Refinancing is the process of replacing an existing mortgage with a new mortgage. There are many reasons why homeowners consider refinancing. But here are a few of the most common reasons to refinance:
Your interest rate or mortgage payments are too high.
Credit history aside, the current interest rate on your mortgage depends heavily on the rate at which you purchased your home originally. Since it's difficult to negotiate a lower rate on an existing mortgage, taking advantage of today's lower interest rates by refinancing is the next best option. Whether you have an adjustable rate mortgage (ARM) or a fixed-rate mortgage that you want to replace. By lowering your interest rate, you can also reduce your monthly payments.
You need cash and you need it now.
Many life events call for immediate financing. You might need to invest in education, purchase a new car, pay off medical bills, or fund long-term care for a family member. By refinancing, you can take out a new loan that is greater than the value of your existing mortgage, and you can use the excess cash however you choose. This is called cash out refinancing.
You want to consolidate debt.
In the same way, you can extract enough cash from the new loan to cover both the old mortgage and your credit card debt, or other balances with higher interest rates.
Your payout term is too long.
Most mortgages are 30-year loans, and the interest over those years adds up to tens of thousands over the purchase price of your home. By refinancing, you can reduce your payout to 15 or 25 years, thereby saving a lot of money in the long run.
Are you thinking about refinancing an existing mortgage? Call us at 1-800-620-6292 right now. We can discuss your options and help you decide if refinancing is right for you.
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About Embrace Home Loans
For over 30 years we've been helping people with their mortgage financing needs. We are licensed in 46 states nationwide helping tens of thousands of customers every year.