Reasons to Refinance

Getting a mortgage to buy a home can be challenging. However, refinancing that mortgage after you’ve bought your home is often much easier.  There are excellent reasons to refinance with Home Reliance Capital Corp and we want to explain them to you:

Saving Money is ALWAYS a Great Reason.

Refinancing can help you save by lowering your interest rate and payment. You might be able to get a lower rate if market rates have dropped, you’ve improved your credit or you originally got a loan for more than 80 percent of your home’s value and your new loan will be for less than that percentage.

Cash Out from Equity Means Money in Your Pocket!

The difference between your home’s value and the amount you owe on your mortgage is known as your equity. If you have equity, you may be able to borrow against it and get a lump sum when you refinance. This is known as a cash-out refi. The advantages are that you’ll be able to spend the cash however you want (Daughter’s wedding? Son’s tuition? That new pool you always wanted?).  Plus, you’ll typically pay a lower rate than you would for a credit card or personal loan. If you don’t have much equity, you might be able to refinance with private mortgage insurance (PMI) or by getting an FHA loan that’s insured by the Federal Housing Administration, a  VA loan guaranteed by the Department of Veterans Affairs, or a USDA loan insured by the U.S. Department of Agriculture. There are tons of options!

Lock in a Fixed Rate That You Can Live With!

If your current loan has a variable interest rate, your rate and payment could rise. Examples of variable-rate loans include an adjustable-rate mortgage (ARM), a hybrid loan with an initial fixed rate, a home equity loan or a home equity line of credit (HELOC). Refinancing to swap a variable rate for a fixed one or to combine two loans into one could protect you from the financial risk of a rising-rate loan.

Does it Make Sense for You?

One way to decide whether refinancing makes sense is to divide your costs by your monthly savings to figure out how soon you’ll recoup the expense. For example, if you paid $2,500 to refinance and saved $150 each month, it would take you about 16 months (2,500 divided by 150) to recoup your costs. This calculation is known as a break-even analysis.  Another way to think about refinancing is to compare the total interest you’d pay on your current loan if you kept it until it was paid off with the total interest you’d pay on your new loan if you kept that until it was paid off.

If you want to get the benefits of refinancing, connect with a knowledgeable and transparent mortgage broker at a Home Reliance Capital. We are the experts that can help you make the right decision for your personal situation.  We are always here to give you the right information you need.  

At HRC…Yes, You Can!