Choose Your Home Loan

 The world of homeownership is complex to navigate, especially while you are trying to understand — the mortgage process and home equity. Understanding the relationship between these two concepts are important whether you are a first-time homebuyer, considering a home equity loan or looking to refinance. This blog aims to break down both the terms and explain how they are connected. This blog will also guide you through the important aspects of homeownership financing. What is Home Equity? Home equity refers to the portion of the value of your home that you own outright. It is the difference between any outstanding mortgage or loans secured against your home and its market value. For example, suppose your home is worth $300,000 and you owe $200,000 on any mortgage, your home equity is $100,000. How is Home Equity Built? Home equity builds over time through two primary ways: Paying down your mortgage: When you make monthly payments, you reduce the principal amount owned, ...

 PMI or the Private Mortgage Insurance is the extra cost that a homeowner with initial loans often incurs in case of a down payment of less than 20% of the home value. PMI protects the lenders, but it does not offer any direct benefit to the homeowners, making it a common target for elimination. Refinancing can be a powerful tool for removing PMI and enhancing your economic condition. This blog will discuss how it works and how you can improve the benefits, including cash-out refinancing , using home equity, and investing in home improvements. What is Refinancing? Refinancing includes replacing your current mortgage with a new one, particularly with better terms. Homeowners refinance for different reasons, for example, securing a lower interest rate, eliminating PMI or cutting down the loan term. By doing so, you can effectively save thousands over the period of your loan. How Does Refinancing Remove PMI? PMI is generally needed until your loan-to-value ratio (LTV) decreases b...