What You Should Know Before Refinancing

If you’re looking for a way to lower your mortgage payments or get your home loan paid off faster, refinancing (paying off an existing mortgage with a new one) may be the way to go. Most people refinance when they have equity in their home, which is the difference between the worth of the home and the amount owed to the mortgage company.

There are many common reasons why homeowners refinance. Refinancing can be used to lower your interest rate, take cash out of your home for large purchases – such as home improvements – or to change mortgage companies.

 

Other reasons to refinance

  • Switch from an adjustable rate loan to a fixed-rate mortgage.
  • Change from one adjustable rate loan to another to lower your monthly payment.
  • Build equity faster by shortening the term of your loan to 15 or 20 years.

 

Closing costs

If you choose to refinance, you’ll need to pay for the new mortgage’s closing costs. These typically run 13% of the loan’s principal. Many times, these costs can be rolled into the loan amount. Therefore, it’s important for you as a homeowner to determine if refinancing offers a true benefit.

 

Calculate your savings

Use Tower’s refinance calculator to help you to decide whether or not to refinance your current mortgage at a lower interest rate. It will help you calculate the monthly payment and net interest savings, and also how many months it will take to break even on closing costs.

After you’ve crunched the numbers and decide to take the plunge, refinancing with Tower is simple. Apply here once you’re ready to get started. When it’s time to settle your refinance loan, Tower Title Services offers convenient day or evening hours, at your workplace or home.

 

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