn’t have to be a difficult or complicated process, but if you have questions, feel free to ask. At Columbus, we help homeowners weigh out their refinancing options every day so they can feel confident about the product they choose. Click Here To Apply Now