What is Refinancing?
When you take out a home loan, you’re required to make mortgage payments on the house until the loan is completely paid off. With payment obligations that can span anywhere from 10 to 30 years, it only makes sense that you would opt for a mortgage with the most favorable terms. When you refinance your home loan, you can replace your existing mortgage loan with a new one that better serves your needs right here in Alabama.
More specifically, most borrowers choose to refinance their home loans to lower their interest rate, shorten their payment term or cash out a portion of their equity. Whatever the goal, refinancing helps homeowners restructure their plans to make the payment process easier and more beneficial. When refinancing your existing loan, your total finance charges may be higher over the life of the loan. Let one of our loan originators help you find the right loan option!
At CIS Home Loans, we’re committed to making the payment process as easy as possible. When you refinance your mortgage through us, we’ll work to set you up with a monthly plan that better enables you to achieve your goals. Whether you’re looking to lower your mortgage payments or pay off your loan faster, the experts at CIS will help you get there.
When you refinance your mortgage, you set yourself up with more manageable terms individualized to your financial needs and objectives. In some instances, total finance charges may be higher over the life of the loan.
What Are the Benefits of Refinancing Your Mortgage?
Refinancing generally helps you save money in one or more of the following ways:
- Lower monthly payments: Refinancing your loan can help reduce your monthly payments, requiring you to pay less in principal and interest every month over a longer period of time. Lowering your monthly payments can free up room in your budget and help you advance toward other financial goals.
- Shorter terms: Increasing your monthly payments through refinancing can help you shorten your loan term, pay off your mortgage sooner and ultimately save thousands of dollars in interest.
- More predictable costs: If you have an adjustable-rate mortgage, you can stabilize your loan payments by replacing it with a more predictable monthly rate. Refinancing to a fixed-rate mortgage can protect you from rising interest rates and simplify budgeting.
- Better interest rates: If interest rates have dropped since you first took out your loan or you’ve recently become eligible for a lower one, you can refinance your mortgage to obtain a better rate.
How Does Mortgage Refinancing Work?
To refinance a loan, you must first apply for a new mortgage, similar to when you took out the original loan for your house. If you qualify for the more favorable loan terms, your lender will pay off your original mortgage — essentially erasing all existing debt — and replace it with the new one. Once your mortgage is refinanced, you’ll begin paying off your loan as usual according to the adjusted terms.
What Do You Need to Move Forward?
If you’re interested in refinancing your mortgage, there are several steps you can take to move forward in the process:
- Know your key financial information: This includes your credit score, home equity, debt-to-income ratio and other important considerations.
- Set a financial goal: Do you want to reduce your monthly payments, shorten your term or pursue a different goal?
- Research mortgage rates: You can calculate and compare rates using a mortgage rate calculator.
- Apply for a mortgage: If you are submitting applications to multiple lenders, be sure to send only one application every two weeks to generate the least impact on your credit score.
- Choose a lender: Compare loan estimates and select a lender with the best offer.
- Lock and close: Lock in your interest rate before it expires and close out your loan.
You can refinance your loan and obtain the most favorable rates when you apply for a mortgage with CIS. For over 25 years, we’ve committed ourselves to helping Alabama customers secure their dream homes at the most competitive rates. Our team of experts is here to provide you with the most positive experience based on our core values of character, integrity and service.