Refinance Your Mortgage

Should you leave your mortgage as-is or change your mortgage terms? Many people find multiple benefits to refinancing their mortgage — refinancing can be great if you're undergoing home improvement or debt consolidation, or if you want to lower your monthly payments. As your one-stop shop for personalized service and major savings, Suncoast Realty Solutions, LLC is here to help you figure out if refinancing is right for you.

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The Benefits of Refinancing a Mortgage

 

The concept behind refinancing a mortgage is simple: replace your old mortgage terms and monthly payments with a brand-new one. That might mean a cash-out refinance plan, where you convert the equity of your home into cash in exchange for higher interest payments. Or it might mean creating a new loan agreement with lower interest payments. If the current value of your home has increased or you're eligible for a lower rate, refinancing might be the right option for you.

 

Common Reasons to Refinance Your Mortgage

 

Pay Off Your Balloon Payment Or Interest-Only Mortgage

If you're able to pay off a large sum of your mortgage, refinancing is a good idea, as it helps lower your payments going forward.

 

Take Cash Out For Home Improvement Work, Increasing The Value Of Your Home

One of the more popular reasons people choose to refinance their mortgage is to cash out. With these additional funds, you can improve your home in any number of ways (Maybe it's time to install that in-ground pool you've been dreaming about?).

 

Reduce Your Interest Rate And Your Monthly Payment

People don't want to feel stifled by their mortgage - mortgage refinancing often means being able to reduce your interest rate and monthly payments. It gives you more financial freedom, allowing you access to more of your money every month.

 

Remove Someone From The Mortgage

Another common reason to refinance a mortgage is because someone wants to be taken off it — this is common in times of divorce and makes this process a lot easier for both parties.

 

Build Equity Faster By Shortening The Term Of Your Loan 

You can also refinance to shorten the length of your loan, giving you more ownership of your home. For example, you could reduce your loan from 30 years to 15.

 

The Types of Refinancing

 

People refinance their mortgages for a variety of reasons. Luckily, there are different types of mortgage refinancing loans out there to suit your needs.

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Rate-and-term

The rate-and-term refinance involves exchanging your current mortgage loan for a brand-new one with newly adjusted rates and terms. There are several potential outcomes, from lowering payments to paying off the mortgage sooner. Many people choose this option when the interest rate has dropped from when they purchased their home, so they don’t pay as much interest on their loan and monthly mortgage payments going forward.
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Cash-out

If your home has increased in value, you might want to do a cash-out refinance, which involves taking out cash that's been valued on the equity. Common reasons for a cash-out include wanting to embark on a costly home improvement project that you might not have been able to fund otherwise.
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Cash-in

Cash-in is the opposite of cash-out. With a cash-in refinance, you pay a large sum towards your mortgage to reduce the debt. That can mean reducing the length of your mortgage or the amount of the monthly payments.
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Short Refinance

A short refinance loan is for those struggling to keep up with their mortgage repayments. In this situation, you replace your old mortgage with a brand-new loan where you do not pay as much. This type of loan should usually be avoided, as it is only used when your property is going to be foreclosed. It’s also the type of refinancing loan that will likely most affect your credit.
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No-Closing-Cost

The no-closing-cost refinance loan is when you don’t have to pay the lump sum for the home's closing costs (which is usually between 3% to 6%). Instead, you add those payments to your monthly payment through a higher interest rate. This makes sense for people who don’t have a large sum of money to pay off the closing cost but still want to refinance their mortgage. This refinance loan is generally best if you plan on staying in your home for a while.
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Streamline

A streamlined refinance mortgage loan streamlines the process by allowing the borrower to go ahead with the loan without going through appraisals or credit checks first. This type of loan is only available for people who already have certain types of loans, such as an FHA loan.
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Debt Consolidation

Debt consolidation refinance involves taking cash out from your home equity with the sole purpose of paying off another debt. If you have accumulated non-mortgage-related debts, this type of refinancing loan allows you to free yourself from those debts with the equity you’ve built over the years.
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Reverse Mortgage

A reverse mortgage is only available to borrowers over the age of 62. As the name suggests, it’s like the opposite of a mortgage — the borrower will receive monthly payments from the equity they have built during their time as a homeowner. These repayments can be very useful for those who have retired, as they can help fund living costs and medical expenses.

