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Everything You Need to Know About Refinancing Your Mortgage in Phoenix

Everything You Need to Know About Refinancing Your Mortgage in Phoenix

Refinancing your mortgage in Phoenix offers many benefits. Yet, knowing whether you should refinance your mortgage can be confusing. So, we are going to break down when you should consider a refinance, and things you should know before refinancing. 

The Top 4 Reasons to Refinance Your Mortgage

Lower Interest Rate – If you have a high interest rate on your current mortgage, consider refinancing. A good rule of thumb is to consider refinancing if you plan to stay in your home and the refinance interest rate is half of a percent or more lower than your current interest rate.

Increase or Decrease Length of Loan – You might want to consider refinancing your current mortgage from a 30-year to a 15-year mortgage. You could end up getting not only a lower interest rate but also a short loan, saving thousands in interest.

Cash Out – If you have thought about buying a second home, rental property or a major renovation of your current home, a cash out refinance could be the answer. This option allows you to finance another property or project by using the equity in your home.

Get Rid of Mortgage Insurance – If you bought your home with an FHA loan, or a minimum down payment, you most likely are paying mortgage insurance. However, if your property has appreciated to give you enough equity, you can refinance to get rid of that insurance. It could save you hundreds of dollars a month!

Things to Know Before Refinancing

Costs – When you refinance, there are costs and fees called “closing costs” just like when you bought your home. Every lender is different and so are the refinance fees. The fees can be a few hundred dollars to a few thousand. Be sure to know the fees upfront and understand the amount of time you must stay in the house to recoup the fees.

Many lenders will allow you to add these costs to the new loan. This means you will be paying interest on those costs. Consider your options before committing.

Qualifications – You will have to be approved for the new loan. So, if your financial situation has changed, you might not qualify to refinance. Be sure you talk to someone about whether you can qualify for better terms and interest rates. You might be surprised! 

Loan Terms – Your loan terms WILL change. Your interest rate, length of the loan, and other terms will most likely be different. Be sure you talk about any significant changes in loan terms before committing.

Equity – It is possible to refinance your original mortgage without eating into your equity. However, if you do a “cash out” refinance, you are taking the cash from your equity position. If you take too much, you could put yourself in a position of having no equity if you need to sell in the future. 

If you are still unsure whether a refinance is the right option, Call the Fred Delgado Real Estate Group for consultation at (602) 308-8394!

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