Refinancing your mortgage can be a great financial step for anybody looking to lower their monthly payments or spend less on interest throughout the course of the loan.
But for the first-time refinancer, the world of calculators and interest rates may seem daunting. The home loan refinancing specialists at Magnolia Bank Home Loans are available to break it down simply and help you find the best mortgage rates in Columbia, MO.
What Does Refinancing Mean?
“Refinancing” your mortgage simply means taking out a new mortgage on your home. When you refinance, your new loan pays off the balance of your old loan and allows you to obtain a new agreement with the potential for lower interest rates or reduced monthly payments.
Refinancing also gives you the opportunity to borrow money out of what you’ve already paid into your home, known as your home’s equity. When you refinance your home, you can borrow money against this amount from your mortgage lender in order to make large updates or improvements that would, in turn, increase your home’s value.
Why Should You Refinance?
As mentioned above, refinancing can be the best chance you’ll have to lower your mortgage’s interest rates or monthly payments.
Some of the biggest reasons why people choose to refinance include:
- Lowering monthly payments
- Lowering total interest paid
- Getting rid of Private Mortgage Insurance (PMI)
- Tapping into a home equity line of credit
It is common for people refinancing their mortgages with lower rates to reduce their monthly payments significantly and save hundreds of dollars a year in interest alone.
“As first time home buyers, we had a lot of questions (and not the best credit scores). Bobby [from Community First] answered all of our questions and worked very hard to get us the best possible interest rate. We have been in our dream home for a year and just finished refinancing our home with Bobby. He was able to lower our house payment by $200!”
Bernardi & Terri
Whether or not refinancing is right for you will depend widely on the market and your individual needs. The key will be finding a competitive interest rate at a term length that is ideal for you.
A mortgage specialist can help you learn more about the current market and options available to see if refinancing is a good fit.
Are There Any Risks?
You have the potential to run into some risks from a refinance if you incur any penalties. One common way that borrowers get into trouble is by using their home equity line of credit to pay down your existing mortgage.
Additionally, you should be prepared to pay some additional fees and costs associated with refinancing, including an applications fee, title insurance, bank fees and attorney review fees.
Talk to your lender about these during your search process. They are standard for any refinancing process, but understanding the entire process up front will help you make an informed decision about which lender to go with.
How To Begin Your Refinance
In order to refinance your home, you need to have owned it for at least 12 months. From there, start your process by discussing your mortgage and financial situation with a mortgage specialist.
Contact Magnolia Bank Home Loans to discuss the mortgage refinance options available and to look at how a new loan could work for you.