Did you purchase your home when your credit wasn’t great and now you’re curious if there’s anything you can do about it? Or maybe you’re looking to make repairs on your home but don’t have the cash but do have the equity. If this sounds like a similar situation, then refinancing might be the best option for you. Although these aren’t the only reasons to refinance, they are some of the popular ones and we can discuss your options with you based on your personal situation.
When To Refinance
Mortgage rates for conventional loans are low thanks to strong backing by two of the world’s largest lending agencies. Some people purchase their home when they aren’t as financially stable as they could be which means they will have a higher interest rate. Others may purchase the home with a decent interest rate, but keep an eye on the market so they refinance to get an even better rate after they own the home for some amount of time. As your income increases, you might work harder on your credit, and that means you could receive a lower interest rate, so you can save more money per year that could be used to renovate your home or simply pay down the loan earlier than planned.
Another reason people choose to refinance is because they want to use the equity in their home for a major purchase, one of the most popular being renovations.. In order to cash out on the equity of your own, the first thing you need to know is the value. Once you have an appraisal, the lender can decide an appropriate amount of equity that can be borrowed. Finally, the balance owed is subtracted; after that the original mortgage is paid and the owner gets the rest as a loan.
If you purchased your home with cash, you can refinance to pay yourself back. The delayed financing rule means you can make a fast purchase for a foreclosure for example, without using all cash reserves. Before this rule came about, investors had to wait six months to cash out on a home that was just purchased. This rule removes the waiting period as long as certain rules are followed.
What Do I Do Next?
If a refinance is something you’re considering, be sure to review your finances to ensure you can cover the those payments along with the loan. If you will be using the equity to increase your home value, you’ll have more revenue if you were to sell your home. But if you are using the equity for something like a car or pay off student loans, you’ll want to be very detailed with your financial plan moving forward.
Reach Out Today!
There are many different factors when it comes to deciding to refinance and we want to be here to make sure you have all the information needed to make the best choice for you. Don’t hesitate to reach out to Commonwealth Mortgage Corporation today!
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