Can you refinance a fixed-rate mortgage for your home in Jacksonville, Florida? Fixed-rate mortgages have an interest rate that’s locked in from the moment you close on the deal. But what happens if the market changes and rates drop? Can you take advantage of these lower rates?

In this post, our real estate experts at Your Home Sold Guaranteed Realty - Phil Aitken Home Team will cover whether it’s possible to refinance a fixed-rate mortgage, some reasons why you might want to refinance, and what steps you can take to make it happen.

Key Takeaways:

• Yes, it’s possible to refinance a fixed-rate mortgage. However, in order to break the contract terms of your current mortgage, you’ll have to face some penalties. 
• You’ll have to pay a fee for breaking the original loan terms. This will either be three months’ worth of interest payments or the interest rate differential between the interest rate fees of your old mortgage and the ones tied to your new mortgage. 
• Once you know why you want to refinance, consider your finances. Evaluate the costs and benefits, including closing costs, loan fees, and potential savings. Consult with a mortgage lender or financial advisor to determine if refinancing aligns with your financial objectives and circumstances.

Can You Refinance a Fixed-Rate Mortgage in Jacksonville?

Yes, it’s possible to refinance a fixed-rate mortgage. However, in order to break the contract terms of your current mortgage, you’ll have to face some penalties. 

First, you’ll have to pay a fee for breaking the original loan terms. This will either be three months’ worth of interest payments or the interest rate differential between the interest rate fees of your old mortgage and the ones tied to your new mortgage. 

Of course, the fee amounts can vary from lender to lender, so it’s important to speak to your lender to see the exact fees that come with breaking your specific contract. 

On top of that penalty, you’ll also have to go through the loan application process again and pay all the costs and fees associated with it. You’ll have to do a background check, credit check, and pay fees for an appraisal, inspection, and title search again.

Depending on your situation and the terms of your fixed-rate mortgage compared to the terms of the new mortgage, refinancing may or may not be worth the cost. You’ll have to calculate whether you’ll save money on your mortgage in the long run even after paying these fees.

5 Reasons to Refinance a Fixed-Rate Mortgage

Refinancing to a fixed-rate mortgage with a lower interest rate or to an adjustable-rate mortgage can be a good move for several reasons:

• Lower Interest Rates: If interest rates have decreased since you obtained your original loan, refinancing could be a good idea. A lower rate could help you reduce your monthly mortgage payments and save money over the life of the loan.
• Shorter Loan Term: You can also refinance to get a shorter loan term. For example, switching from a 30-year mortgage to a 15-year one. This is a good move if you want to pay off your mortgage faster, save on interest payments, and build equity more quickly.
• Cash-Out Refinance: This refinancing option lets you turn some of your equity into cash by refinancing for a higher loan amount than your current mortgage balance. This is commonly done for home renovations, debt consolidation, and paying for college tuition or other financial needs.
• Change in Financial Situation: Changes in your finances, such as an increase in income, decrease in debt, or improvement in credit score, may make refinancing worth the cost so you can secure more favorable loan terms.
• Switch to an Adjustable-Rate Mortgage (ARM): Switching to an ARM may be a good idea if you’re expecting interest rates to change frequently and remain unsteady. An ARM allows you to have a lower interest rate for an initial period, with rate adjustments taking place afterward. An ARM can be a particularly good idea if you’re planning to sell your home soon.

How Can You Refinance a Fixed-Rate Mortgage?

First, think about what your goal in refinancing is. Do you want to pay less in interest? Do you want to shorten your loan term? Or are you ready to pay off your mortgage entirely? Do you need money for renovations or other expenses?

Once you know why you want to refinance, consider your finances. Evaluate the costs and benefits, including closing costs, loan fees, and potential savings. Consult with a mortgage lender or financial advisor to determine if refinancing aligns with your financial objectives and circumstances.

Next, decide if you want to refinance with the same lender or switch to a different one. Explore different lenders and loan products to find the interest rates and loan terms that fit your needs. 

Once you’ve decided on a lender, you’ll have to gather your financial documents and fill out a refinancing application. Be prepared to disclose detailed information about your financial history, employment status, and property value to facilitate the underwriting process.

From there, the process will be similar to when you applied for your original mortgage. You’ll have to go through an appraisal, inspection, and title search again. After that’s completed and the underwriting process is finished, you’ll sign a new Closing Disclosure, which outlines the final loan terms, closing costs, and funds needed to close.

After closing, the lender disburses funds to pay off your existing mortgage and initiates the new loan. Keep in mind that you’ll have to continue making payments on your existing mortgage until the refinance is finalized to avoid any late fees or penalties.

Learn More About Your Refinancing Options with Phil Aitken

At Your Home Sold Guaranteed Realty - Phil Aitken Home Team, Phil Aitken and our team have been rated as the best realtor in Jacksonville. We’ve worked in the area for years and have developed relationships with all the top lenders. This makes it easy for us to recommend the right lender for your financial needs.

On top of that, we’ve helped hundreds of clients buy their dream homes in Jacksonville. We make the home-buying process easy and risk-free thanks to our Buyer Satisfaction Guarantee, which ensures you end up with a home that meets your budget and criteria. 

Have more questions about buying a home in Jacksonville? Give us a call at (904) 544-5252 or send a message to [javascript protected email address]. You can also fill out the form on this page. Get ready to start packing!

To Discuss Your Home Sale or Purchase, Call or Text Today and Start Packing!