When someone wants to buy a house, the cost is usually too great to pay cash out of pocket. Because of this, the buyer will get a home loan called a mortgage to pay for it over time. To get a mortgage, the buyer enters into a legally binding agreement with a lender; the lender provides financial backing to the buyer, allowing him or her to borrow money to purchase the property. A mortgage refinance replaces an existing mortgage with another one–refinancing is the process by which the original loan is paid and a new one is created.
If you are trying to decide whether or not to refinance your home mortgage loan, you need to do some analysis to determine if it will be worthwhile to you. The steps required for refinancing a mortgage are similar to those taken to get the original mortgage loan. First, you should decide what specific interest rate and/or term length you would like to aim for with your new loan. Then you must choose a lender–you might find that your current lender is unable or unwilling to offer the terms you desire. After deciding on a lender, you can then apply for a mortgage refinance.
According to guidance from Justin Pritchard from The Balance, “…mortgage refinancing is a good move when you’ll truly benefit financially from a new loan.” But that said, he also advises that “[i]t can be a bad move if you’ll waste money or increase risk when you refinance, so weigh the pros and cons of your old loan against a new loan to decide whether it’s worth the cost.” And remember: mortgage refinancing isn’t free. You will pay a variety of fees to refinance your loan, including application and origination fees, appraisal fees, home inspection fees, and closing costs.
There are several reasons you may want to refinance your home mortgage. The goal ideally is to secure a loan that offers better terms than your existing one so you can save money. While it is rising interest rates might deter you from refinancing your mortgage, you might still want to consider it if you want to tap into your home’s equity.
For more information about home mortgages, check out the following resources:
If you need help navigating the real estate market as you plan to buy or sell a home along the Texas Gulf Coast, WEICHERT, REALTORS® – The Place of Houses is the experienced team to call. The Corpus Christi, Texas-based company is comprised of several professional real estate professionals who are committed to providing outstanding service and real estate guidance to their clients. The real estate specialists at The Place of Houses can help you understand mortgages in greater depth and answer your other property-related questions as well. Contact WEICHERT, REALTORS® – The Place of Houses at any time online or by calling 361-882-5588 for more information about the Coastal Bend area and so the team of property experts can assist you with all your real estate needs.