So You Are Thinking Of Refinancing Your Loan?

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So you are thinking of refinancing your loan? This can be a money-saving move but not in every situation. How does refinancing work? First of all, you need to understand your financial situation to determine if refinancing will save you money and get you a lower interest rate or end up being more expensive than keeping your current loan. We at Key City Lending will help you to understand refinancing, go through the factors needed and help you make an educated decision regarding the future of your current mortgage loan.

How does it work?

Basically, you are paying off your original loan and replacing it with a new one, that's why the interest rate and the terms of your loan will be different. The only thing that stays the same is the property on which you are getting a loan but since you already own the property it is often easier to refinance. The incurred equity in your property also plays a factor on the new refinancing loan.

What are the costs?

Since you are replacing your original loan, refinancing comes with some costs. You may need to pay closing costs, title insurance, appraisal and other transfer fees. When considering doing a refinance it is important to determine whether or not the savings you get from the lower interest rate will offset the costs you will need to pay to get the loan. Remeber costs may vary or you can qualify for no-out-of pocket costs. You can contact us in order to look into your situation.

How can it save money?

Refinancing your current loan can lower your monthly payment. Having a lower interest rate will allow you to built up your equity and pay off your mortgage balance quicker. In a way, your mortgage loan stays the same but the amount of money going toward paying off the principle goes up and this allows you to pay off your home much faster. Refinancing also removes your PMI ( private mortgage insurance ) which also saves you money.

Simply put if you can get a lower interest rate, refinancing is worth looking into but you have to consider all the closing costs and how long will it take to recoup them. Also if your credit score has improved since your original loan and you have built equity in your property this will help in getting the refinancing. We at Key City Lending understand that every situation is unique so give us a call to discuss yours. Let us know exactly what you want to accomplish with the refinancing and we will advise you if this is a good option for you or if there are better programs out there.

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