Refinancing a home is an important tool to consider for many homeowners. To refinance a home simply means that you renegotiate your present loan in exchange for a new loan. While risks do exist, if one refinances for the right reasons, it is often wise and saves them money.
Pay off debts
One type of refinancing is a cash-out refinance. This should not be done lightly, but if you find yourself with debts that need to be paid off and have a lot of equity in your home, it could be the right decision. The basic premise is that one re-borrows some of the equity that was already paid back by renegotiating some of the terms of the original deal.
Lower your interest rates
The other main type of refinancing is a rate and term refinance. Often these are used to lower your interest rates so that the monthly mortgage payment will be reduced.
Shorten the term of your loan
A rate and term refinance can also be used to shorten the term. This would allow you to pay off the loan more quickly without any adverse effects.
Change your loan type
Some people refinance in order to move from an adjustable rate to a fixed rate. Adjustable rates can make your payments unpredictable, even if the initial low rate seemed the best option at the time. Others have reason to move from a fixed rate to an adjustable rate if they believe they can get a lower rate from their high fixed rate.
National Home Finance is a refinancing expert.
Refinancing your loan can be beneficial in many circumstances, but it can also go wrong. You need to be careful and work with a proven expert who has your best interest in mind. Contact National Home Finance today, and we will talk through your situation and what refinancing options are best for you.
What does it mean to Refinance My Home Loan?
To refinance a home loan means that you are essentially paying off your old loan and getting a new loan, hopefully with much better terms. People usually refinance to obtain a lower interest rate, to lower monthly payments, or to convert from an adjustable rate mortgage to a fixed rate mortgage. It is also desirable for those who want to consolidate debts. For example, say you owe $30,000 in credit card debt to 10 companies, and you have an existing mortgage with payments of $1,000 at an interest rate of 9%. You want to get a new loan that pays off your old mortgage, pays off the credit card debt, and gives you one monthly payment at a lower interest rate. So when you refinance it can potentially save you tens of thousands of dollars, depending upon your situation and loan terms.