There could be many reasons you are considering refinancing your mortgage. You may want to pay off your existing home loan, or you might choose to switch from an adjustable-rate mortgage to a fixed-rate mortgage. Many homeowners also choose mortgage refinancing when they need to pay off probate loans, pay off property taxes or get rid of liens on the property.
Another reason for refinancing your mortgage is to use your home's equity to consolidate debt or finance a large purchase. And in some situations, people have gotten divorced and wanted to refinance their mortgage loan to remove their ex-spouse’s name from the loan.
Whatever your reason may be for choosing to refinance your home loan, dealing with Acala Investments makes the refi process much easier than going through a bank. Our process is shorter, with a faster closing time and a lot less hassle! And because Acala is a hard money lender, your credit score is not important to us.
Ways You Can Use Mortgage Refinancing
Though we touched on some of the uses for mortgage refinancing above, the following is a little more information on the most common reasons for refinancing your home loan:
Convert to Fixed-Rate or Adjustable-Rate Mortgage (ARM)
If you start with an ARM that provides an interest rate that is lower than a fixed-rate mortgage, there will be periodic adjustments made so that you may experience a rate increase. It can eventually become more than the interest rates provided with a fixed-rate mortgage.
When this happens, you may want to consider changing over to a fixed-rate mortgage. Doing this could result in you having a lower interest rate and eliminating the possibility of experiencing an interest rate hike in the future.
Consolidate Debt Or Access Home Equity
You may have a situation in your life where you need to access the equity in your home to cover a large expense. This could involve a child's education, remodeling the home and more. Many homeowners feel refinancing for remodeling will add value to their homes. Or you may simply wish to consolidate debt, paying off your credit cards so you have one monthly payment rather than lots of monthly minimums to keep up with.
Whatever your reason for seeking to refinance your home loan, Acala Investments can help you every step of the way with our fast, hassle-free lending process.
Common Types of Refinancing
Refinancing is usually characterized in a few different ways.
● Cash In – You can put down more money as a way to secure a shorter term or lower interest rate. This may eliminate the need for mortgage insurance on the new loan.
● Rate-and-Term – This type of refinancing does not include changing the principal loan balance. The repayment terms or the interest rate could be changed. It may also change both.
● Cash Out Refinance – With this form of refinancing, a person's new loan will be more than their current balance. They are given the difference in cash. This is a way some people can renovate their homes or pay down their debt.
Steps To Mortgage Refinancing
Depending on your situation, refinancing can be complicated or quite simple. There are certain steps involved in getting refinancing.
- Identify the reason for refinancing. This could be everything from home improvements to a smaller monthly mortgage payment and more.
- Take the time to shop for the best rates associated with mortgage refinancing. It's also important to know the fees associated with refinancing.
- Apply to up to five different lenders. Applications to these lenders should be done within a period of two weeks. This will help decrease any possible impact on your credit score.
- Choose the lender with the best offer. Carefully compare each lender's Loan Estimate documents. These documents will let you know how much money you will need to pay for closing costs.
- Close the loan. This is when you will be paying the closing costs mentioned in the Closing Disclosure as well as Loan Estimate documents. Closing a refinance loan is like a purchase loan. The big difference is you won't be handed the keys to a new home.
As a homeowner, you may need to schedule a home appraisal as the lender reviews your application and supporting documents. Once the underwriting is complete, you will be given the terms of your refinance loan.
As a hard money lender, Acala Investments can help make home refinancing easier for you. We identify the best mortgage refi offers available and advise you through the application process. What’s more, we have a much faster turnaround time than conventional mortgage companies.
Mortgage loan refinancing is a great option when you need money quickly or simply wish to have a lower mortgage payment. It’s also a lot easier to unlock the equity in your home when you have a team of experts on your side! Contact us today to get the process started.