Benefits of Mortgage Refinancing
Refinancing a mortgage means paying off the borrower’s existing home loan and replacing it with a new one. Typical benefits of a refi include:
- Lower interest rate and lower monthly payment
- Possibly lower borrower’s monthly mortgage payment by decreasing or eliminating mortgage insurance
- Consolidate debt
- Use their home’s equity to generate additional cash
- Changing the loan terms for savings or to build equity faster
- Improve borrower’s credit and their monthly cash flow
Note: By refinancing an existing mortgage, the total finance charges may be higher over the life of the mortgage.
Mortgage Refinance Options
Cash-Out Refinance is when you use your home’s equity to refinance for more than the outstanding balance owed on your current mortgage. Then, after paying off your original mortgage, the amount left over is used to payoff your other debt or for other needs (e.g. remodel, tuition, your business, etc.)
FHA Streamline Refinance: Homeowners with a current FHA loan can save money by refinancing to a new lower rate and payment.