What a mortgage refinance means is getting a new mortgage to replace the original; this can be beneficial to you, as it can reduce the monthly payment or loan terms.
Maybe you have heard about mortgage refinance before and how many people have gotten great deals by doing this, but you need to know if you are ready before making any move.
Should You Refinance Your Mortgage?
There are a few things you have to take into account:
- Rates and terms of your loan: Before you decide to refinance your mortgage, you need to make sure you are getting better rates and terms. Before signing any document, check if the interest rates will be lower and if you will be able to make lower monthly payments.
Make sure the terms are favorable, some lenders will not let you pay earlier during a determined period.
- The length of your loan: Make sure that you are not adding any additional time to your loan. Refinancing your mortgage can save you money if you shorten the length of the loan; the shorter the loan, the less you will have to pay on interest. Try to refinance your mortgage to a ten or fifteen-year loan.
- Real property value: You need to know how much home equity value your property has. Most banks ask for at least 20% of equity to refinance your mortgage. If your home equity is good, you can refinance to a lower amount than the original loan.
- Refinancing is not always a good idea: Refinancing your mortgage can cost you a lot since you need to pay the closing of the last loan, pay for legal documents, and fillings. It is also bad to refinance your loan if you do not have a good credit score.
If you extend your loan’s term, it will result in a higher interest rate, which means you will end up paying even more money.
Mortgage refinancing can help you save money, but it can also be risky. If you have a bad credit score or if you are planning to stay in your house for long, you should be careful and discuss your situation with an expert before making any decision.
When it comes to the financial world of property ownership, Intercorp Mortgage Solutions has the best alternatives for you. Make sure you check all the options and opportunities to improve your life or get the home or business you have dreamed of with their specialized services.
Intercorp Mortgage Solutions
Phone Number: (305) 517-5633