If you own your home, you know how many bills go along with that ownership. Utilities, maintenance costs, even property taxes. The most significant expense that most homes will incur, however, is the mortgage payments. It is possible, however, to change up your mortgage payments, so that you can pay them off differently, in a way that will be more advantageous to you. The process of doing this is known as refinancing a mortgage loan.
Home Equity
To understand refinancing, it’s important to first understand home equity. Home equity is the difference between a home’s value and the remaining value of the mortgage on the home. In other words, home equity is the part of your home that has been paid off. So if you had a $200,000 home, and you had paid off $100,000 of that, then that’s how much home equity you have. You can also build that home equity without paying a dime. If due to normal fluctuations in the market, your home increases to $300,000 in value, that would increase your home equity by the same amount. The mortgage on the house has $100,000 remaining to be paid off, so your home equity value would be $200,000. Home equity is important because it is an asset that is well and truly yours and can be used to advantageously refinance your home mortgage loans in Maryville.
Why Refinance
The main reason to refinance home mortgage loans in Maryville and everywhere else, is to procure better interest rates. Those interest rates that you are paying are based on what your credit was when you first purchased the house, but after years of living in it, it is likely that you can borrow at a different rate. Your credit is likely to be higher, especially because the equity in your home is counted towards your credit. You can also refinance in order to take money out ofthe value of the home equity, essentially taking out a second loan to make a significant payment.
Refinancing can take some different forms, and it requires a talented lender to lead you to the best outcome for you. If the wrong deal is struck, then a refinance could end up making your situation worse. Visit a bank in Maryville now for experienced and trustworthy guidance and service, to refinance your home mortgage loan today.
