Refinancing your home can be a great way to reduce your interest rate or qualify for a mortgage product that better suits your needs. Unfortunately, when it comes to mortgage loan refinancing, there are many misconceptions and myths floating around. Learning the truth surrounding these myths may help you to better understand mortgage loan refinancing. Here are three common myths.
Myth 1: It Is Free to Refinance Your Home
One of the most common myths pertaining to mortgage loan refinancing services is that they are free. As such, many people think that it is worthwhile to refinance their homes whenever mortgage rates drop. This is not true. You have to pay closing costs when you refinance a home. As such, you need to carefully consider how much money the new mortgage may be saving you versus the cost of the closing costs to determine if refinancing your home financially makes sense for you.
Myth 2: You Can Only Refinance Through Your Existing Lender
Another common myth pertaining to mortgage loan refinancing is that you can only refinance through your existing lender. This is not true. When you refinance a loan, the new lender will pay off your existing loan with another lender. As such, you have the opportunity to go to any lending agency you wish. Some people find that they could not refinance with their preferred lender due to their previous credit score or income, but now they may qualify with a new lender as time passes. You can refinance through any mortgage company you want, regardless of whether they are your existing lender or not.
Myth 3: Reducing the Interest Rate is the Only Reason to Refinance
The final myth out there about mortgage loan refinancing is that refinancing to reduce your interest rate is the only reason to refinance. While this is one of the most common reasons people refinance their loans, people also refinance their loans to get out of a less desirable mortgage loan, such as an interest-only loan, into a more desirable loan, such as a 30-year fixed loan. People also refinance to get rid of PMI insurance or if they need to take an ex off of the mortgage paperwork.
Mortgage loan refinancing is not something that everyone understands or is familiar with. As such, people believe common myths that they read online or that other people tell them. Learning more about mortgage loan refinancing can help you make an informed decision about potentially refinancing your mortgage.
Share7 March 2022
After I decided to buy a new home, I realized that I probably needed to prioritize the things on my wish list. Since I am not wealthy, I realized that I probably couldn't get everything that I wanted out of a single home--at least, not this time around. Fortunately, I worked with an incredible real estate agent who helped me to figure out which type of property would pay off in the end. Finding a home took a lot of time, but I am really pleased that I found the right one. This blog is all about learning to prioritize your home hunting wish list so that you can have the home and financial situation of your dreams.
