Applying for Rate and Term Refinancing of Your Mortgage

COVID-19 is seeing many people with home mortgages face changing life circumstances. There have been some efforts by the government for mortgage relief. Never forget: Refinancing may always be an option! Discuss your needs with our team at Professional Mortgage Solutions in Rego Park, NY and we will help you understand refinancing rate and term.

Impacts of the Rate and Term of Your Mortgage

When you assess the long-term costs, there are many changes you may like to make to the rates= and term of your mortgage. The term is the length of the mortgage, which you may be able to stretch or shorten. Others want to use something called a cash-out refinance. With cash-out refinance, a borrower gets a new, higher-value mortgage to replace his or her old mortgage. You can accomplish this by pulling a cash payout from your home equity to cover the difference in cost between the two.

Often, people will us a cash-out refinance to get a better interest rate. You need to have a certain amount of equity in your home to do a cash-out refinance. If you do not have this, but still want to lower your interest rate, you can seek a regular mortgage rate and term refinance. You can send updated information to the bank and see if you will get a better rate, more preferred term, or both. For example, your credit score may have improved since you bought the home.  The principal balance of your mortgage will remain the same with a rate-and-term refinance. It is only with a cash-out refinance that you can receive a payout.

Why Do I Want a Rate and Term Refinance?

There are many situations where a homeowner wants a rate and term refinance. Some obtained their initial mortgage during a worse time for interest rates in the market. They may have seen better programs and terms for rates come out and want to take advantage. In many situations, a rate and term refinance will only gain you back a few percentage points on interest. This could save thousands a year in payments, however, there is a cost to approving and closing a new loan. Make sure this cost is worth it.

Other Perks of Rate-and-Term Refinancing

Many refinance rate and term to save money. However, there are other perks in rate-and-term refinancing. When you secured your initial mortgage, you paid closing costs. With a refinancing, you will pay new closing costs and loan originator fees. However, your home may have gained new value and you will end up with a better appraisal on the house.

COVID-19 has created a lot of change in the market, be sure to use someone with plenty of experience when you refinance. Contact Professional Mortgage Solutions for an assessment on how you can benefit from a rate-and-term refinance.