Refinancing Your Current Home
As a homeowner, you may want to consider refinancing when interest rates fall below your current rate or if you need cash to meet an immediate financial need. Depending on your home's present value, and the terms and payment structures available to you, refinancing could reduce your monthly payments as well as your overall loan expense.
To apply for refinancing now, stop by any RBC Bank banking center or call us at 1-800-789-1108. We'll get the process moving. In the meantime, here is more information to help you make a smart decision.
Reasons to Refinance
Refinancing is a big decision and doesn't come without cost. Here are some reasons why refinancing may make sense:
Get a Lower Interest Rate
If you plan to remain in your home for several years, the savings you will realize in the form of a lower monthly mortgage payment could justify the costs of refinancing your home.
Pay Your Mortgage Off Faster
Many homeowners want to build the equity in their homes more quickly and choose to refinance from a longer-term mortgage to one with a shorter term. With shorter-term loans, a greater percentage of your monthly payment goes to the principal. This can be a particularly good strategy if you're looking ahead to retirement and want to have your mortgage paid off when you get there.
Switch Your Adjustable Mortgage To A Fixed-Rate Loan Or Vice Versa
When interest rates are higher, homeowners often choose adjustable-rate mortgages, which traditionally offer lower interest rates to start. When rates come down, people often refinance to a fixed-rate loan, so they know exactly what their mortgage payment will be over the life of the loan. There are also instances when a homeowner may wish to refinance from a fixed-rate to an adjustable-rate mortgage (ARM). This occurs occasionally when homeowners are looking to lower mortgage payments for a short period of time.
Draw on the Equity Built Up in Your Home
Through either a "cash-out" refinance or a home equity loan, you can tap the equity that has accumulated in your home to pay for college, home improvements or other debt.
Cash-Out Vs. Home Equity
Many homeowners choose to use their home's equity to pay off high-cost debts, college tuition or home improvements. Interest paid on both cash-out refinancing and home equity loans or lines of credit is usually tax deductible (consult your tax advisor), but the similarity ends there. Understanding the differences will help you decide.
The Cost of Refinancing
When you refinance, you pay off an existing mortgage and take out a new one, so you generally will repeat many of the same steps, provide the same information, and encounter the same costs as you did when you originally applied for a mortgage. Fees generally involved in refinancing include: