Should I Refinance My Mortgage? - River City Bank

Should I Refinance My Mortgage?

Wednesday, December 29, 2021

Refinancing your mortgage could help you reach your financial goals sooner rather than later, when done at the right time and for the right reasons.

What is a Mortgage Refinance?

A mortgage refinance is when you obtain a new mortgage to pay off your old mortgage. You are essentially obtaining a new mortgage loan with a different interest rate, term, and monthly payment than your old mortgage.

Why Should I Refinance My Mortgage?
  1. Lower your monthly mortgage payment

If you refinance to a lower interest rate, your monthly payment will likely decrease.

  1. Access your home’s equity

If you’ve made payments on your mortgage, you could potentially have equity in your home. Equity is the difference between your home’s fair market value and the amount you still owe on your mortgage. A cash-out refinance allows you to take advantage of the equity you have in your home to:

  • Pay off or consolidate debt
  • Make home improvements or renovations
  • Allocate more money to retirement savings
  1. Pay off your loan sooner

At the time you took out your mortgage, a 30-year term may have made the most financial sense. Over the years as your financial situation changes, a shorter term, like a 15-year mortgage, may make better financial sense for you now. It could possibly allow you to build equity faster and own your home sooner.

  1. Save on total interest

Refinancing your mortgage at the right time could help you reduce the total amount of interest that you pay over the life of your loan. The amount of interest you pay over the life of your loan is determined based on the interest rate and mortgage term. Having the ability to reduce one or both could save you significantly on interest in the long run.

  1. Change Your Loan Term

A refinance can allow you to lengthen the term of your mortgage and lower your monthly payments. For example, you can refinance a 15-year mortgage to a 30-year mortgage and make a lower payment each month. Be mindful that when you lengthen the term of your mortgage, you may get a slightly higher interest rate, and a longer mortgage term means you will likely pay more interest over time.

Switching from a longer term to a shorter term, you will likely be taking advantage of lower interest rates. It usually (but not always) means your monthly payments will increase, so you’ll need to be prepared for that.

River City Bank offers a YOURgage – so you can refinance your mortgage without starting over. With a YOURgage, you don’t have to worry about going back to square one with a 15 or 30-year mortgage. You decide your term – anywhere from 8 to 29 years.

Learn more about River City Bank’s mortgage options. 

How Do I Decide If I Should Refinance?

Know The Costs – Application fee, appraisal fee, inspection fee, attorney review and closing fee, title search, insurance, etc.

Gather Your Documents – Two most recent pay stubs, W-2s, and bank statements.

Underwriting Your Loan – The underwriter examines all details of your application and supporting documentation for accuracy and guideline fulfillment.

Getting An Appraisal – Appraiser inspects your home and compares it to similar, recently sold homes in the area to determine its value. You may be exempt if you have had an appraisal in the last 120 days.

Closing Costs – Prior to closing, you will receive a Closing Disclosure with detailed information about closing fees, loan details, and payments.

Are you interested in refinancing your mortgage? Meet our team and contact a lender today.