How Does Refinancing Your Mortgage Work?
If you’re struggling to make your mortgage payments, you may look into refinancing as one option to stabilize your finances. When reviewing this option, there are numerous factors to consider, including interest rates and how much equity you have in your home. In this article, the Dayton, OH foreclosure defense lawyers at Kohl & Cook Law Firm, LLC will discuss refinancing, how it works, why you might need it, and the pros and cons.
What is refinancing?
Essentially, refinancing your mortgage means you are replacing your current loan with a new one in the hopes that you can lower your monthly payments. You may be able to negotiate a lower interest rate or a longer term for the loan. By doing so, you can pay less monthly and potentially save money on interest.
Why would I want to refinance my mortgage?
One of the most common reasons for refinancing your mortgage is that it could end up helping you secure a lower interest rate. Interest rates can fluctuate, and if you purchased your house while interest rates were still high, refinancing could lower your monthly payments.
In addition, refinancing can help you get a different type of mortgage loan. For example, refinancing can help you switch to a conventional loan if you currently have an FHA loan. This could benefit you because FHA loans require you to pay mortgage insurance while conventional loans do not.
Refinancing is also an option for those with considerable equity in their home. If you plan to take out a second mortgage to pay for something like your child’s college, you might consider refinancing your loan at the same time.
Pros of refinancing your mortgage loan
All things in life have pros and cons, and refinancing your mortgage loan is no different. The pros of refinancing your mortgage loan include:
- Securing a lower interest rate, which makes your monthly payments lower, which means you can pay off your loan earlier than expected
- You can use this as an opportunity to consolidate your debt
- Refinancing could help you get rid of unnecessary fees such as mortgage insurance payments
Cons of refinancing your mortgage
- Refinancing your mortgage could impact your credit score
- You could have less equity if you decide to take a cash out, the mortgage term can end up being longer, which ultimately adds to the total cost of the mortgage
The bottom line
Meeting with a foreclosure defense attorney can help you determine if refinancing your mortgage is a viable option to avoid foreclosure. Refinancing your mortgage could be the right decision for you. Refinancing can make a huge difference in your monthly payment.
Talk to a Dayton, OH Foreclosure Defense Lawyer Today
Kohl & Cook Law Firm, LLC represents the interests of Dayton residents who want to avoid foreclosure on their homes. Call our Dayton foreclosure defense lawyers today to schedule an appointment, and we can begin discussing your best options right away.
