Debunking Misconceptions About Mortgage Refinancing

Given the way mortgage rates have dropped with the state of the world, it’s no surprise that many people are refinancing their mortgages. Mortgage refinancing is a crucial part of any home purchase, whether it’s your first time or not. When it comes to refinancing, any hesitation is probably because of the numerous misconceptions and myths that have come about.

Misconceptions About Mortgage Refinancing

Here are some of the most common misconceptions about mortgage refinancing, debunked:

• Getting mortgage refinancing means that your home’s equity will be lowered. Equity builds over time, and there’s a myth that when someone chooses to refinance, they will end up losing it. However, that only applies to a cash-out refinance, when the amount you borrow is more than the mortgage balance you currently have existing. Merely refinancing an existing balance without having anything added to it should not have your equity drop at all.

• Getting mortgage refinancing means that your loan’s clock will end up being reset. Understandably, nobody wants the clock of their mortgages to be reset. If it’s been a number of years since you started, you certainly wouldn’t want a reset either. Some people seem to think that if you refinance when you’re, say, eight years into a mortgage that’s got a 20-year span that signifies having to start all over again. That’s not entirely true. A number of lenders have taken to writing loans that are customized for every borrower. Using the previous example, it would be possible to take on a 12-year loan instead. That way, the clock doesn’t end up resetting at all. It’s moving forward from the last place you were, with a lowered rate. With how low the mortgage rates of today are, it’s even possible to refinance to a shorter-term loan that’s still well within your budget.

• It will take another year before refinancing yet again is possible. Have you done some refinancing in recent times? It could seem like it’s too soon for your home loan to be swapped out yet again. However, the time frame is actually very short: six months. You should take note of the fact that closing costs will come with every single time you refinance. In the long run, refinancing often will not be the best idea. If, for some reason, you really need to refinance after six months, like your credit score having improved considerably or a far better rate, then go ahead.

• The closing costs that come with mortgage refinancing is not negotiable. As previously mentioned, refinancing means closing costs in order for the new loan to come through. While some of those costs, such as recording fees, will not budge since they’re government fees, mortgage lenders’ fees such as application and loan origination are negotiable.

Refinance Your Mortgage Now!

There are several misconceptions about mortgage refinancing on the market. They are entirely false, and can, unfortunately, deter people from going for it, especially in these uncertain times. Contrary to popular belief, mortgage refinancing does not lower your home’s equity or reset the clock of your loan.

Are you paying too much for your mortgage? Use our mortgage payment calculator and find the best refinancing options in your area. Call our Florida office at (239) 766-8344. We also have offices in Louisville, Kentucky. If you would like to reach us there, you can give us a call at (502) 327-9770. We work with customers in Indiana, Tennessee and Colorado as well.