Mortgage Refinancing

What Is Mortgage Refinancing?

• You’d like to change the terms of your loan: By refinancing, you may shorten the amortization period to get a better interest rate or lengthen it to get a lower monthly payment.
• You’d like to get a lower interest rate on the remaining balance owed: If interest rates have gone down significantly since your mortgage began, refinancing can help you save on the remaining monthly payments at a lower rate.
• You’d like to change the type of loan you have: Perhaps you want to change from an adjustable-rate mortgage to a conventional one or vice versa, or you’d like to go from an FHA loan to a privately funded one or vice versa. A mortgage refinance could help you do that.
• You’d like to reduce or remove private mortgage insurance (PMI): PMI can be a big expense. If your financial circumstances have changed since you took out your mortgage, refinancing can help you get rid of PMI and gain more wiggle room in your budget.
• You’d like to cash out any equity gained: Tapping equity is a great reason to refinance your mortgage. We’ll go into more detail on how this works below.

How Does Mortgage Refinancing Compare to Cash Out Refinancing?

Cash-out refinancing is a special type of refinance in which you can take out a loan that is greater than the amount you still owe on your mortgage and pocket the extra cash. If your home’s value has increased since the time your mortgage amortization period began, you may have built up enough equity to use that extra cash for a home improvement project, debt consolidation, or another expense. Using the acquired equity from your property, money can typically be borrowed at a much lower interest rate than a standard loan. However, please note that a cash out loan can affect your taxes.

The IRS now sees cash out refinancing as debt restructuring. Under this law, deductions for expenses related to your mortgage have changed. Other things have changed as well. Because of this, cash-out refinancing might not be the best option for you if you need to refinance your mortgage.

Luckily, the Loan Specialists at UAE Real Estate Funds Lending are here to help. Depending on why you seek to refinance and what you’re hoping to get out of it, we can help you determine if you’d be better off with a routine mortgage refinance or a cash-out refinance. Just fill out our Super-Simple Application™ to get started!