Refinancing

Refinancing is the process of obtaining a new mortgage in an effort to reduce your monthly payments, lower your interest rates, take cash out of your home for large purchases, or change mortgage companies. Most people refinance when they have equity in their home, which is the difference between the amount owed to the mortgage company and the worth of the home. Opportunities to refinance your home are always available regardless of the type of loan you have on your house.

  • Lowering your interest rate: The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month–lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved. A lower interest rate also may allow you to build equity in your home more quickly.
  • Decreasing the term of your mortgage: Shorter-term mortgages–for example, a 15-year mortgage instead of a 30-year mortgage– generally have lower interest rates. Plus, you pay off your loan sooner, further reducing your total interest costs. The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month.
  • Getting cash out from the equity built up in your home: Home equity is the dollar-value difference between the balance you owe on your mortgage and the value of your property. When you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment (this is called a cash- out refinancing). You might choose to do this, for example, if you need cash to make home improvements or pay for a child’s education.

All mortgage products are subject to credit and property approval. Rates, program terms, and conditions are subject to change without notice. Not all products are available in all states or for all amounts. Additional conditions, qualifications, and restrictions may apply. This is not an offer for extension of credit or a commitment to lend. Please contact Capstone Home Loans for more information.