If you own your home through a mortgage agreement, you may have the ability to refinance, which can come with benefits like access to a lower interest rate or an adjustment of the length of your loan. With interest rates remaining noticeably low, now could be an opportunity to refinance your mortgage.
It’s important to understand the basics about mortgage refinancing so you can feel confident in your financial decisions. This infographic covers five different elements of mortgage refinancing you should know before you move forward with a refinance.
What to know about refinancing a mortgage:
- Refinancing your mortgage means taking out a new home loan to pay off your old one, then paying according to the terms of that new agreement.
- Refinancing lets you adjust your mortgage terms. This process opens the door to potentially lower interest rates, switching from an adjustable-rate to a fixed rate, a longer or shorter payment term, and other options.
- Refinancing can be helpful when the current interest rate is significantly lower than your current one. A drop of at least 1% is a good guide for comparing rates.
- Refinancing doesn’t automatically mean better rates and terms. Carefully review your current mortgage and compare it to the offers you receive to see if it provides the enhanced value you are looking for.
- Refinancing costs money. Be prepared to spend money on the refinancing—similar to the closing costs of the initial mortgage. Make sure the additional costs don’t outweigh the benefits.
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