23 Feb Mortgage Refinancing 101: What, How, and Why It Works
The U.S. has seen record-low interest rates over the past year-and-a-half. The current low-rate environment results from the government’s attempt to stimulate the economy in wake of the pandemic. As a result, over the past two years, we have witnessed a record-breaking housing market and, of course, a wave of refinancing. But what do low interest rates have to do with refinancing? Why is the window closing for the opportunity of a lifetime? And what else can refinancing do for you?
If you’re looking to refinance your mortgage, Accurate Mortgage is here to help. In this guide, you’ll find out the benefits of refinancing and how Accurate Mortgage can help you get it done.
What Is Refinancing?
Refinancing refers to a financial strategy that allows you to replace your existing mortgage with a new one. When you decide to refinance your mortgage, you’ll be seeking to improve the loan’s terms, such as getting a better interest rate or payment schedule, otherwise known as the term.
Some reasons why borrowers may want to refinance can include:
- Lower your interest rate
- Consolidating high-interest consumer debt
- Improving monthly cash flow
- Shortening of a loan’s repayment period
- Get cash out for home
- Improvement projects
- Add or remove someone from the loan
The reasons listed above are often interlinked. For example, falling interest rates provide a great opportunity to lock in a better rate than you currently have. A lower interest rate can reduce your monthly payment.
As it turns out, one of the best reasons to refinance is to offer yourself more options. Refinancing is a versatile tool. Let’s look at how it works.
How Does Refinancing Work?
If you are looking to refinance your home, it is important to understand the ins and outs of refinancing to make sure that this is the right option for you and your family.
Let’s start by understanding how refinancing works to obtain more favorable borrowing terms. First, consider your goals—lowering your fixed interest rate, reducing a payment, or switching from an adjustable-rate to a fixed-rate mortgage.
Once you have set your goals, it is important to pinpoint the right moment to apply for refinancing. Macroeconomic factors can influence interest rates, which rise and drop cyclically, therefore most borrowers wait before seeking better borrowing terms. With interest rates now back on the rise from record lows, now is the time to take advantage—before it’s too late. Our experts at Accurate Mortgage can help you understand your options.
Accurate Mortgage Refinancing Options
When consulting one of our expert Mortgage Loan Advisors, you will discover many refinancing options that might be suitable for your needs, including:
- Rate and term refinancing: One of the most popular reasons for refinancing, adjusting your rate and term allows you to adapt to the current market environment.
- Cash-in or Cash-out refinancing: Cash-in refinancing allows you to put a lump sum down down on your home so that your new mortgage is for much less. Cash-out refinancing allows you to take equity out of the home for much-needed liquidity.
- Consolidation: People with debt on several credit cards often consolidate into a simpler loan with better terms. What many folks don’t know is that you can also consolidate loans of varying kinds, bundling debt from your car, home, credit cards, and/or consumer debt.
Once again, you can see that the options are seemingly endless. Whether you’d like to exchange that adjustable rate mortgage (ARM) for a lower fixed rate or put more equity into your home with a cash-in refinancing, our experts here at Accurate Mortgage will help you find the best option.
Benefits of Refinancing
As we have seen, the most important benefit of refinancing is that it can give you access to better borrowing rates and can offer you the possibility of lower interest rates. In addition, you may be able to reduce your loan term, resulting in cash savings on interest rates and improve your household cash flow.
While refinancing comes with many benefits, it might also reset the original loan length and reduce your home equity. Because of this, refinancing is not the best alternative for all borrowers, and you should always consult an expert lender at the Accurate Mortgage Group before getting started.
Refinancing for your future with Accurate Mortgage
Life offers opportunities and tragedies alike, both of which could benefit from mortgage refinancing. Whatever your reasons, whatever your goals, Accurate Mortgage is here to help you make the most of your most important investment. Visit us online to get your mortgage rate quote or give us a call today at (615)833-0456!