Home refinancing can be an attractive option for homeowners looking to save money on their mortgage payments or access cash for home improvements or other expenses. However, there are many myths and misconceptions about the refinancing process that can confuse or mislead homeowners.
In this blog, we’ll share some of the most common refinancing myths busted by a mortgage company in Dallas, TX.
Myth #1: Home refinancing is only for people in financial trouble
Reality: While refinancing can be a smart choice for homeowners in financial distress, it’s also a viable option for those who want to take advantage of lower interest rates or reduce their monthly payments. Refinancing can help homeowners build equity in their homes faster and save money over the life of their mortgage.
Myth #2: Refinancing is expensive and time-consuming
Reality: Refinancing typically involves fees and closing costs, but these can be offset by the savings you’ll achieve over the long term. Many lenders offer streamlined refinancing options that can be completed quickly and with minimal paperwork.
Myth #3: You need perfect credit to refinance
Reality: While having good credit can help you qualify for a lower interest rate, there are refinancing options available for homeowners with less-than-perfect credit. The key is to shop around and compare offers from multiple lenders to find the best option for your specific financial situation.
Myth #4: You can only refinance with your current lender
Reality: Homeowners are not required to refinance with their current lender. In fact, shopping around for the best deal is highly recommended. By comparing offers from multiple lenders, homeowners can find the best interest rate and terms that meet their needs.
Myth #5: Refinancing resets the clock on your mortgage
Reality: While refinancing does involve taking out a new mortgage, it doesn’t necessarily mean starting over with a 30-year term. Homeowners can choose to refinance for a shorter term, such as 15 or 20 years, which can help them pay off their mortgage faster and save money on interest.
Myth #6: You can’t refinance if you have an adjustable-rate mortgage (ARM)
Reality: Homeowners with adjustable-rate mortgages can refinance to a fixed-rate mortgage, providing stability and predictability in monthly payments. Alternatively, homeowners can refinance to a new ARM with better terms and conditions.
Myth #7: Refinancing isn’t worth it if you plan to move soon
Reality: While refinancing may not make sense if you plan to move within a year or two, it can still be a smart financial move if you plan to stay in your home for the foreseeable future. By refinancing to a lower interest rate or shorter term, you can save money on monthly payments and build equity in your home faster.
Home refinancing can be a smart financial move for many homeowners, but separating fact from fiction is essential when considering your options. Understanding the reality behind common refinancing myths allows you to decide whether it is right for you.