When you bought your home, you probably assumed that the loan payments you agreed to make under the terms of your mortgage would continue for the duration of the loan. Even though most mortgage loans are originated for a term of 10 to 30 years, few borrowers keep the loan for that long. Homeowners choose to refinance their loans for a variety of reasons. When you refinance your mortgage, you pay off your existing loan and take out a new one.
1. To get a lower interest rate mortgage
One of the main reasons people refinance is to take advantage of lower interest rates. You can reduce your monthly payments when you refinance a higher rate loan for one with a lower rate. Even if the interest rate is lower, you need to consider the length of time you intend to stay in the home you would like to refinance. If you intend to stay in the home for many more years, then the upfront costs incurred in refinancing might be worth the lower monthly payments. A rule of thumb is that the new interest rate must be at least 1 percentage point lower than your current rate for the new loan to result in significant savings. However, make sure you factor in how many years longer you will be staying in the house or how many years away from repaying your current mortgage you are, and whether the upfront costs will justify the refinance.
2. To build equity faster…speeding up the growth
3. To get a loan that recognizes your creditworthiness
4. To draw on the equity already built in your home
5. To switch from an adjustable-rate loan to a fixed-rate loan
There are a number of things to consider in refinancing a loan, and below is a simple step-by-step guide to help you arrive at a decision on whether and how to refinance your home.
To be eligible to refinance a mortgage, lenders usually require that you have at least 5 percent equity accumulated in your property.
Equity is the difference between what your property is worth and the amount you still owe on the mortgage.
At Lyons Mortgage Services, Inc. we offer a number of flexible options to determine your eligibility for a refinance.
To determine your eligibility contact our mortgage consultants at 1-800-448-8101 or 718-267-2000.
If Lyons currently holds your loan, you will save up to 1.8% when you refinance with us since you will not have to pay a mortgage tax. Ask us about refinancing your Lyons Mortgage! Lyons will also waive half the application fee (up to $100).