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 Frequently Asked Questions What is a mortgage refinance? A refinance is a new loan that pays off and replaces an old mortgage. Because mortgage loans are typically not amended, a refinance mortgage is the easiest way to restructure debt. The biggest reasons to do this are : 1. Lower interest rates or payments 2. Shorten or lengthen the loan maturity 3. Increase or reduce the loan amount. What is a cash-out refinance? If you have equity in your home, you have the option of refinancing for more than what you owe on your old mortgage. This cash-out refinance, in which the amount leftover after the pay-off is transferred to you, can be used as you wish. How does refinancing work? The process for a refinance is very similar to what you experienced with the initial purchase of your home. You will consult with one of our loan officers, supply documentation to verify your income and assets, complete an application, and have your home appraised. You'll have to pay closing costs, but they should be lower than they were when you purchased the home. When the refinance funds, the old mortgage will be automatically paid off, including any penalties, and any remaining funds will be transferred to you. Can I reduce my payment with a mortgage refinance? You can reduce your payment with a mortgage refinance by lowering the interest rate and/or by extending the maturity date. How do I know if I should refinance? Many homeowners decide to refinance when some part of their existing mortgage is no longer appealing. Examples include: *Your payment is too high *Your interest rate is higher than what's available on the market *Your adjustable interest rate is too volatile *You want to pay off your mortgage in 15 years instead of 30 *You want to cash out your home equity Please refer to our refinance calculators. The decision will ultimately depend on how market rates compare to what you're currently paying. Please consultant an AFN loan officer for more details. |
