Clearwater Mortgage Blog

If you’ve been thinking about refinancing, but aren’t quite sure if it’s a good idea, read on for some quick tips.

 First of all, there are two types of refinance loans:

• Rate-and-Term Refinance – is used when you want to get a better interest rate or change the length of the loan. For example, if you want a lower rate, or need to remove private mortgage insurance. Or if you want a 15-year mortgage instead of a 30-year. But there’s a caveat - the rate still has to be good. Sometimes this is truly a good deal depending upon what the market place is offering for 15-year rates – you have to check with your loan professional to see if this is a good time. For example, if you have a rate of 4.5% but the market is offering a rate of 3.5% that could really be worth it. The rate 15-year loan rate is a bargain, but sometimes it isn’t. One thing to keep in mind, though, is with a Rate-and-Term refinance­ - you can’t get any cash-out.
• Cash-out Refinance – with this type of loan besides changing the rate and Term, you can also get cash out to consolidate debt, make home improvements, buy another property, or whatever else you’d want. If you’re an investor, getting cash-out from a property with a nice chunk of equity can be a way to come up with a down-payment for a new property. The rate might be a bit higher than a Rate-and-Term, but not always. 

Refinancing is a good idea under some circumstances. Here are a few:

Interest rates are better than what you have, and you plan to stay in your home for a while. If you think you may be moving within the next few years, refinancing might not be worth it because there are fees connected to any loan.

•  You have private mortgage insurance you’d like to get rid of. Some borrowers can save $150+ a month when they get rid of their PMI. 
•  You have credit cards and debts you’d like to consolidate. In some circumstances, it’s a good idea to pay off your high-interest credit cards by rolling the debt into your loan. But, you have to weigh your options because your new loan could be 15 to 30 years long.
•  You have home improvements you’d like to do. Again – you have to weigh the costs of the loan versus the enjoyment of home improvements and increased equity.

At Clearwater Mortgage, we strive to do what is best for the borrower. If refinancing is a good idea, we’ll let you know. If not – we’ll tell you that too. But, no matter what–we’re always happy to hear from our past clients. 

Give us a call today at 727-259-2900 to see if it’s time to refinance.