4 Myths About Refinance That Are Not True
To define it, when you refinance a mortgage on a home, you have to pay off the first, original mortgage and then replace it with a brand new one. There are many benefits to refinancing and it is great to think about doing so.
Here are 4 of the most common myths about refinance that are just not true.
Myth 1 – Resetting your loan term is a must
Starting over is a big fear for any homeowner. You pay quite a lot in interest in the beginning so it is not very good looking to have to start again putting more into the interest. But the secret is that depending on the lender you choose, you may not have to start your loan term over. Recently, it has become more common for lenders to write more loans that are not as traditional. There are many different time gaps that newer lenders can offer that look much more appealing than traditional loans. These new kinds of loans can save you thousands or even tens of thousands of dollars in long term interest.
Myth 2 – You will lose your equity in your home
The home equity is only affected if you add to your loan principal like you would in a cash out kind of refinance. Cash is accessed based on the home equity you have earned so it will lower the equity if you take out the money. The most important things to know about changes in your home equity is that it will not change if you lower your interest rates, drop mortgage insurance, or shorten the term. You can also take advantage of competitive rates since it can help you grow your equity.
Myth 3 – Moving from short term debt to long term debt is a bad idea
This myth for refinance is just not even possible to be credible. It makes no sense and is just not true. Most credit cards rates are 3 times as much as the interest rates on mortgages, making credit cards a lot harder to pay off and easier to make you fall into debt. Debt consolidation into your mortgage could possibly be a solution if any debt you have has built up to a pretty bad point. It is just important to stay out of debt all around, since the last thing you would ever want is to just get even more debt.
Myth 4 – Not enough time has passed for you to refinance again
You are able to refinance about 6 months after your previous refinance. And sometimes it is the right thing to do. Sometimes interest rates are smaller and help you not have to go into crazy debt. And it is possible to take advantage of programs for new loan programs.
Now that these 4 myths have been debunked and explained, maybe, if the time is right, it is time to look into refinancing.
If ever in need of professional help with refinancing, contact this Lancaster refinance company.