Refinancing means replacing your current mortgage with a new loan—often with a lower interest rate or better terms. That simple change can unlock several financial benefits: lower monthly payments, faster payoff, reduced interest costs, cash out from home equity, or consolidation of higher-rate debts. At Sammamish Mortgage, we’ll help you weigh all your options and make informed choices tailored to your situation.
The word refinance gets thrown around quite a bit. The problem for many is the confusion surrounding why. For the sake of providing clear and worthy information, the following is our cheat sheet for the subject of mortgage refinance.
re·fi·nance rēˈfīˌnans, rēfəˈnans
verb
To finance (something) again, typically with a new loan at a lower rate of interest
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The key to this definition would be the part about a lower rate of interest. Most people know that’s a good thing, but here’s why:
When mortgage interest rates drop lower than the rate on your current loan, you may want to think about refinancing. Oftentimes a refi can be done with little or no closing costs. If this is the case, the financial benefit from your refi is immediate.
Shorter loan terms carry lower rates. By shortening the term, you will alleviate thousands of dollars in saved interest. Compounded with a lower interest rate and the savings are staggering.
By lowering your interest rate you create financial options outside of lowering your payment. The money you save on your monthly mortgage payment can now be put towards other investments such as retirement accounts. Or, it can be put toward the principal of your loan, resulting in an even shorter loan term.
When you refinance an existing mortgage, your new loan can be for an amount greater than what is owed. The overage can then be taken out as cash and used for different purposes.
Consolidating high-interest debts such as credit cards or student loans can often save you hundreds of dollars in monthly interest.
Additional savings can also occur due to the tax deductibility of mortgage debt.
Consolidating is also a great way to improve your credit score, as it reduces your overall number of creditors and lowers your revolving debt levels.
Cash-out financing can be used for large purchases such as a down payment on an investment property, a new car, or financing a child’s education. Borrowing these funds in other ways could lead to higher, taxable interest rates.
Your home is an important part of your total net worth. Make sure to consider all your options carefully before deciding to take cash out of your home’s equity. Tapping the equity of your home has potential risks that should be carefully evaluated prior to moving forward. You can use our refinance calculator to find out just how you might be able to benefit from a refinance.
Your loan-to-value ratio (LTV) describes what you owe on your mortgage as a percentage of the total current value of your property. It’s important to understand your LTV ratio, because it affects the rate and type of new loan you may qualify for.
For example:
$300,000 is 75% of $400,000—so that’s an 75% loan-to-value ratio.
No matter why you’re interested in refinancing your mortgage it is important to consider all your options, as well as any potential risks. Our team of skilled and knowledgeable professionals at Sammamish Mortgage can help you do just that.
For more information about mortgage refinancing, or to find out how Sammamish Mortgage can help you, we invite you to contact us today.
We’re a local, family-owned mortgage firm based in the Washington area and serve the entire state, in addition to the broader Pacific Northwest region including Oregon, Colorado, Idaho & California.
Get StartedRefinancing can help you reduce monthly payments and save thousands over the life of your loan.
Yes. A lower rate or longer term can reduce your monthly payments.
Even a 0.5% drop can lead to significant savings over time, though it’s important to weigh all fees to make sure refinancing makes sense.
Yes, if your new loan has at least 20% equity, you may drop PMI.
A cash-out refinance lets you borrow more than your current mortgage and receive the difference in cash.
Often yes — mortgage rates are typically lower than unsecured loan rates.
Yes. It can increase your home’s value while using equity wisely.
Yes. Moving from a 30-year to a 15-year mortgage saves on interest, while extending the term lowers monthly payments but increases total interest.
Refinancing to a fixed-rate mortgage allows you to lock in a stable rate and avoid future payment increases.
Yes. Lower mortgage payments or equity access can support retirement income strategies.
The ideal time to refinance is when interest rates drop, your credit improves, or your home value rises.
Yes, though you’ll need to provide tax returns and business financials.
Yes. Expect appraisal, legal, origination, and closing costs — typically 2–5% of the loan.
Our loan officers are ready and waiting to help you apply for your home loan.
If you’re looking to buy a home as a self-employed individual in the Pacific Northwest region, we can help. At Sammamish Mortgage, we offer various mortgage programs for those without traditional employment documentation in WA, OR, ID, CO, and CA. Visit our website to get an instant rate quote or call us today to have your mortgage questions answered!
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