Reasons to Refinance
A mortgage is generally the largest debt most homeowners have to manage. It is a good idea to give your personal real estate finance portfolio a checkup at least once a year. Since there are several reasons a homeowner may choose to refinance, we'll take a look at the most common reasons;
1. Mortgage Rates Drop:
Typically, the most common reason that homeowners refinance their home is to secure a lower interest rate and lower monthly payment. The interest rate and loan amount determines the total payment that a borrower will pay. The lower the interest rate, the lower the monthly payment will be.
2. Lower Payments:
Lowering a mortgage payment can be achieved by: Lowering the mortgage interest rate; lengthening the loan term (amortization); combining two or more loans, like a 1st mortgage and an equity line; or removing mortgage insurance.
3. New Mortgage Program:
Refinancing an Adjustable Rate Mortgage (ARM) to a new Fixed Rate Mortgage (FRM), combining a first and second mortgage or paying off a balloon loan are three possible reasons to explore a refinance.
4. Debt Consolidation:
If there is sufficient equity in your home, you may be able to save money by paying off consumer debt (credit cards, personal loans, car loans, student loans, etc.). Combining these consumer debts into one lower monthly mortgage payment is a great way to significantly reduce the overall monthly expenses for your family. However, it's important to keep in mind the total cost of that debt is now included in your mortgage.
Frequently Asked Questions:
Q: Do I have to refinance with my current mortgage company?
A: No, you may choose Uwharrie Bank or any company you wish to refinance your mortgage since the new loan will replace the loan mortgage.
Q: Is it easier to refinance with my current mortgage company?
A: Probably not. The chances are that your loan at this point would have been sold to a mortgage servicer that is really not setup to handle your refinance. Uwharrie Bank will typically require the same documentation from you that any other bank or lender would also need. Make sure that you check to make sure you're getting the best deal. In the end, most customers find that Uwharrie Bank is able to offer better interest rates.
Q: Will I automatically qualify?
A: No, you will have to qualify for your new refinance. However, certain programs will allow for reduced documentation.
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