Are you thinking of refinancing your mortgage? | Trust Elite Mortgage Source
When we say refinancing what we are saying is you’re taking your current mortgage and you are going to be replacing it or paying it off through a new mortgage. It may sound difficult, but it’s not. There are a few different reasons why you might want to refinance your mortgage. The major reason most people refinance is to get a lower interest rate.
Let’s say you got a mortgage for your house or your apartment a few years back. Now interest rates at that time were at 4 or 5%. And now you’re looking at rates that are at 2% or less like they are in Florida as of March 2021. You might decide to refinance or replace your old mortgage with a new mortgage to take advantage of these lower rates to save money, lot’s of money. This is a big reason most people will refinance their mortgage.
Now there are still other reasons you might want to refinance. Let’s say you have some equity in the property now. And in addition to purchasing a new mortgage, you want to pull a part of that equity out of the home to use for remodeling or to pay off debt. This would be considered a cash out refinance. A common question I get is “when should I refinance” or “how do I know if this is the right time to refinance?”
That will depend on your personal situation because there are also drawbacks to refinancing as well. Let’s see why. You will have to pay closing costs when you refinance your mortgage. So you will have to weigh the benefits of refinancing with the costs that you will still need to pay out. And I know there are people who will tell you, “Oh, there’s no closing costs out there”, beware this guidance. Particularly sales people trying to sell you a new mortgage, but trust me, there will always closing costs at some point. However, you may not always see it. And you may have to pay out of pocket. You may be taking out a bigger loan amount, so they’re putting those closing costs into the new loan or you may be paying it in terms of a higher interest rate than you could have found elsewhere.
Just remember you are always trying to weigh the cost of refinancing with the understandable benefits. Always look to see how this will fit into your overall financial situation before you decide to refinance. This can be a real challenge. Often people don’t realize that if they keep stretching out or refinancing into new loans they are also stretching out the loans over time and they may end up paying more interest over time because they’re never able to pay down or pay off their home.
Remember, make sure when you decide to refinance that you get a new mortgage that’s right for your personal situation and make sure the benefits outweigh the downsides. At Elite Mortgage Source of Cape Coral, FL we can walk you through the refinance process and help you make the right choice that most benefits your situation and goals.
