Mortgage Refinancing 101

Mortgage Refinancing 101

Have you ever wondered how a refinance could help you achieve your financial planning goals? Here at FirstTrust, we can help you find out!

The two most common types of conventional refinance loans are categorized as no cash-out refinances or cash-out refinances. While their names are similar, their setup and function are quite different.

A no cash-out refinance is used to pay off an existing first mortgage. In this scenario, an existing loan is replaced with a new loan. If you have enough existing equity in your home, this loan will also allow borrowers to roll in any closing cost or escrow setup that might be required. The potential benefits of obtaining a no cash-out refinance range from lower monthly mortgage payments, shorter loan terms, and/or lower amounts of interest paid over the life of the loan. Each situation is different but it is possible to realize one or more of these benefits.

A cash-out refinance is used to pay off an existing first mortgage by accessing a portion of the equity in your property to provide you additional cash to pay off other debt, such as installment loans or credit cards. A cash-out refinance can also be used to put cash back in the hands of the borrower. Proceeds from a cash-out refinance can be used in many ways. Two of the most common uses are debt consolidation and home improvements.

Depending on your personal financial goals, one of these refinance types may be right for you. FirstTrust Home Loans’ team of licensed loan originators can help you compare different scenarios and weigh out all of the possibilities and available options.

Leave a comment!

Your email address will not be published. Required fields are marked *