Navigating Refinancing: When and Why It Might Make Sense

Refinancing your home loan can be a smart financial move—but only when it aligns with your bigger picture. Whether you're aiming to lower your monthly payment, pay off debt, or access equity, the key is understanding how it works, when it’s worth it, and what to expect.

At Horizon Funding, we don’t believe in “one-size-fits-all” advice. This guide will walk you through the why, the when, and the how of refinancing, so you can decide if it’s the right time for you.

📉 What Does It Mean to Refinance?

Refinancing is simply replacing your current mortgage with a new one—usually with better terms, different goals, or both. Your old loan gets paid off by the new loan, and you start fresh with updated payments, interest rates, or structure.

There are three main reasons people refinance:

1. To lower their interest rate and monthly payment

2. To take cash out of their home’s equity

3. To change the loan term or loan type

Let’s break those down.

💵 1. Rate-and-Term Refinance

This is the most common type of refi. The goal is to get a better deal on your mortgage—usually by lowering the interest rate or changing the loan term.

Why people choose this:

• Interest rates have dropped since they bought

• Their credit has improved and they now qualify for better terms

• They want to shorten their loan term (e.g., from 30 years to 15)

• They want to go from an ARM to a fixed rate

Example:

Let’s say you bought your home at a 7% interest rate. Now rates are at 5.75%. Even a small drop like that could lower your monthly payment by hundreds—potentially saving tens of thousands over the life of the loan.

What to consider:

• You’ll pay new closing costs (unless you do a no-cost refinance)

• You’ll “restart” the loan term unless you choose a custom option

• You’ll want to stay in the home long enough to break even

💡 Pro Tip: Horizon can run the numbers to calculate your break-even point—so you can see exactly when the savings outweigh the costs.

🏦 2. Cash-Out Refinance

This is when you refinance for more than you currently owe, and take the difference out in cash. It’s a way to unlock your home equity to use for other goals.

Common uses:

• Pay off high-interest debt (like credit cards)

• Make home improvements or renovations

• Invest in a business or second property

• Fund tuition or large expenses

Example:

Your home is worth $400,000, and you owe $280,000. You could refinance into a new loan for $330,000, pay off the old loan, and pocket $50,000 (minus costs).

What to consider:

• You’ll increase your loan balance, so your payment may go up

• You’ll need enough equity (typically 20%+ remaining after cash out)

• You may lose some equity cushion if home values drop

💡 Pro Tip: We’ll help you weigh the benefit of freeing up cash vs. growing long-term equity. It’s about strategy—not just access.

🧭 3. Restructuring Your Loan

Sometimes the goal isn’t to lower the rate or pull out cash—it’s to make the loan fit your current life better.

You might want to:

• Extend your term to lower your monthly payment

• Go from an FHA loan (with mortgage insurance) to a Conventional loan (to remove MI)

• Combine a first mortgage and a HELOC into one loan

• Switch from an ARM to a fixed-rate for peace of mind

At Horizon, we take a long-term view. If your needs or goals have changed since you first bought your home, refinancing can give you a better structure.

🔎 What Does the Refinance Process Look Like?

Refinancing is similar to getting a mortgage when you bought the home—but often faster and easier.

Here’s the typical process:

1. Application & Strategy Call
   We review your current loan, equity, goals, and credit. We’ll show you the best options available.

2. Lock Your Rate
   Once you’re ready, we lock in your interest rate and begin the process.

3. Appraisal (Sometimes Waived)
   Depending on the loan, you may need a new appraisal—but not always. We’ll let you know.

4. Underwriting & Approval
   We verify your income, assets, and property value. This part is streamlined if you’re already a homeowner with good history.

5. Closing
   You sign the new loan docs. Your old loan is paid off, and your new loan begins. If you did a cash-out, funds are disbursed shortly after.

💡 Pro Tip: The whole process can be done in as little as 2–3 weeks. We handle most of the paperwork for you.

🔐 Is Now the Right Time to Refinance?

It depends on your goals. Refinancing isn't always the right move—but when it is, the benefits can be significant.

Refinancing may be smart if:

• Rates are at least 0.5–1% lower than your current loan

• You’ve built up at least 20% equity

• Your credit score has improved

• You need to reduce monthly expenses or consolidate debt

• You’re planning to stay in the home for a few more years

We’ll never pressure you into a refinance. But we will run real numbers with you and help you make an informed decision—based on facts, not hype.

Final Thoughts

Refinancing is about strategy. Whether your goal is to save money, access equity, or rework your loan structure, Horizon Funding is here to guide you.

We’ll show you:
✅ If it’s worth it
✅ What your options are
✅ What the numbers really mean

No obligation. No stress. Just smart advice and personal attention.

Let’s talk and see if refinancing could help you move forward.