There’s no doubt you have probably heard someone mention refinancing in the past few years. Refinancing your mortgage basically means you “are trading in your old mortgage for a new one, and possibly a new balance” (CentralBank). With refinancing being a popular topic, there is a lot of circulating information. Here are the top 7 myths about refinancing that you should know to approach refinance with confidence! *
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Myth #1: You need 20% equity to refinance.
Loans with less than 20% equity may require mortgage insurance, however, you are fully eligible to refinance regardless of having less than 20% equity. Do not let mortgage insurance scare you either; even with the mortgage insurance, you may still be making a money saving move.
Myth #2: You won’t save a lot of money by refinancing.
In fact, refinancing can potentially save you a ton of money. Refinancing has the potential to save you money on interest, all dependent on your current interest rate and the interest rates available today! Don’t look past even a tiny refinance change. Even reducing your interest by 10% could save you tens of thousands of dollars in the long run. If you are interested in seeing what a refinance could do for you, then try out our refinance calculator.
Myth #3: Your current lender will offer you the best rates.
Your current lender may tell you they can provide you the best rates. However, we do encourage you to do your own research. Do not settle with an offer you are unhappy with. To refinance with Direct Mortgage Loans, connect with one of our loan experts now!
Myth #4: Refinances are only beneficial for getting a lower rate.
Refinancing for a lower rate is NOT the only reason you may refinance. Maybe you want to take some cash out of the equity of your own home to do renovations, or maybe you just want a shorter loan term.
Learn about the many reasons you should consider refinancing today!
Myth #5: You’ll lose your equity.
Your home equity is only affected IF you ADD to the principal of your loan (cash-out refinance). However, simply lowering your interest rate, shortening your loan term, or dropping mortgage insurance with a refinance will not affect your home equity! Take advantage of today’s rates.
Myth #6: Refinance will always be a better deal than your original mortgage.
This is potentially true but not for everyone. Everyone’s homeownership journey and mortgage are unique to them! When considering a refinance, it is beneficial to work with a professional to figure out what is best for you. Contact us for any of your home loan and refinance inquiries!
Myth #7: Applications require a lot of documents.
Yes, it is true that the mortgage application process requires a lot of documents for good reason. However, at Direct Mortgage Loans we will make the process seamless for you. To prepare for any documentation, check out our entirely FREE Digital Course Library for a refresh of what documents will be needed throughout!