If you have an existing mortgage loan, you have the option to refinance it. You do this by securing a new home loan to pay off your original mortgage. But you may be wondering, why refinance if you already have a home loan? There are a few key reasons it may make sense.
If you run your own business (25% or more), are a gig worker or independent contractor — and you want to refinance, it could be more challenging for you to secure financing. It can be harder to prove how much income you have without a steady paycheck or W-2. That’s why most lenders have stricter rules for self-employed borrowers.
When refinancing a mortgage, essentially, you have two choices. If you refinance your existing loan to get a lower interest rate or change the terms, it is called a rate-and-term refinance. If you want to extract some of the equity in your home—perhaps to do a renovation, pay down debts, or help pay college costs—you may take a cash-out loan.
In the mortgage industry or personal finance industry, “experts” like to overcomplicate the process — with insider terms, graphs, charts, and complicated products and services. In the end, it is a hype machine to make things out to be more than what they are.
Smart money is a term used in many financial circles. Depending on your age range; baby boomer, Gen Y and YES Gen Z, the understanding of the power of a mortgage will have many different meanings. The one notion that seems to prevail amongst all age brackets is, they don’t want a mortgage! This is where being “smart money savvy” comes into play.