Mortgage 101: The Basics of a Refinance
You may be hesitant to refinance because you don’t think you’ll qualify or you believe the process is too complex. In reality, however, many homeowners do qualify for refinancing—and the process is a lot easier than you think.
What is a refinance? In simplest terms, a refinance is when a borrower obtains a new mortgage—with a new interest rate and term—to pay off and replace an existing mortgage. A refinance is done to get a lower monthly payment, to make a change in the length or terms, or to get cash out at closing. Keep in mind that a refinance is a new loan, not a modification of a current loan.
What are the benefits of refinancing? If interest rates are low—and you currently have a mortgage with a higher rate—you may want to refinance in order to have a lower monthly mortgage payment. Alternately, your goal may be to make a change to the length (term) of your loan. For example, you can refinance from a 30-year fixed-rate mortgage into a 15-year fixed-rate mortgage. No matter what you’re looking to do, however, you should talk to your mortgage professional prior to making any decisions.
Are there qualifications I have to meet? Yes, but the process for qualifying for a refinance is similar to the process for qualifying for your original mortgage. Your lender will analyze your credit score, payment history, debt-to-income ratio, employment and income, assets, and cash available. However, there are some refinances known as “streamline” refinances—usually FHA, VA and similar loans—that have more relaxed qualifications.
With the current low interest rates, many homeowners can greatly benefit by refinancing, so don’t be afraid to pick up the phone and call you mortgage professional today.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988. Licensed by the Commissioner of Banks - License No. MB2671