The term “mortgage refinancing” does not have to be intimidating. It’s exciting as a mortgage refinance can both save you money and potentially speed up the time to when you fully own your home. And that is what this post is about.
Below you’ll learn everything from what mortgage refinancing is to when it is a good idea to refinance your mortgage.
Mortgage refinancing is when a homeowner trades in their current mortgage for a newer one because there will be a lower interest rate. By doing this the borrower will save more money in the long run, even if they restart their loan payback period. The benefit to the lender is they get a trusted source of payments over a longer time vs. having the mortgage end sooner. And there are a ton of reasons to consider a mortgage refinance if the rates are low.
If it sounds like a mortgage refinance is right for you, here’s how the process works so you can help ensure a seamless refinance.
A few days before closing you should get a document called the closing disclosure which tells you all the final numbers for your loan. Your closing is usually only attended by the people on the loan and title, and a representative from the lender or title company. At the closing, you’ll go over the details of the loan, sign your loan documents, and pay any closing costs that aren’t already rolled into your loan. And now you’re probably wondering how much it will cost to refinance your mortgage.
On average the cost to refinance a mortgage is between 2–6% of the total value of your loan. On a $300,000 mortgage, your closing costs will be between $6,000 and $18,000.
Mortgage refinancing makes your mortgage and the equity you have in your home work for you. You can refinance a mortgage to have cash to spend, lower your monthly payments to increase your cashflow, or reduce the payback period so you can become a homeowner more quickly.
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