Looking for refinance home loan options? By choosing a home refinance loan, you get a new home loan to replace an existing home loan. Broadly, there are two types of refis: (1) a rate and term refinance where you’re getting a different interest rate and/or changing the mortgage terms (2) a cash-out refinance where you’re refinancing to take cash out. Clearly there are different goals borrowers have in mind, as well as qualifications to meet when deciding between these two types of home loan choices.
Reasons for Refinancing a Home Loan
- Monthly savings : this one is straightforward…but if not, we have a list of wonderful financial planners who can help.
- Get a lower interest rate which usually means a lower monthly payment
- Stop paying for private mortgage insurance (PMI)
- Get better terms : “better” being dependent on what is important to the homeowner, but examples are:
- Get a shorter term, so you will own your home sooner.
- Switch from an adjustable-rate mortgage to a fixed-rate loan (or vice versa in some cases)
- Cash out : Trade some of that home equity for cold hard cash. This is what separates a cash-out refinance home loan from a rate/term refinance home loan.
Cash-out Refinance Home Loan
In a cash-out refinance, the new mortgage is larger than the previous. With the new loan terms, you’re also being advanced money – essentially taking equity out of your home. It’s not exciting as “cashing out” is depicted in hip hop videos, BUT you can use the cash for any purpose so feel free to splurge. However, we suggest speaking with us before making any purchases.
Also, to be eligible for a cash-out refi, you must have sufficient equity so contact us if you want to evaluate where you stand.