If you’ve made the decision to refinance your house, you’ll first want to take into account how much interest you’ve already paid on your old loan and how much you’ll pay with the refinance. Loans are front-loaded with interest, so the longer you’ve been paying, the more each payment is going toward paying off the principal balance — and the more interest you’ve already paid. Comparing what you’ve paid in interest so far and what you will pay on your current loan versus the refinance will give you a solid idea of your total loan costs for either option.
By resisting the urge to extend your loan term, you can instead refinance to reduce the term and to get a lower interest rate, which could significantly reduce the amount of interest you pay over the life of the loan!
Here is a quick guide on how to refinance your home:
• Determine your goal
• Learn your current credit score
• Research your home's current value
• Ask your lender what the best mortgage rate would be
• Know your all-in costs
• Gather paperwork
• Lock your rate
• Have cash on hand
Make sure to discuss all of your options with your Mortgage Banker as you go through the process! Refinancing — for the right reason, with a good rate and a suitable term — can enhance your financial position!