A refinance loan allows you to replace your existing mortgage with a new one, typically offering more favorable terms. When you opt for a refinance, your new lender pays off your original mortgage using the new loan. Essentially, you are refinancing or reevaluating the financing of your home with a different loan.
Many homeowners choose to refinance when interest rates have significantly dropped since their initial home purchase. By doing so, they can secure a new mortgage with lower interest rates, potentially reducing the total interest paid over the life of the loan.
Another reason people consider refinancing is to access the equity built in their homes. If you have substantial equity due to years of mortgage payments or an increase in your home’s value, you may be able to withdraw cash during the refinance process. This cash can be used for home renovations, consolidating higher-interest debt, or saving for important future expenses like college tuition.
At Fairway, our team of mortgage experts can guide you through the refinance process, exploring your options and helping you make an informed decision that aligns with your financial goals.
If you’re considering refinancing your mortgage, Fairway offers several advantages that could benefit you in your financial journey. Refinancing may be the right choice if your home’s value has experienced a significant increase or if current interest rates are substantially lower than when you initially purchased your home. Here are some highlights of what a refinance with Fairway can offer:
At Fairway, our experienced mortgage professionals are here to guide you through the refinancing process. We’ll help you explore your options, assess your unique financial situation, and find the refinance solution that best aligns with your goals.
How much does it cost to refinance a mortgage?
The cost to refinance your loan depends on several factors. Many refinance loan programs require a new appraisal on the home. That cost can range from $400-$750 for an average-sized home, but it may not always be required under all refinance loan programs. There are also generally closing costs associated with your new refinanced home loan. Sometimes those closing costs, which can vary widely depending on the size and type of property, must come out of pocket, and other times, they can be rolled into the financing of the new home loan instead of coming out of your pocket when the new refinanced loan closes. It is important to discuss the costs, terms and conditions associated with a refinance loan with your Fairway mortgage advisor.
When should I refinance my mortgage?
The short answer here is that you can refinance anytime when it benefits you as a borrower, as long as you have at least a six-month on-time payment history on your current home mortgage loan. Maybe that means when mortgage rates have decreased considerably. Maybe that means when you have built up a significant equity stake in your home, when a refi would serve to either shorten your loan term or to tap that equity by taking cash out at the time of refinancing. The answer to this question is different for each individual client. It is important to discuss your specific financial situation and goals with your Fairway mortgage advisor when considering a refi.
Can I refinance if I have an FHA loan?
Yes! You may have several refinance options if you currently have an FHA loan.
You are required to have at least a six-month history of on-time monthly mortgage payments before you can refinance any home mortgage loan. However, it may be advantageous to wait even longer than that before refinancing your FHA home mortgage loan, for the reasons discussed in the previous answer. As always, it is important to talk your refinance options over with your Fairway mortgage advisor to make sure that you are getting the most benefit from your new home loan, because each individual’s financial situation, credit situation and goals may vary.
It’s not uncommon to encounter some confusion when it comes to the terminology surrounding home loans. The terms “home equity loan” and “refinance” are sometimes used interchangeably, leading to misunderstandings. Let’s clarify their relationship.
In general, all refinance loans consider the amount of equity a borrower has in their home at the time of refinancing. Whether you’re exploring a rate-and-term refinance or a cash-out refinance, having more equity in your home during the refinance process can bring various advantages in your new mortgage loan. In this broader sense, you can indeed consider “home equity loan” and “refinance” as synonymous terms.
However, it’s important to note that people sometimes use the term “home equity loan” specifically when referring to a cash-out refinance. This distinction arises because, in a cash-out refinance, the funds received by the borrower at closing are derived from the equity they have already built in their home over time by making payments on their initial home loan.
We hope this clears up some confusion. However, if you have any questions about rate-and-term refinancing or cash-out refinancing, we encourage you to speak with your Fairway mortgage advisor. They will provide personalized guidance based on your specific situation and goals, ensuring that you make informed decisions throughout the refinancing process.