There are a number of reasons you might choose to refinance your home mortgage. Rates are still extremely low, and depending on your reasons, now could be the right time for you to get off the fence and get the ball rolling.

There are two major types of refinances:

  • Rate-and-term refinancing to save money. Typically, you refinance your remaining balance for a lower interest rate and a term you can afford. Shortening the loan’s term can greatly reduce the amount you pay in interest over the life of the loan.
  • Cash-out refinancing, in which you take out a new mortgage for more than you owed. You take the difference in cash or you use it to pay off existing debt.
If you refinance without adding to the amount you owe, then all interest generated by the mortgage remains tax deductible. *

With rate-and-term financing, you can:
  • Refinance into a long-term ARM for a lower interest rate, freeing up more of your cash each month.
  • Switch to the stability of a fixed-rate mortgage if you have an ARM loan that is about to reset.
  • Consolidate first and second mortgages to lower your overall monthly payment.
Cash-out refinances often are used to consolidate and pay down debt. You use the equity in your home to borrow money in excess of your original loan amount. On the plus side, you can pay off credit cards and other high-interest loans, and have all your debt in one monthly bill, with a low interest rate. This will free up your cash to invest, put into savings or spend on other necessities.

Refinancing loans often have interest rates lower than a typical 30-year mortgage, so even if you locked in your home loan at a rock-bottom rate, you should check the current rates. I’m happy to go over the numbers with you and help you determine if refinancing is the right choice to help you manage your finances.

But remember, with a cash-out loan, you’ve just transferred your credit card balance to your mortgage, and it could cost you money in interest payments because you’ve got a 30-year term against a higher balance.

Shawn Fitzpatrick
Senior Loan Officer
NMLS: 429936

direct: (828) 777-6308
cell: (828) 777-6308
fax: (828) 393-0846

84 Coxe Ave, Suite 1-B
Asheville, NC 28801

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