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Refinancing

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Refinancing a Mortgage & How it Works

When you refinance your mortgage, you apply for a new home loan like you did when you bought the property. You use the money from your new loan to pay off your original mortgage. And, if you have enough equity, you can get extra funds. You can use the money to pay off debts or use in other ways like home improvements. Your interest rate will be different, and the length of your loan may be too. Find out if refinancing a home is right for you. Let the expert team at Total Lending Concepts help you every step of the way.

Refinancing Programs Explained

There are two main types of refinancing programs. Both are based on property value. They are:

  1. Rate-and-Term – This type of mortgage repays your existing home loan. But it doesn’t give you any extra money. You might be able to include the closing costs into the amount though. Most people get a rate and term refinance to reduce their interest. Or some borrowers want to remove private mortgage insurance once they have 20% equity. You can also change the duration of the mortgage–for example, go from a 30-year loan to a 15-year loan. Both VA and FHA offer streamline rate-and-term refinance programs with less paperwork.
  1. Cash-Out – Refinancing for cash out is like it sounds. With this loan, you pay off your current mortgage and get extra money. The reason you can do this is that you have additional equity in the property. Besides property value, the amount of cash you can take out also depends on credit, property type, and occupancy. For example, you might be able to take out more money on a home that’s your primary residence versus an investment property. There are a lot of different programs. The most popular are conventional,  FHA, and VA cash-out refinance. 

Refinancing Advantages

There are many good reasons for refinancing a home. It depends on your own goals. Some of the most significant advantages our borrowers at Total Lending Concepts receive are:

  • Lowering their interest rate and their monthly payment
  • Changing the length of their loan to pay it off early
  • Switching from an adjustable-rate to a predictable fixed rate
  • Eliminating private mortgage insurance (PMI) and lowering their payment
  • Improving their cash flow by paying off debts and high-interest loans
  • Getting cash to buy an investment property or second home
  • Funding college tuition for the kids

When you contact us, we can give you an idea of what your home is worth and what the best loan program is for you.

 Refinancing with Cash Out

The great thing about refinancing with cash out is that you can decide what to use the money for. For example, you can pay off debts or make home improvements you’ve been dreaming of like remodeling your kitchen. Or you can even take a trip to France. It’s your decision. 

Getting the most cash out depends a lot on the condition of your property.  So, make sure it looks good when the appraiser comes out. Here are a few tips: 

  • Curb appeal – have the yard looking its best with the weeds pulled, grass cut, and nothing out of place. Make sure the porch is clean and newly swept. You can even add welcoming touches with fresh potted plants and a new welcome mat. 
  • Inside tidy – above all, make sure the interior of your home is neat and clean with no clutter or bad smells. If you have pets or are a smoker, it’s a smart idea to air it out before the appraiser arrives. 

Refinancing Rates

Rates vary and change daily and move with the market. Besides that, your interest rate is based on:

  • The property value
  • Your credit scores
  • Your credit history
  • If it’s cash-out 
  • The occupancy 

For example, if you want to get cash out on an investment property or second home, you won’t be able to get as much as if it were your primary residence.

To know what your rate will be, and your best options, ask your loan originator at Total Lending Concepts.

Ready to get started? Contact us today to see if it’s time for you to refinance.

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