When to Acquire a Refinancing Loan

A refinancing loan, or refinancing a loan, is the process of securing a new loan to replace the one you currently have. Refinancing allows you to obtain a new loan on your home, with different terms and features, that will virtually pay off the first loan. There are some situations in which refinancing your home loan can be one of the best decisions you can make for yourself.

When to Refinance

Before you refinance, find out if it is worth doing so. Not all situations will benefit from refinancing, especially if the terms of the loan are extended. This can make it more expensive to own your home.

• If you are current holding a mortgage with an interest rate that is one or more points higher than the current rate you qualify for through a refinancing loan, consider the potential in refinancing. It could cut the costs if you retain the same term and keep closing costs low.
• If you are currently facing a difficult time making your monthly payments, refinancing a loan to a longer term may help to reduce those payments. You may pay more in the long term, but it may make it easier for you to keep up to date on your loan.
• On the flip side, if you are able to pay more towards your loan each month, consider refinancing the loan to a lower term. This way, you will pay more each month but you will pay off the long sooner.

Another instance when you should consider refinancing is when you have an adjustable rate mortgage and the interest rate can continue to rise. By refinancing to a fixed rate, you can lock in more affordability.

Hire an Attorney

Are you unsure if you should get a refinancing loan? If so, speak to an attorney about your options. Many times, attorneys can offer information and look over your refinancing loan offer to find out if it is a good solution for you.