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Contact us for additional tips for refinancing your home.
In its simplest form, refinancing your mortgage means that you are trading in your old mortgage for a new one and possibly save money in the process. Some mortgages are refinanced for the purpose of drawing cash equity out of your property. Currently, mortgage rates are some of the lowest they’ve been in decades. However, a lower rate is not the only reason to refinance. There are many different reasons why people want to refinance their existing loans. See how the below tips for refinancing can help you.
At Opportune, Inc., when you plan to refinance your home, we recommend consulting with a team that has decades of experience. If you live Chicago, greater Chicagoland, or anywhere in Illinois, you should work with a trusted local lender that can help you with your home refinancing process.
This is the most obvious reason why people refinance their mortgage. Most people want to save money. In many instances, the savings acquired through a lower interest rate can be significant. For example, if you have a mortgage loan with a balance of $300,000 at 4.5% and are able to replace it with a new mortgage loan at a 3% rate, your monthly savings will be over $250 per month. These savings can be used towards retirement, or simply to offset the cost of other bills such as utilities.
There are many reasons a borrower could have for seeking a cash-out refinance and the process can open many doors. For instance, some people might use their cash-out refinance with a lower interest rate mortgage loan to pay off their higher interest debts such as credit cards (that typically carry a 16-18% annual rate). Some people borrow to make major purchases such as cars or tuition. Some people use it for investment purposes — either to buy investment properties or invest in a business or the stock market.
It is significantly cheaper to repay a mortgage loan earlier than it is to drag the payments out across 30 years. Many people, especially those planning for retirement or those who have extra income, will refinance into a 15-year repayment schedule. To give you an idea of how much you will repay with a 30-year mortgage vs a 15-year loan with the same rate, the savings over the life of a loan will be over $227,000! This is not a small sum. So, if you are planning for retirement, have come into extra income, or are simply seeking to pay as little as possible for your property overall, refinancing into a shorter-term mortgage is an option that’s on the table.
PMI or FHA premiums can add a significant amount of money to your monthly payment. For example, if you take a $300,000 loan, the FHA monthly premium may be about $212, and it does not ever go away, regardless of your loan to value. If your property has increased in value, you can refinance your mortgage loan and possibly drop your FHA or PMI entirely (if your loan is at 80% of the value or lower). Again, this can add up to significant savings over the life of the loan.
Contact us for additional tips for refinancing your home.
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Equal Housing Lender Illinois Residential Mortgage Licensee. NMLS #276689
An Opportune, Inc. NMLS-ID. 276689
Illinois Residential Mortgage Licensee, MB 6759387
Illinois Department of Financial and Professional Regulation, Division of Banking
100 W. Randolph Street, 9th Floor, Chicago, IL 60601
All Inquiries: 1-888-473-4858 TYY: 1-866-325-4949
Florida Residential Mortgage Licensee, MBR4281
Office of Financial Regulation
200 E. Gaines Street, Tallahassee, FL 32399
Phone: (850) 487-9687 Fax: (850) 410-9663
For Licensing Information, go to: www.nmlsconsumeraccess.org
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