Will a Mortgage Refinance Affect Your Credit Rating?

 

Yes — a quote from a lender requires a hard credit inquiry, which will decrease your credit score, so you should limit how many inquiries you send. But don’t let this put you off entirely, as this impact isn't permanent!

Assuming you make all your payments on time and nothing else changes, you can expect your credit score to revert to what it was in just a matter of months.

 

Do You Qualify for Refinance?

 

It’s best to do this before you receive quotes, as you don’t want your credit rating to be negatively affected. Generally, these are the criteria you’ll need to meet to refinance a mortgage in Florida:

  • Enough equity built
  • A good credit score
  • No overwhelming debt
  • Steady income

If you meet these criteria, then refinancing your mortgage can be a good choice for you.

 

The Process of Refinancing Your Mortgage

 

Your first step will be understanding your goals — what do you want to get out of refinancing your mortgage?

If you want cash for a home improvement, a cash-out refinance would make sense. If you want to lower your interest rate payments, wait for interest rates to drop to start the process. Spend some time thinking about what outcomes you'd want to see after potentially refinancing your mortgage.

 

Once you know your goals, get quotes from different lenders to see who can offer you the best one, keeping in mind that these quotes can impact your credit rating.

At Suncoast Credit Union, we offer exceptional interest rates once you become a member! From there, simply gather your mortgage documents (like bank statements and tax returns) and complete the application.

 

A home appraisal is usually involved before the loan is closed and your monthly payment is settled. This is to determine the current market value of your home.

The appraiser will consider multiple factors when determining the precise value, from the value of other recently sold properties in your neighborhood to how much space you have. The cost of the appraisal is usually around a few hundred dollars. Once the appraisal is complete, you close the loan by paying the closing costs.

 

Much like getting a mortgage to begin with, the process of refinancing your mortgage will take some time. In general, expect up to 45 days for the process to complete.

 

What’s the Best Type of Refinance Loan for You?

 

With so many different types of mortgage refinance loans to choose from, you might be confused about which one is right for you. Here are some considerations to keep in mind when refinancing your mortgage:

  • Your credit rating
  • Who your lender is
  • Your current type of mortgage
  • Whether you have any debt
  • How much equity you have built in the home
  • Your financial goals

A good example is someone who has a good credit rating, a lot of equity, and a goal of paying for costly home improvements. In this case, cash-out refinancing would make a lot of sense, as you would be able to take cash out of your equity.

 

The Pros and Cons

 

Still not sure whether mortgage refinance is the right call? Weigh your options with some pros and cons.

 

Pros of Refinancing:

  • Pay off your mortgage faster
  • Take advantage of lower interest rates
  • Potential ability to consolidate debts
  • Access your home’s equity
  • Switch from an Adjustable Rate to a Fixed-Rate mortgage
  • Lower your monthly mortgage payments

 

Cons of Refinancing:

  • Less equity after refinancing
  • A chance of increased monthly payments
  • Closing costs
  • Can take time (usually up to 45 days, but it may take longer)
  • You might not qualify for the refinancing option you want
  • Your credit score will drop for several months

 

Refinance Your Mortgage with a Credit Union

 

When deciding where to refinance your mortgage, there are two popular options: traditional banks and credit unions (like us!). While banks offer certain benefits, credit unions often offer lower mortgage rates to save you money in the long run.

 

When refinancing your mortgage in Florida with Suncoast Credit Union, you’ll get a lower mortgage refinance rate and personalized guidance from our team every step of the way.

 

Let’s do this together. Contact Suncoast today to start your refinancing process!