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Refinancing 101




Refinancing your mortgage is when you replace your existing mortgage


agreement with a different one. While the most common reason to refinance


your mortgage is to take advantage of significantly lower interest rates to


lower your monthly payment, it’s not the only reason for refinance.



Some people refinance to access the equity in their home to provide


flexibility to cover expenses, such as major home improvements, or to pay off


higher-interest debt. It’s easier to qualify for the refinance if you have at least


20 percent equity in your home.



If refinancing is something you are interested in, start with a mortgage expert


to see if it makes financial sense. Be sure you plan on owning the property


long enough to break even on the closing costs of the refinance - that is


the time it takes for the closing costs to be covered by the monthly savings.


If you have a credit score of 750 or more and a debt-to-income ratio of 36


percent or less, you will be more likely to get the lowest rates.



Making your money work for you is what refinancing is all about. It’s worth


exploring to see if it makes sense for you, whether you want to lower your


payments, pay off your mortgage sooner, or help fund a large expense


like a home improvement project or retirement.




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