Refinancing a home is the process by which a homeowner secures a mortgage at a more favorable interest rate. The new mortgage is used to pay off the existing mortgage, and the homeowner will, thereafter, make payments to the new mortgage company. There are a few things that residents of North Carolina and other states should know when deciding to refinance a home.
Length of time remaining in the home
One of the most important factors that can help you decide if refinancing is worth it is how long you intend to remain in your home. Refinancing costs money because homeowners need to pay for the filing fees, title searches and legal costs associated with the process. As such, refinancing only makes sense if an individual will live in his or her home long enough so that he or she will pay a more favorable interest rate for a longer period of time to make up for the refinancing costs. An experienced real estate law attorney should have a sense of these costs and determine if refinancing makes sense in your situation.
The interest rate offered to refinance a home will also be important when determining if refinancing is worth it. If the interest rate offered is substantially lower than your current interest rate, it makes more sense to refinance to obtain more favorable lending terms. However, if the interest rate is only marginally different than your current rate, it may not be worthwhile to refinance your mortgage.
Income and debt
Refinancing companies usually only extend offers to refinance to individuals who have a solid financial background. As a result, people should ensure that they have a solid income and debt history before they apply to refinance their mortgage.
Length of time on the mortgage
If individuals are close to paying off their mortgage, it may not make sense to refinance. This is because they may soon pay off their mortgage and won’t have to make any more payments. However, if you decide to refinance your mortgage, it is important to speak with a lawyer who has experience with real estate law to protect your rights.