Refinancing Quick Facts
Minimum Down Payment
Minimum Credit Score
Max Debt-to-Income Ratio
What is Refinancing?
When you refinance your mortgage, you pay off your existing mortgage and replace it with a new mortgage that typically has a lower interest rate, term period, or monthly payment. If you have both a primary mortgage and a second mortgage, you could refinance both by paying them off and replacing them with one new mortgage.
What are the benefits of refinancing?
Refinancing offers the following benefits:
- Interest rate and monthly payment. You may be able to get a lower rate. Depending on the length of your loan term, a lower rate may decrease or increase your monthly payment.
- Loan term and monthly payment.
– Decreasing the length of the loan term usually results in a lower interest rate but a higher monthly payment. You’ll likely pay off your mortgage sooner because you’re paying more principal each month. The total interest you pay throughout the shorter mortgage term will typically be less.
– Increasing the loan term usually results in a lower monthly payment, but the total amount of interest you pay throughout the longer term will typically be more.
- Cash from the equity in your home. If you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment, which you may use for home improvements to increase the value of your home or in any way you choose.
- Convert from an Adjustable-Rate Mortgage (ARM) to a Fixed-Rate Mortgage, or get an ARM with better terms.
Who may benefit from refinancing?
Refinancing may the right fit for you if:
- You want a lower interest rate.
- You want a different loan term (number of years).
- You want a lower monthly payment.
- You want cash from the equity in your home.
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