Refinance Your Home

What Does It Mean to Refinance Your Home?

When you refinance your home, you are replacing your existing mortgage with a new one. Many homeowners choose to refinance to lower their interest rate and shorten their loan term or to take advantage of turning the equity they have built up in their home into cash and using it for important purchases.

Why Refinance Your Home?

• Lower your monthly payment: The interest rate on your mortgage is tied directly to how much you pay every month for your mortgage. You may be able to get a lower rate because your credit has improved or because of changes in the market. Lower rates mean lower payments, allowing you to build equity (increased value) in your home more quickly.
• Consolidate debt: Consolidate consumer debt into your mortgage.
• Cash out a portion of the home’s equity: Most homes will increase in value and are a great resource for extra income. Increased value allows you to pay for major expenditures, such as home improvements, medical costs, credit card debt, or college tuition. Learn how you can put your home equity to work for you with a cash-out refinance.
• Shorten your loan: Shorten your loan term to own your home and clear the loan.

What Are the Costs of Refinancing Your Home?

Refinancing your mortgage can save you money every month, but it’s also important to be aware of the fees associated with it. Common mortgage refinance fees include:

• Origination charges: These are standard fees to process the loan.
• Discount points: You may be able to finance points as part of your mortgage amount.
• Prepayment penalty: Your current mortgage may have a penalty for early payoff.
• Other charges: These may include the appraisal, credit report, title search, title insurance, attorney fees, etc.

Are You Eligible to Refinance Your Home?

Determining your eligibility to refinance your home is similar to the approval process of getting a mortgage loan. HOMESTAR will consider the following:

• Income
• Assets
• Credit score
• Other debts
• The current value of the property
• The amount of money you want to borrow