Paying the mortgage can be a heavy burden but refinancing might be the solution you need to break free of the stress and anxiety related to being a homeowner. When used appropriately, refinance mortgage loans help homeowners lower interest rates, minimize monthly payments and change to a more flexible mortgage company. Becoming knowledgeable about refinancing helps you decide if it is the right option for your situation.
What is Refinancing?
Refinancing gives homeowners the opportunity to pay off their old loan by securing a new one. The process is mostly determined by credit scores, payment history, an appraisal, and income and employment history.
Is Refinancing Beneficial?
Most homeowners opt to refinance their homes when they are looking for a lower interest rate. Refinancing can significantly lower interest rates, which can subsequently lower payments, putting money back into your household budget or savings. Homeowners can also switch from an adjustable rate to a fixed rate, which provides more predictable payments.
Refinance mortgage loans can help reduce monthly payments. This can be a major relief for some homeowners who are having difficulty making timely payments. Those interested in shortening the terms of their mortgage can also benefit from refinancing their home.
Refinancing can also enable homeowners to use the equity in their home to make large purchases such as cars or paying for their children’s college or private school tuition. Having the option to leverage the equity in their homes helps homeowners buy essential items without having to stress about where they will get the cash.
Debt consolidation is another major benefit of refinancing. Taking advantage of the equity in the home can be a great way to pay off high-interest items such as credit cards.
Should You Refinance?
There are many benefits to refinancing your home, but there are considerations you should keep in mind. Refinancing is associated with various fees including an application fee as well as other costs that may be related to early termination. Some fees can cost thousands of dollars. Therefore, reading the conditions of your mortgage is essential in order to determine whether there are specific penalties.
Refinance mortgage loans are not recommended for families who will only live in their home for a short time period. Sometimes, it takes a while for the savings from refinancing to make a significant impact on your finances. If you only plan to be in your home for a few more years, it may not be worth it to refinance.
The best way to know whether refinancing is best for you is to speak with a knowledgeable loan officer at a community bank who knows about refinance mortgage loans in Knoxville. They can help you review the terms of your current mortgage; determine fees, and possible interest rates.
