Some homeowners constantly examine interest rates and calculate their remaining home loan payments, always looking for a better deal. A home refinance may be a great next step under certain conditions. It can offer solutions to homeowners who want to:
- Exchange an adjustable-rate for a fixed-rate mortgage
- Lower monthly payments
- Pay off their mortgage faster
- Consolidate debt
Refinancing does come with expenses, including closing costs and other fees, which typically add up to 3%–6% of the loan’s principal. A home appraisal is also usually required. In addition, refinancing means reducing equity in the home, possibly resulting in less pricing flexibility if the homeowner decides to sell the property.
Financial Security for Homeowners
When homeowners need cash, an additional option is to apply for a home equity loan or line of credit. With a home equity loan, the homeowner borrows a set amount and receives loan proceeds in a one-time payment. This solution works well for homeowners who need funds for a one-time purchase or project.
With a home equity line of credit, the homeowner has an approved credit line up to a certain amount, and can borrow as little or as much as wanted, up to the credit limit, during the established draw period. A line of credit can be a good fit for homeowners who have several purchases or projects to fund over an extended period of time.
Ready to explore refinancing or home equity options? Learn more by visiting the Borrowing section of our website.