Types of Refinancing
Brent Rasmussen, AMP, CMC, CRMS, CDLP, CVLS, CMA
Combining vast mortgage experience, competitive drive & commitment to excellence, I pride myself on helping my clients evaluate their mortgage saving them time, money, & making the mortgage process simple & stress free
Refinancing is a financial tool that can help people achieve a range of financial goals. Whether you’re looking to save money, reduce your monthly payments, or access cash for various expenses, there’s likely a type of refinancing that can fit your needs. Let’s discuss the three main types of refinancing that we handle at Mortgage Specialists and the situations in which they can be beneficial.
Rate and Term Refinance
A Rate and Term Refinance is the most common type of refinancing. This is where an existing mortgage is replaced with a new one that has a lower interest rate and/or a different loan term. This type of refinance is typically used to reduce monthly mortgage payments or to pay off the home loan faster. Keep in mind that Rate and Term Refinances may come with closing costs and fees, so borrowers should carefully weigh the potential savings against these costs. Three main reasons why people choose a Rate and Term Refinance include:
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Cash-Out Refinance
In a cash-out refinance, you borrow more than what you owe on your existing mortgage and receive the difference in cash. This is often done to access home equity for various reasons, such as home improvements, debt consolidation, or other financial needs. Generally speaking, homeowners will only be able to borrow about 80-85% of their home’s total value. Here are some common reasons why someone might opt for cash-out refinancing:
While the positives can sound great, keep in mind that cash-out refinancing will increase the loan amount and monthly mortgage payments, which can be a long-term financial commitment.?
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