By refinancing your home mortgage loan, you are paying off your current home mortgage loan with a new loan and restructuring the new home loan to fit your current needs and goals. With the refinanced loan, you could save a considerable amount of money over the life of the new home mortgage loan and potentially improve your overall financial outlook.
A refinance loan on your home means that you are trading in your existing loan for a new one — hopefully one with more favorable terms. When you refinance your home loan, your new lender pays off your old home mortgage loan with the new loan. That, in essence, is the reason for the term “refinance” — you are financing the same home again, just with a different loan.
Many people refinance their home mortgage loan when rates have gone down significantly from when they initially bought their home. This way, the new home mortgage loan they receive may charge them less in interest over the life of the new home mortgage loan.
Many people take cash out of their home’s equity when they refinance their home mortgage loan, if they have a significant amount of equity in the home, either because they have been paying on their initial mortgage for several years or because their home has significantly increased in value, or both. They can use the cash they take out to renovate their home, pay off higher-interest debt or save for college or other impending major expenses.
Refinancing your mortgage loan may be the right decision for you if your home’s value has significantly increased or current interest rates are considerably lower than they were when you purchased your home. Through a refinance with Fairway, you may be able to:
The cost to refinance your loan depends on several factors. Many refinance loan programs require a new appraisal on the home. That cost can range from $400-$750 for an average-sized home, but it may not always be required under all refinance loan programs. There are also generally closing costs associated with your new refinanced home loan. Sometimes those closing costs, which can vary widely depending on the size and type of property, must come out of pocket, and other times, they can be rolled into the financing of the new home loan instead of coming out of your pocket when the new refinanced loan closes. It is important to discuss the costs, terms and conditions associated with a refinance loan with your Fairway mortgage advisor.
The short answer here is that you can refinance anytime when it benefits you as a borrower, as long as you have at least a six-month on-time payment history on your current home mortgage loan. Maybe that means when mortgage rates have decreased considerably. Maybe that means when you have built up a significant equity stake in your home, when a refi would serve to either shorten your loan term or to tap that equity by taking cash out at the time of refinancing. The answer to this question is different for each individual client. It is important to discuss your specific financial situation and goals with your Fairway mortgage advisor when considering a refi.
Yes! You may have several refinance options if you currently have an FHA loan.
You are required to have at least a six-month history of on-time monthly mortgage payments before you can refinance any home mortgage loan. However, it may be advantageous to wait even longer than that before refinancing your FHA home mortgage loan, for the reasons discussed in the previous answer. As always, it is important to talk your refinance options over with your Fairway mortgage advisor to make sure that you are getting the most benefit from your new home loan, because each individual’s financial situation, credit situation and goals may vary.
These terms are sometimes used in different ways by different people, so some confusion is understandable! In general, all refinance loans depend on how much equity the borrower has in their home at the time when they refinance. Whether you are looking into a rate-and-term refinance loan or a cash-out refinance loan, the more equity in the home the borrower has at the time of the refinance, the more advantages they can reap in their new, refinanced home mortgage loan. So, in that sense, yes, you can consider “home equity loan” and “refinance” synonymous. But sometimes, people say “home equity loan” when they are referring specifically to a cash-out refinance, because the funds the borrower receives at closing from a cash-out refinance come from the equity they already held in the home after paying on their first home loan for several years. We hope this clears up some confusion, but if you have any questions about either a rate-and-term refinance or a cash-out refinance, you should always talk to your Fairway mortgage advisor about your specific situation and goals.
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