If you’re already a homeowner and you’ve already secured some equity into your existing home, then it may very well be a good time to start looking at refinancing. Refinancing is a great way to reduce your interest rate, restructure your loan to pay for much-needed improvements, or simply reduce the overall amount you owe on your mortgage.
Refinancing is really a simple process, but it helps to understand how it works and what you expect going into the process. It’s not a complicated process, but today we’ll explore refinancing and how to make it as easy as possible.
What is Refinancing?
In it’s simplest form, when you refinance a loan, you’re effectively replacing your existing loan with a different one. Ideally, you’ll refinance in a way that is most advantageous to you and your family, but there are a lot of different ways to structure your new loan.
How you do so depends entirely on you and your goals for both your finances and your home. There is no one right way to refinance, so it depends on what you want to focus on and what you want out of your new loan.
How Refinancing is Structured
Refinancing can be structured, loosely, in one of three different ways. Again, depending on what your goals are for refinancing and your overall purpose for this move will depend on how you choose to structure your loan.
Rate Refinancing
The most common refinancing structure is that of rate refinancing also known as rate-and-term refinancing. This structure allows you to refinance your loan with a better interest rate, better terms, or a combination of the two. Ideally, you would want to both shorten the term and lower the interest rate in order to pay off your loan sooner.
Cash-Out Refinancing
If making upgrades is part of your refinancing plan, then a cash-out refi may be just what the doctor ordered. In a cash-out refinance, you can refinance your existing loan and actually increase it in order to make needed repairs or remodels to your home.
Essentially, by increasing your loan and removing some of the cash, you can finance your home repairs and roll it into your new mortgage. Many homeowners who have delayed in doing major renovations with their home take advantage of a cash-out refi to take care of those home repairs.
Get Help with Your Refi
Refinancing requires some work and paperwork to boot but is a far cry from the original loan process. After all, you’ve already got a home and the legwork has been done before. There are still some housekeeping duties to take care of, but the loan experts at Tidewater Mortgage Services, Inc., can help you navigate those things and make your refinancing process as simple as possible.
Apply online today and get pre-qualified in as little as 24 hours!
