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Refinancing your mortgage can lower your interest rate, tap into the equity of your home, or eliminate private mortgage insurance, however it’s important to make sure it’s the right option for you.
How does Refinancing a Mortgage Work?
When you refinance, you pay off the original mortgage and replace it with a new one. The terms and conditions of the new loan may be different, but the property is the same. It’s a similar process to getting a mortgage, but with a few less steps.
What Do I Need to Refinance my Mortgage?
Just like a mortgage, you’re evaluated based on:
- Your credit score and payment history
- Income and employment history
- Retirement assets and cash reserves
You’ll be asked to provide proof of income with W-2s and pay stubs, proof of assets via bank statements.
Can I Refinance my Mortgage to Get Rid of PMI?
Yes! This, coupled with a potential reduction of your interest rate, are two of the main reasons people choose to refinance.
How Long Do I Need to Have My Mortgage Before I Can Get Rid of PMI?
Many loans require you to own the home for at least two years before refinancing to get rid of PMI. If you have owned a home for less than two years, you’ll want to talk it over with your lender.
When is Refinancing Worth It?
Figuring out if refinancing is right for you is a numbers game. You’re comparing the savings of potentially lowering your interest rate, shortening the term of the loan, and eliminating PMI or FHA Insurance with the fees you may pay with a new loan.
Working with a loan officer is the best way to determine what’s right for you.
Can I Refinance My Mortgage to Consolidate Debt?
Yes! Most commonly a cash-out refinance is used in this case. While it increases the amount that is borrowed. The extra cash is paid out at closing. It can be directed to the home owner or to creditors such as credit card companies and student loan administrators.
A cash-out refinance can also be used to lower the mortgage rate or shorten the term, depending on how the home owner uses the cash that is paid out.
Can I Refinance My Mortgage if I’m Behind on Payments?
It’s very unlikely that you’ll be able to refinance if you’re behind on your current payments.
How Do I Speak with Someone at WECU About Refinancing?
You can set up a no cost, no-pressure meeting with one of our Real Estate Loan Officers to discuss your options and figure out if refinancing your mortgage makes sense for you.
Give us a call at 800-525-8703.