What does refinancing mean? How does it work? Will it save me money? These are all questions that pour in from my customers. Let’s answer these and other burning questions about how mortgage refinancing works.
What is refinancing?
A mortgage refinance is when a homeowner gets a new mortgage loan that replaces their current one.
What are the benefits of refinancing?
There are several reasons to refinance, but they all depend on your personal situation and current mortgage. Most people refinance to lower their interest rate, which results in lower monthly mortgage payments. You can also refinance a mortgage into a shorter loan term, which will help you pay off your home sooner.
If rates are lower than when purchased your home by at least 1%, it might be time to look at refinancing.
How does refinancing work?
The process for refinancing is similar to when you purchased your home. You apply for a home loan like you did when buying your first home. The lender will review your credit, income, assets, debts and the equity in your home to see if you meet the requirements. Equity is an important factor. You must have a certain amount of equity in your home in order to refinance.
If approved, instead of using the loan proceeds to purchase a home, it’s used to pay off your existing mortgage and get a new one.
Is refinancing right for me?
There are a number of reasons why refinancing your home could make sense. Here are a few you may consider:
What does it cost to refinance?
While refinancing isn’t free, there are options to make it worthwhile. Just like when you bought your home, there are closing costs. This includes an application fee, appraisal fee and title fees. You can choose to pay the cost upfront or we can roll the costs into the loan so the amount is spread out in your monthly payment.
What are the steps to get started?
1. Talk to a lender
2. Apply for refinancing
4. Closing on your refinanced mortgage
Take the next step.
When thinking about any loan it’s important to know your options and understand what’s involved. Refinancing is no different. Now you know the basics to choosing your next step.
The Ambler Savings Bank Lending Team is available to help with all your home mortgage needs from beginning to end.
Visit our website here to learn more or call our office at 215-646-8400 to speak to one of our team members today.
Becky Dice is a Consumer Mortgage Loan Processor at Ambler Savings Bank.