posted byBagasian LawMay 5, 2021
Are you looking to refinance your home? It can be a complex legal process that requires a number of different steps.
LA Attorneys is here to provide you with professional legal advice and guide you through the process.
In this article, we will be discussing the following:
Refinancing is revising a credit agreement, such as a loan or mortgage. This new agreement often revises the borrower's interest rate or payment plan, allowing them to lower the payment or pay the loan off faster.
In other words, borrowers can choose to refinance their debt obligations in a way that is favorable for them.
In this article, we are going to be discussing refinancing in the context of buying property. For example, when someone buys a home, they get a mortgage to pay the seller of that home. However, one can also refinance other types of consumer loans, such as student loans or car loans.
There are a number of reasons someone may choose to refinance a loan. As previously mentioned, it allows them to lower payments.
Additionally, borrowers may want to change the duration of their loan.
Or, they might want to switch from one type of mortgage to another, such as a fixed-rate mortgage to an adjustable-rate mortgage (ARM).
Since interest rates fluctuate often, many borrowers choose to refinance when interest rates fall.
Now, let’s talk about the steps one much take in order to refinance a loan.
First, set a goal for what you are trying to achieve by refinancing, whether it be reducing your monthly payments or shorten the term of your loan.
Next, look for the best refinance rate and apply for a mortgage with a number of different lenders.
Once you have chosen the best offer, lock in your interest rate. This means that your interest rate will be frozen to prevent it from raising and therefore, helping save you money.
Finally, close on the loan and pay the closing costs.
On the other hand, there are some cons to refinancing that you should consider.
First, your loan term may be set to the original length, meaning that your total interest paid would be higher.
Second, refinancing may reduce the equity you hold in your home.
Third, you may have to pay closing costs.
There are different types of refinancing options and it is important to understand how each of them works to choose the best for you and your personal financial situation.
The first type we will be discussing is cash-out refinancing, which “replaces your existing mortgage with a new home loan for more than you owe on your house.”
You get to keep the difference between the mortgage and the value of your property, and spend it on what you choose, whether that is to improve your property or to pay off debts.
However, to qualify for a cash-out refinance, “you must have equity built up in your house.”
This is different from traditional refinancing because it fully replaces your “mortgage with a new one for the same balance.”
On the other hand, a cash-out refinance has higher interest rates because a larger amount of money is being loaned.
The next type of refinancing option we will be discussing is rate and term refinancing, which changes the interest rate and term of the mortgage, hence the name.
Rate and term refinancing is also known as a “no cash-out refinance” because it does not advance any money. It is for this reason that this type of refinancing option has the lowest interest rate.
The final type of refinancing option we will be discussing in this article is stream-line refinancing, which allows borrowers to skip the appraisal process, saving both time and money.
However, the borrower must meet certain criteria for this refinancing option. For example, you must have paid your past mortgage payments on time, you will have to pay closing costs on the refinance, and the refinance must produce a benefit like lowering your interest rate.
There are a number of reasons to hire an attorney when refinancing your home.
First, hiring an attorney will avoid falling victim to predatory lending, or loans that scan the borrower by charging hidden fees or misleading the borrower. An attorney will be able to snake out these scams and ensure you are working with a legitimate lender.
Second, hiring an attorney will ensure that the refinance is working to your benefit and best interest.
Finally, refinancing your home can be complicated and requires a number of steps and documents. A business attorney will guide you through the process and ensure it goes smoothly.
Refinancing your home is a complex legal transaction that has a number of steps.
Hiring legal representation ensures your refinance is carried out legally, and that you, as a borrower are protected from scams.
An experienced real estate attorney will help with reviewing contracts and ensuring that you are benefiting from the transaction.
Los Angeles-based lawyer, Alina Bagasian, will provide the best legal services. Possessing an understanding of real estate law, Alina Bagasian is ready to represent you and provide excellent legal advice.
The Law Offices of Alina Bagasian have achieved 100% client satisfaction, providing clients with unlimited advice, and offering eight different services to avoid any legal complications when refinancing your property.
Get the help you need today!
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