Jim Quist is the President and Founder of NewCastle Home Loans. Jim has worked in the mortgage industry for over 20 years. His goal is to help home buyers find the information they need to close on their home purchase with confidence.
Maybe interest rates are lower than when you financed your original loan, or maybe you want to pay off your house faster. Perhaps your financial situation changed, or you’d like to get rid of mortgage insurance.
The good news is that your mortgage isn't set in stone. It’s easier than you think to replace your mortgage with a better one to fit your current needs.
When you refinance your home, you trade in your old mortgage for a new one with a new loan amount, interest rate, and term.
In this article, I’ll give you some basics to help you decide if it’s the right time to refinance your home. Then I’ll share some info about the digital mortgage so you refinance safe, fast, and convenient. First, let's look at a few reasons to refinance your home:
- Lower your interest rate by refinancing your home
- Refinance to change the length of your loan term
- Replace your ARM with a fixed-rate mortgage
- Take cash out when you refinance
- Get rid of mortgage insurance
Lower your interest rate by refinancing your home.
Refinancing your home can take a huge burden off your monthly budget. Lower your interest rate to reduce your monthly payment. Often, people refinance in order to lower their interest rate. A lower interest rate can often mean lower monthly payments.
For instance, if you drop your rate from 4.5% to 4.0% on a $200,000, 30-year fixed mortgage, you'll cut your monthly payment by about $60.
Are today's mortgage rates lower than the rate you have on your home loan? Check mortgage rates in real-time now.
Refinance to change the length of your loan term.
Switch from a 30-year fixed to the 15-year mortgage to lower your interest rate and save a lot money in interest payments. Compare the difference with our amortization calculator by clicking the “Fetch My Mortgage” above. Or you can refinance into a longer term loan to lower your monthly payments when you need flexibility or if money is tight.
Replace your ARM with a fixed-rate mortgage.
The last 10-years has been great if you have an adjustable rate mortgage. I know because I have an ARM. But rates are rising and now is a good time to get serious about locking in a stable fixed rate loan.
Take cash out when you refinance.
You see the headlines, “Optimism for Rising U.S. Home Values Is Highest Since 2007” and “Home values post the biggest rise in 2½ years.”
If your home’s value is up, then you might want to tap into your equity. Sure, you'll increase your loan amount and your monthly payments may even go up as well, however, think about what you can do with the extra cash. Use it to make home improvements, pay for your kids’ college, or pay off high-interest credit cards. There is not a cheaper way to borrow money. Aside from Grandma, it’s one of the cheapest ways to borrow money.
Get rid of mortgage insurance.
Do you see it on your statement each month - mortgage insurance, aka PMI or MIP? If you have an FHA loan or if you have less than and 80/20 loan to value, sometimes the only way to get rid of PMI is to refinance. You pay down your loan balance with each mortgage payment. So now that home values are up you might be able to trade your mortgage with PMI for one with no PMI.
Refinance your home in three simple steps:
Here’s how the digital mortgage, one that uses latest technology, can make your mortgage experience safe, fast, and convenient.
1. Find the best deal.
Start with a real-time mortgage calculator to find the current lowest mortgage rates. Get a detailed mortgage quote up front - before you give away your private info. Avoid mortgage companies that tell you they need your name, phone, email or social security number before giving you the valuable mortgage quote you want.
2. Get approved.
Refinance with a lender that can do it online in 15 minutes. Lenders that invest in modern tech have systems that connect your accounts and share your financial info. Your refinance experience will be safer, faster, and more convenient.
The modern mortgage process is super efficient, so you’re ready to close on your refinance in half the time. Click-to-sign loan documents in seconds. Upload your documents to a secure hub that logs every activity in real-time. Keep a finger on your loan at all times with an online dashboard.
Is it time to refinance?
While rates are still low, it's a good time for you to get serious about refinancing your home. You might be able to lower your payment, pay off your loan faster, switch from an adjustable to a fixed rate, or drop the mortgage insurance on your mortgage.
A few lenders offer new mortgage tech, NewCastle Home Loans is one of them, that makes it easier for you to shop and compare your options online in seconds. And if you decide to refinance, you'll be pleasantly surprised by the safe, fast, and convenience of the modern mortgage.
See for yourself.