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Basics of Refinancing a Home

Refinancing A Home Helps Homeowners Gain A New Lease On Life

Choosing to purchase a home is a major life decision and comes with many long term commitments. Various maintenance and repair items are an ongoing concern along with monthly mortgage and utility payments. Soaring interest rates typically cause homeowners to reconsider their decision to purchase, just as variable interest rates can lead to a bit of anxiety for existing homeowners.

Refinancing a home can create a sense of relief for homeowners who want to lock in a lower interest rate or spread out their mortgage payments over a longer time period and reduce their monthly obligation. Another reason homeowners consider refinancing a home is to gain access to some of the accrued equity in the home, by cashing out your equity. There are many ways to refinance your mortgage, a rate and term reduction, this can be done on your current mortgage. This can be done on FHA, Conventional, VA loans, RD loans or Land Contracts conversion. All rules and conditions follow what loan you have.There are also a variety of other benefits that come with refinancing mortgage. Homeowners can typically expect to: 

  • Move from a variable to a fixed interest rate
  • Lower monthly mortgage payments
  • Lower monthly mortgage payments
  • Consolidate revolving debts
  • Access cash from built up equity

When To Refinance A Mortgage

Homeowners who are looking to improve their overall economic position frequently keep an accurate savings and spending plan so they can curb unnecessary spending and track savings in order to reach important financial goals. Refinancing may be a useful tool for some homeowners who are trying to reaching those goals.

Refinancing With Cash Out

When properties have accrued equity over the years, homeowners may be able to tap into some of that equity through a cash out refinance option. This feature does increase the total amount of the loan financed, but offers a number of unique options for homeowners:

  • Extra cash for education or travel
  • Cash out can be used to make home improvements
  • Same or reduced monthly payments as original mortgage
  • Consolidate revolving debts
  • Eliminate high interest credit card debt

When Not To Refinance A Mortgage

Although there are numerous benefits to refinancing a mortgage, there are also a few compelling factors that homeowners should consider before making a final decision. These reasons not to refinance are fluid and could change periodically, but are good starting points for open discussions between potential borrowers and lenders. Some communication openers may include the following questions:

  • How long do you plan to remain in the home?
  • What are you financial objectives?
  • Do you know your consumer credit score?
  • How much are the expected closing costs?

Asking these and other questions up front will save the lender and the homeowner lots of time in the future. If a cash out refinance is going to be used to pay off revolving credit or personal loans, homeowners must be committed to not utilizing high interest credit cards or taking on other new debts. Refinancing a home can be a great way to rise above difficult financial circumstances, but only if the borrowers are diligent about improving their overall spending habits.


Joe Canestraro NMLS # 219951,OH #LO.001509.000; FL #LO24523, Branch Phone 330 865 9600 Ph. Ext. 1
Home Loans and Refinancing for the States of Ohio and Florida.
The Money Connection, a DBA of Polaris Home Funding Corp. NMLS #38072, Phone (616) 667-9000.