Understanding Mortgage Refinancing: Three Options to Consider

Refinancing your mortgage can be a smart financial move, whether you’re looking to lower your interest rate, shorten your loan term, or tap into your home’s equity. At Sandia Area, we’re here to help you understand your options and find the best refinancing solution for your needs.
Here is a look at three common types of mortgage refinancing: rate-and-term, cash-out, and cash-in.

Rate-and-Term Refinance
A rate-and-term refinance allows you to modify the interest rate, loan term, or both. This can help lower your monthly payments, reduce the amount of interest paid over time, or pay off your loan sooner.
For example, you might refinance from a 30-year fixed-rate mortgage into a 15-year fixed-rate mortgage to pay off your home faster. Alternatively, if interest rates have dropped, refinancing could reduce your rate, helping you save on long-term interest costs.
With a Sandia Area mortgage refinance, you may have the option to roll closing costs into your new loan to reduce upfront expenses. Keep in mind that doing so will increase your loan balance, so it’s important to weigh the trade-offs carefully.

Cash-Out Refinance
A cash-out refinance allows you to take advantage of the equity you’ve built in your home by borrowing more than your remaining mortgage balance and receiving the difference in cash. This option is ideal if you need funds for home improvements, debt consolidation, or other major expenses.
For example, if your home is worth significantly more than what you owe, you could refinance and use the extra funds for renovations that increase your home’s value. However, lenders typically require a lower loan-to-value (LTV) ratio—often 60% or below—to qualify for the best rates.
Sandia Area offers competitive cash-out refinance options, helping you access the funds you need while maintaining manageable payments. Our team can help you determine if this option aligns with your financial goals. Talk to our mortgage loan officer to see your options. 

Cash-In Refinance
A cash-in refinance is the opposite of a cash-out refinance—you bring extra cash to the table to lower your mortgage balance. This can help you qualify for a lower interest rate, shorten your loan term, or eliminate private mortgage insurance (PMI) if you reach 20% equity in your home.
For instance, if your LTV ratio is slightly above 80%, making a lump-sum payment at closing could help you remove PMI, reducing your monthly expenses over time. This strategy can be beneficial if you have savings you want to invest in your home while securing better loan terms.
At Sandia Area, we can help you explore whether a cash-in refinance makes sense for your situation, ensuring you maximize the benefits of homeownership.

Find the Right Refinance Option with Sandia Area
Refinancing your mortgage is a big decision, and Sandia Area is here to guide you through the process. Whether you’re looking to lower your rate, access cash, or reduce your loan term, we offer personalized refinancing solutions to fit your needs.
Speak with a Sandia Area mortgage loan officer today to explore your options and take the next step toward financial savings and security.