4 Common Misconceptions About Mortgage Refinance
There’s a reason many homeowners are rushing to refinance their mortgages, and that is because the rates have dropped significantly. Therefore, now is the perfect time to get a reasonable rate. However, if you’re hesitant to do so, you likely came across some misconceptions that have been going around online. We’re here to set the record straight:
Myth #1: You Need to Restart Your Loan
A common misconception when it comes to mortgage refinance is that many people think refinancing will reset the clock on their loan, which will take them back to zero.
The truth is, it doesn’t work that way. A lot of lenders write custom loans for borrowers. Therefore, you would simply pick up where you left off, but at a lower rate.
In addition to that, due to the low mortgage rates today, you can refinance to a shorter-term loan and still afford it.
Myth #2: Refinancing Will Affect the Equity of Your Home
Some people think that refinancing their homes will lower the equity of their properties. However, the only reason this could happen is if you cash-out refinance in which you borrow more than your existing mortgage balance. On the other hand, if you only refinance your existing balance without adding to it, it will not impact your home’s equity.
Myth #3: You Need to Wait a Year Before You Can Refinance Again
If you recently refinanced your property, you might think you won’t be able to swap out your loan again. Generally, you can refinance it as long as it’s been six months since you last did so. Therefore, you don’t need to wait a year at all.
Every time you refinance, you will need to deal with some closing costs, which is why refinancing frequently isn’t really a good idea. However, if you do have a reason to refinance six months after you do so, then it could make sense. Still, you need to think about it carefully because those closing costs don’t come cheap.
Myth #4: Closing Rates Are Non-Negotiable
Speaking of closing rates, some people back off refinancing their mortgage because they’re intimidated by the closing costs. Indeed, closing costs exist, but you can bring the costs down because you can negotiate some aspects, like the loan origination and application fees, as the lenders only set these.
To Refinance or Not?
You really need to shop around to find the right mortgage lender that could give you the most reasonable rates. When you refinance your mortgage, you could have a lot of savings, especially at today’s rates. Therefore, explore your options and research properly, so you don’t fall victim to misinformation.
Now that we have debunked these common myths about mortgage refinance and you’re still on the fence about it, it would be a good idea to look for an expert who can help you out. Mortgage experts can help advise you on what to do when it comes to mortgage refinancing.
EST Home Mortgage is one of the best mortgage companies in Michigan. We specialize in helping families in Kalamazoo find their best mortgage with the lowest rate and personalized service. Contact us today.
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