What does it mean to refinance your
When you refinance your mortgage, you pay off your existing mortgage and replace
it with a new mortgage that typically has a lower interest rate, term period, or monthly payment.
If you have both a primary mortgage and a second mortgage, you could refinance both
by paying them off and replacing them with one new mortgage. You may also refinance
a non-FHA loan with an FHA loan. But refinancing has costs, so it isn’t always right
If you currently have an FHA-insured mortgage, you may be eligible for an FHA Streamline
Refinance. Click here to learn about an FHA Streamline Refinance
What are the benefits of refinancing?
Here are some of the benefits of refinancing:
Who may benefit from refinancing?
With interest rates at historic lows, now is a good time for every homeowner to
consider and evaluate the option of refinancing. However, refinancing is typically
a benefit only if you plan to stay in your home for a minimum of two to five years,
in order to recover your refinancing costs.
For more information
- Get a lower interest rate and make lower payments. A lower interest rate usually
means you will make lower monthly mortgage payments. You may be able to get a lower rate because
of changes in market conditions or because your credit score has improved.
- Change the mortgage length.
– If you decrease the length of your mortgage—for example, if you go from a 30-year term to a 15-year
term—you will usually have a higher monthly payment but a lower interest rate. You will likely pay off
your mortgage sooner because you are paying more of the principal each month. The total amount of
interest you pay throughout the shorter mortgage term will typically be less.
– If you increase the length of your mortgage, you will likely have a lower monthly payment, but the total
amount of interest you pay throughout the longer term will typically be more. Note: Mortgage interest,
unlike credit card debt, is tax-deductible; consult a tax professional for more information.
- Build equity more quickly. With lower monthly payments, you may be able to make
additional payments and build up equity in your home more quickly.
- Get cash from the equity in your home. If you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment. You may use this
cash for home improvements, which will increase the value of your home, or for other major expenses.
- Convert from an Adjustable-Rate Mortgage (ARM) to a Fixed-Rate Mortgage. Interest rates for an ARM can
increase or decrease, so monthly mortgage payments can also rise or fall. Because the variable ARM
rate is unpredictable, many people are more comfortable switching to a Fixed-Rate Mortgage that has a
steady interest rate and steady monthly payment.
- Get an ARM with better terms. You may be able to refinance your existing ARM by getting another one with terms that are more advantageous to you. For example, you may be able
to get a new ARM with smaller interest rate adjustments or lower payment caps (the interest rate
can’t exceed a certain amount), or the new ARM may start out at a lower interest rate.
- Refinancing costs may be included in the loan.
- Contact your loan officer today to see if refinancing may be right for you. We take pride in delivering
value and savings to homeowners across the United States. It would be a pleasure
- Visit the Federal Reserve Board’s online publication, A Consumer’s Guide to Mortgage
If you believe this solicitation is deceptive, you may file a complaint on the
North Carolina Office of the Commissioner of Banks website,