Today's mortgage interest rates are at historic lows. So if you've been on the fence about whether to refi, this may be the time. Today we're dispelling the top two myths about refinancing.
Myth: I can't take cash out when I refinance.
Fact: If you've built up significant equity through your monthly payments and your home's appreciation, a cash–out refinance may make sense to improve the value of your home or your general financial situation. With a cash–out refinance, you're refinancing your mortgage for more than you currently owe and, in return, getting a portion of your equity back in cash.
In the first quarter of 2016, 10% of the refinance loans we purchased were to homeowners who took cash out. Cash–out refinances generally have a slightly higher mortgage rate because you are borrowing more money, which is an added risk to the lender making the loan.
Myth: My mortgage can't be underwater to refinance.
Fact: If your loan was originated before 2009, you could qualify for the Home Affordable Refinance Program (HARP). More than 3.2 million families have benefited from this program and saving thousands a year. You could too. Good news – HARP has been extended through September 2017.
Read other posts in our Myth vs. Fact series:
- Myth vs. Fact: PMI
- Myth vs. Fact: Qualifying for a Mortgage
- Myth vs. Fact: Down Payments
- Myth vs. Fact: 3% Down Mortgages
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