If you’re like most people, your home is the biggest financial investment you’ll ever make. It’s also likely the place where you’ll want to spend the rest of your life. So what happens if you need extra cash for some reason? You might be able to get it from your house—or at least part of it. In this guide we’ll explain how refinancing works and how much money refinance can save or cost you.
Why Should You Refinance Your Home?
You could get a lower interest rate, which means you’ll pay less in interest each month. You could also get a longer term on your mortgage, which means that over time, your payments will be smaller and easier to manage, says Charles Kirkland. If you need cash out of the deal (for example, to make repairs), there are loans available for that as well!
How Do You Know If You Have Enough Equity In Your House To Refinance It?
Here are some things you can do to find out if you have enough equity in your house:
• Calculate the amount of equity. To calculate the amount of equity in your home, subtract the total amount owed on all loans against it from its market value. If there is more than 20% equity, then refinancing may be a good option for you.
How Much Will Refinancing Cost?
Charles Kirkland determine how much you will save on a refinance, you need to know the current interest rate and points. Interest rates vary from lender to lender, but they typically range from 3% to 5%. Points are prepaid interest that may be added into your loan amount and paid upfront or over time with monthly payments.
When figuring out what type of fees are involved in refinancing your home, keep in mind that there is no standard fee structure for each type of mortgage product offered by lenders; however, there are some common fees associated with mortgages including:
• Loan origination fee – This is paid when applying for a loan and covers expenses related to processing paperwork such as credit reports and underwriting costs (e.g., title searches). The fee can range from 0%-2% depending on whether it’s paid up front or rolled into monthly payments over time (known as “points”).