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Common Myths About Refinancing

By March 20, 2023No Comments

Common Myths About Refinancing

Refinancing is a common and easy way to save money or maximize your mortgage if you’re ever in a financial pinch or need a sizable chunk of cash. It’s also a great way to change your current home loan into one with better terms and lower interest rates.

But despite its benefits, there are a lot of myths surrounding refinancing a mortgage. And unfortunately, these myths can keep people from making the best decision for their situation. That’s why we put together a list of the most common myths about refinancing and the truth behind them. That way, you can make an informed, educated decision!

Myth #1: Refinancing is too complicated.

Many people believe refinancing is too complicated, with lots of paperwork and fees. In reality, refinancing is often much more straightforward than getting a new loan since most of the initial paperwork is already done. Plus, many lenders offer low or no closing costs for refinancing, so the fees are actually minimal compared to getting a new loan.

Myth #2: Refinancing isn’t worth the effort.

Homeowners might think that refinancing isn’t worth the time or cost, but the potential savings it offers can be substantial. Refinancing often provides a lower interest rate and other terms that can save homeowners thousands of dollars over the lifetime of their loan. Plus, you can often refinance without significant additional effort or paperwork, so the amount of effort you have to put in is minimal.

Myth #3: You have to have perfect credit to refinance.

While it’s true that having good credit can help you get better terms and an improved interest rate when you refinance, it’s also true that you don’t need perfect credit. Even homeowners with an average credit score or a few dings on their credit rating can still get approved for refinancing.

Myth #4: You need to own your home outright to refinance.

This is probably the most common myth about refinancing. And luckily, you don’t need to own your home outright to refinance. In fact, if you have enough equity in your home, you don’t even need to bring in much extra money to cover closing costs and fees.

Myth #5: Refinancing means you have to start a new loan.

Many homeowners are under the false impression that refinancing is just like taking out a new loan. However, that’s not the case. When you refinance, you’re simply taking on a new loan with better terms and a lower interest rate than your current loan. It isn’t a new loan, per se. It’s more like a renegotiation of an older loan.

Myth #6: Refinancing means you can’t switch loan types.

Homeowners might think that refinance means they’re stuck with the same loan type they already have, but that’s not the case. You can definitely switch loan types when you refinance. For example, depending on your needs, you can often switch from a fixed mortgage to an adjustable-rate mortgage or vice versa.

Thinking About Selling Your Northeast Florida Home?

Refinancing can be an excellent option for those who want to save money on their mortgage or switch loan types. While some misconceptions exist about refinancing, it’s worth taking a closer look to see if you could benefit from refinancing your home.

Of course, sometimes, you’re just looking for a change, and the best option for you isn’t a refinance but a change of scenery. And if you’re considering selling your home in Northeast Florida, you’ve come to the perfect place! Here at the Welch Team, we specialize in helping individuals and families find the homes of their dreams. Contact us today to learn more!