refinancing
What is Refinancing?
Refinancing a mortgage is a process in which a borrower replaces their current mortgage with a new loan for various reasons. Many borrowers refinance their mortgage for better interest rates, to pull cash out of the accumulated equity on the property, to shorten the term of the loan or a combination of these reasons. Typically borrowers will pay 2-5% in closing costs on a refinance and must still qualify with their credit and income for the new mortgage.
Types of Refinances
The main types of mortgage refinances are:
- Rate and term refinance: A common type of refinancing that involves a new mortgage with a lower interest rate and possibly a shorter payment term.
- Cash out refinance: A type of refinancing that allows borrowers to withdraw money from the equity that they have built in the property. The amount able to be withdrawn id typically limited to a percentage of the value of the home.
- No closing cost refinance: a type of refinance that allows borrowers to avoid paying closing costs.