The ins and outs of refinancing
Refinancing your mortgage can be a smart approach to reducing your overall borrowing cost. But what does it mean and how does it work?
- Rate-and-Term Refinancing - Obtain a new mortgage in an effort to reduce monthly payments or lower interest rates. This could involve replacing an Adjustable-Rate Mortgage (ARM) with a Fixed-Rate Mortgage or vice versa.
- Cash Out Refinancing - Take cash out of your current home for large purchases or to pay off existing debt. In this case, your new mortgage is for more than you owed and you take the difference in cash.
Before you make the decision to refinance, be sure you understand the long-term impact. It may only make sense when doing so will save you money or give you additional financial flexibility. Therefore, it's important to calculate a break-even point. Speak with a Farmington Bank Home Loan Specialist today to fully understand your refinancing options.
1 A prequalification/estimate are guidelines; the estimate is not an application for credit and results do not guarantee loan approval or denial. All loans are subject to the credit approval process.