Many people may have heard the term refinance, but they may not know exactly what it refinancing a mortgage entails. Simply put, when you refinance a mortgage, you get a new loan to replace the original that was used to purchase the home. This can be for a number of reasons including reducing interest rates, shortening loan terms, getting cash out, and more. The Mortgage Company specializes in mortgage refinancing throughout Salina, Abilene and Ellsworth.
Reasons to Refinance
When people think about refinancing, one of the most common reasons is to get a lower interest rate. Mortgage rates for a standard loan are usually low due to strong backing by two of the world’s largest lending agencies. Some people purchase their home when they aren’t as financially stable as they could be, leading them to a higher interest rate than they would have liked. As your income increases, you might work harder on your credit, and that means you could receive a lower interest rate.
After a few years in a home, things may start to break, and the cracks of that glorious new home begin to show. When this happens, you may want to start some repairs and renovations. A refinance can help with these kinds of purchases especially if they are costly like plumbing or roof repair.
When you start the process of a refinancing, you begin with getting a valuation of your home. It’s often a good idea to get more than one opinion as this number will help to determine what kind of money you will receive in the refinance. Once the value of the home has been determined, the lender decides what they believe is an appropriate amount of equity that can be borrowed. Then, the balance owed is subtracted, after that the original mortgage is paid and the owner receives the rest as a loan.
If you purchased your home with cash, you can refinance to pay yourself back. The delayed financing rule means you can make a fast purchase for a foreclosure for example, without using all cash reserves. Before this rule came about, investors had to wait six months to cash out on a home that was just purchased. This rules takes away that waiting period as long as certain rules are followed.
Ready to Refinance?
If you think a mortgage refinance is a good idea for you and your financial situation, it’s important that you take a close look at your current and future budget to ensure you can cover the loan payments and that you have enough money for whatever project you plan for your refinance. If you will be using the equity to increase your home value, you’ll have more revenue if you were to sell your home. But if you are using the equity for something like a car or pay off student loans, you’ll want to be very detailed with your financial plan moving forward.
Reach Out Today!
If you are considering refinancing and aren’t sure if it’s the best choice for your situation, don’t hesitate to contact us at The Mortgage Company today! We work closely with clients throughout Salina, Abilene and Ellsworth with all of their refinancing needs.