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Understanding what refinancing is and how it works is an important aspect of becoming a homeowner. Choosing to refinance your home isn’t something that should be taken lightly or decided on without much thought. There are many elements to consider when you go through this process, and you should make sure you have a trusted lender to guide you through it. Dee Ayers has helped countless people purchase homes and makes sure her clients receive the best service possible. With 25 years of experience and plenty of knowledge, continue reading to learn more about refinancing from a trusted professional.

What Does It Mean to Refinance?

To summarize, refinancing your home is replacing your current or old mortgage for a new one. Most people choose to do this in order to lower their interest rates or adjust their payment terms. While there are many different reasons someone might choose to refinance, you should make sure you’ve considered all of your options. Understand why you think it may benefit you before taking action. Like when you purchased your house, you’ll have to apply for a new loan and become pre-approved. There are several types of refinances you should look over, but you should keep in mind the value of your home and the balance of your current loan. Your lender will likely need to see some similar documentation to when you first bought the home, so come prepared and the process will go by smoothly.

Rate-and-Term Refinance

This is a common refinancing option that allows you to change your loan terms to ones that are preferable for you. This is most beneficial when interest rates have gone down or you want to change the size of your payments or term. If you find that you have less debt or a higher credit score, you could also take advantage of this option when rates drop below what they were when you purchased your home. Oftentimes, rate-and-term refinancing may save you from foreclosure if that’s something you’re trying to avoid. By switching to a mortgage loan with a longer term, you’ll give yourself more time to pay off what you need to. The process of applying for this option is similar to that of your original home loan, and your lender will help you stay on the right track.

Cash-Out Refinance

When choosing this refinancing option, you take out a loan that is higher than what you currently owe and receive the difference in the form of cash. This money can be used towards home improvements, paying off debt, or other pressing financial obligations. Limitations only let you use up to 80% of your home’s value, but this could be useful depending on your conditions. Before choosing to go through with this option, determine how much cash you’ll need, what your lender’s requirements are, and have your information ready. Talk to your lender to receive an application and start your process right.

Qualifying for a Refinance Loan

Before getting started on this process, it’s important to understand whether or not you meet the necessary qualifications. Some factors that may be considered are your credit score and history, how the payments for your current loan look, your home’s equity, and any remaining debt obligations. If any of this information has declined or gotten worse since you initially applied for your loan, you could have a more difficult time getting approved. Don’t stress too much, though, because talking to your lender will help you find alternatives or solutions that suit your needs.

How We Can Help

Dee Ayers is one of the most qualified and trustworthy brokers in Alabama, with experience that makes her knowledgeable in all areas of your home buying process. Having a lender you can trust is one of the biggest factors when picking out a loan, and Dee Ayers values this reliability just as much as her clients. Becoming a homeowner can be very difficult and get overwhelming at times, but finding an option that works for you will make a positive difference. Contact us today to learn more about refinancing options and mortgage loans.

Content presented here is for informational purposes only. Every situation is different and you should consult with a mortgage professional before making any financial decisions. We will be happy to schedule a consultation to discuss your specific situation and needs.

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