Guide to Refinancing Mortgage
Refinancing a mortgage has many benefits. It allows you to access equity and even save money. Refinancing can also lower your interest rate payments and get rid of an existing loan faster. However, there are specific considerations to think about before you decide to refinance your home. For more information on refinancing and to determine if it’s right for you, contact a loan officer Las Vegas for expert advice and assistance.
What is Refinancing?
Refinancing a home means that you’re exchanging your current home loan with a new loan. There are several reasons why it makes sense to refinance your home, including accessing equity, reducing interest rates on your current loan, or paying off the mortgage more rapidly. You can also switch the type of loan you have through refinancing, such as changing from an adjustable to a fixed-rate loan. 
How Does the Refinancing Process Work?
Most homeowners have to take out mortgages Las Vegas when they purchase a home. Over time, the payments you make on a mortgage go to the seller of the home that you bought. With refinancing, however, the loan payment does not go towards the seller. Instead, it is used to pay off the remaining balance of the initial home loan. You’ll need to get pre-qualified for refinancing, just as you did for the initial mortgage. The process is similar as well, and it includes a formal closing like the original loan. 
Why Refinance a Home?
Most homeowners consider refinancing to be a part of their larger overall financial goals. Some of the main advantages of refinancing include:
- Lower monthly payments
- Equity
- Faster loan payments
- Eliminate premium mortgage insurance
- Change loan types
There are several ways to lower your monthly loan payments through refinancing. First, you can restructure your loan to have a lower interest rate. You can also extend your current loan’s terms from 15 to 30 years. You will likely pay more in interest throughout the loan’s lifetime, but you will have lower monthly payments. People also refinance to tap into their equity. If you need to borrow a fair amount of money that exceeds your current loan, a mortgage company Las Vegas issues a cash-out refinance. For this refinance structure, the lender hands you a check for the amount you need to borrow. Another reason to consider refinancing is that it reduces the lifespan of your first loan. Just as you can extend the lifespan of a loan through refinancing, you can also shorten it. You can cut your loan payment time in half, for instance, by switching from a 30-year loan structure into a 15-year loan payment plan instead. You’ll pay less interest overall, but be aware that your monthly payments may increase. Refinancing can also eliminate certain types of mortgage insurance, specifically Federal Housing Administration (FHA) insurance. Quite often, the only way to stop a mortgage insurance premium for an FHA loan is to either refinance your original loan or sell your home. Lastly, refinancing is a popular option for homeowners who want to change the type of loan that they have. A popular option is changing from an adjustable-rate loan to a fixed-rate loan. Adjustable-rate loans have a fluctuating interest rate, which means that your mortgage payments can increase over time. Fixed-rate loan payments, on the other hand, remain the same. One reason to switch to a fixed-rate loan is that it provides more financial stability. Predictable payments are often ideal for first-time homeowners or people who want to fit paying for a mortgage into their broader life financing goals. 
How to Refinance Your Mortgage
Once you’ve decided to refinance your mortgage, it’s time to get the process started. There are several easy steps to follow to complete the refinancing process. First, you’ll want to decide what your goal is for refinancing. Then, you’ll want to search for the best refinancing rates. Different lenders will offer different rates. They also vary in the fees they charge, which is an additional cost to keep in mind. Ideally, experts recommend applying for mortgages Las Vegas with three to five prospective lenders. To reduce impacts on your credit score, submit your mortgage applications within a two-week window. After selecting a refinance lender, you’ll want to secure your interest rate. Working with the lender, you should aim to close your loan as quickly as possible to ensure you lock in the rate that you want. Finally, you can close the loan. In this step, you will pay the remaining closing costs outlined in your Closing Disclosure. The process is similar to closing a loan on your home, except that you won’t get the keys to a new house through refinancing. Before refinancing, consider if now is the best time to take that next step. You will want to assess your personal factors to make that decision. Knowing your credit score, your home’s equity, debt-to-income ratio, and the costs of refinancing a home (which usually ranges from three to six percent of the loan’s total amount) can help you decide if you should refinance now or wait for a better time. For assistance on refinancing, be sure to contact an expert loan officer in Las Vegas today. We will gladly provide you with the resources and information required to understand what’s involved with refinancing and determine if now is the right time to refinance an existing loan. (Read why it’s important to maintain a good credit score here.)
