Buying a home is one of life’s most exciting and most significant decisions. Many homeowners have been hurt economically by the COVID-19 pandemic or want to complete home renovations. One way to accomplish this and to reduce your current mortgage is to refinance.
When you refinance, you replace your existing loan with a new loan. The new loan pays off the debt of the old loan and typically has more attractive terms and features.
What is Refinancing?
Consumers can refinance almost any type of loan. Your existing loan may be too expensive, and you want better terms or a lower interest rate, or you may want to do a cash-out refinance and take out cash for the difference between the refinanced and original loan. Lenders typically allow homeowners to draw no more than 80% of the home’s value.
You gain equity as you pay down the mortgage principal. A cash-out refinance is borrowing from the equity in your home and allows you to take out cash in exchange for a larger mortgage. It is essential to know that taking advantage of a cash-out mortgage will not leave you with two monthly payments. It will pay off your existing mortgage and replace it with a new one.
You will want to locate a lender who can offer better loan terms than your existing loan. The new loan will pay off any existing debt. You can calculate the mortgage payments by using a mortgage calculator.
Refinancing has many benefits:
- Refinancing can lower your monthly payment if you refinance into a loan with a lower interest rate.
- You can extend repayment by increasing the terms of the loan.
- You can consolidate other existing loans for one single loan.
How to Refinance
You will want to ensure your credit score is as high as possible to qualify for the lowest interest rates. You will then want to shop around for lenders who can offer you the best rates possible. Do not take on any new debt when refinancing. Carefully review all new loan terms before signing.
- Refinancing a loan involves taking out a new loan to pay off and replace the first one.
- Refinancing can make sense if it will lower your monthly payments by getting a lower interest rate on the new loan.
- You’ll pay the exact closing costs you did when you took out the first loan, which can add up to thousands of dollars upfront, depending on the size of your new loan.
- A cash-out refinance can provide you with cash to pay for renovations or home improvements.
Florida National Title Services
Florida National Title is available to help with many of your real estate needs. Florida National Title Services works under the supervision of attorneys Michele Lewis and Richard S. Weinstein, experienced real estate attorneys. They work to ensure the title of the home you desire is clear and marketable and that title insurance policies are properly issued.
Florida National Title Services provides expert title services. When you are renting, we can help with every step of the way. Florida National Title has years of experience guiding Florida homebuyers through the real estate purchase and refinance experience and have helped them solve the problems that come up in the process. We will decipher the “legalese” and explain what we need and why we need it each step of the way. The blogs to follow will address specific issues to guide buyers to understand the process better and to help them avoid many of the pitfalls. Call us at (561) 408-0729 or visit our website.
Florida National Title Services, LLC
250 S. Central Blvd., Suite 101
Jupiter, Florida 33458
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