"Mortgages can be fun!"
(said no one ever)
Reasons for Refinancing
With a rate/term refinance (the most straightforward refi), no actual money changes hands, besides the fees associated with the loan. The total loan amount of the mortgage is the same and you just trade your current terms for newer (hopefully better) terms. The benefit of refinancing a mortgage is often understood through calculating the breakeven point, which is the point in time where the totaled monthly savings from a refinance equals the various upfront costs of refinancing. Calculating this isn’t always as straightforward as it seems so get with a mortgage pro (or your high school algebra teacher) to make sure you’re making the best decision.
In a cash-out refinance, the new mortgage is larger than the previous. With the new loan terms, you’re also being advanced money – essentially taking equity out of your home. It’s not exciting as “cashing out” is depicted in hip hop videos, BUT you can use the cash for any purpose so feel free to splurge. However, we’d still suggest maaaaybe speaking with one the many wonderful financial planners on our roster before getting too carried away.
Also, to be eligible for a cash-out refi, you must have sufficient equity so contact us if you want to evaluate where you stand.
Also check out common questions other borrowers have when refinancing. Hope this info helps and don’t forget, we’re here if you have any more questions.
Check out our simple eval process where you can get real rates specific for your scenario!