Could it be time to refinance your home loan? There are some easy ways to tell. The simplest definition of a refinance loan is the repayment of a mortgage with another mortgage. Loan consumers will refinance to take advantage of lower interest rates or to take their equity and turn it into cash. A good rule of thumb is if rates have gone down by 2% or more, or if you need some extra cash it might be a good time to refinance.
There are many refinancing loan options to choose from. Some of the most commonly used refinance options are listed below. It is imperative to take into consideration all the details of your loan and financial situation when deciding which option is for you. Contact a loan specialist for help in deciding.
Refinancing can be as detailed and confusing as a first loan so it is wise to make sure you get advice from a loan professional. Many loan consumers have questions about refinancing options. Some of the more common questions are listed below. If you have more questions or need further explanation catered to your personal circumstances contact one of our loan specialist for exact numbers.
When to Refinance
Whether or not to refinancing your loan depends on many things. Things such as how long you plan to be in the house, the interest rate on your new loan, the closing costs for the new loan, your equity position and whether you plan to do a cash-out refinancing. But a good rule of thumb is if rates have dropped by 2% or more, you should refinance.
Do I need to understand the rate and the APR both?
The answer is Yes. You need to have a basic understanding of all points of your loan to be able to get the best deal available for your circumstances. The more you know the better your chances of getting a more equitable loan.
There have recently been some changes in laws regarding refinancing due to some fraudulent activity by some lenders. A change is expected on the House floor that would make it easier for homeowners to refinance loans by restricting when penalties could be applied for early payment. Other changes passed by the Senate include more consumer education on finance and a requirement that prospective buyers get a copy of the home appraisal.
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