We’ll guide you through some of the key differences between a rate modification and a refinance to make it easier for you to make the best financial decision for your needs.
What is a Mortgage Rate Modification?
A mortgage rate modification is a simple adjustment to the interest rate of your current loan without replacing your existing mortgage with a new one. Think of it as a streamlined way to secure a better rate without jumping through all the hoops of a full refinance. Key Features of a Rate Modification:
- Lower Costs: Rate modifications usually involve minimal fees compared to refinancing, as they don’t require an appraisal or a full underwriting process.
- Faster Approval: Since it's not a new loan, rate modifications are quicker to process and come with less paperwork.
- Retain Current Terms: There’s no change to your loan’s term length unless you request a modification to shorten it.
What is Mortgage Refinancing?
Refinancing replaces your existing mortgage with an entirely new loan. Borrowers often refinance to secure better terms, whether that means lowering their interest rate, adjusting their loan term, or even accessing home equity through a cash-out refinance.Key Features of Refinancing:
- Customizable Terms: Refinancing allows you to change your loan’s length, adjust your interest rate, or switch from an adjustable-rate mortgage to a fixed-rate one.
- Access Equity: With a cash-out refinance, you can tap into your home’s equity and use the funds for other financial goals.
- Potential Savings: By securing a lower rate, refinancing can save you money over the life of your loan.
Weighing Your Options Thoughtfully
Both rate modifications and refinancing offer unique benefits, so the right choice depends on your goals and financial situation.
- Rate modifications are ideal if you're looking for an easy and more affordable way to lower your interest rate without significantly altering your loan.
- Refinancing can be a great option if you want to adjust your mortgage terms, explore long-term savings, or access your home equity.
Purdue Federal’s Vice President of Lending adds, “The Rate Modification promotion is just one advantage of working with Purdue Federal Credit Union for your mortgage needs. Purdue Federal offers personalized service, competitive rates and fees and all mortgage loans are retained for servicing for the life of the loan. Plus, with financing available in most states, Purdue Federal is here to support you, even if you're moving out of state.”
With Purdue Federal’s Mortgage Rate Modification Promotion, lowering your rate has never been easier—or more affordable. Contact us today to explore your options and start saving!
