We’re bringing you a special blog series from The Accidental Banker. Orv Kimbrough offers a smart, caring perspective on simplifying home ownership, and we are so happy to share his story and lessons with you. This series is part of a paid partnership with Rising Bank, a division of Midwest BankCentre, and we do receive a commission if you take advantage of their services.
If you’ve read my previous posts (Part 1, Part 2, Part 3), you know by now that I didn’t grow up learning about finances or investing. One of my colleagues told me that her family would talk about the stock market around the dinner table every night – that just wasn’t my reality.
I was not groomed or educated or polished to take on the role as one of very few Black bank CEOs in this country. Rather, I was a seed that grew in the cracks in the sidewalk of an impoverished, low-income community. I was orphaned at eight and grew up in the foster care system. Until I was 18, I had never even stepped into a bank. There were no banks in the neighborhoods I grew up in, only payday lenders and pawnshops.
Up until I joined the Bank as CEO, I thought refinancing was some sort of scam that would end up costing me money. People would call me and ask if I had refinanced yet to take advantage of historically low interest rates, and I would tell them I wasn’t interested. I thought it was a game.
Trusting the Refinancing ‘Game’
It wasn’t until I really started investigating that I realized it was kind of a game – but one that could save me and my family a lot of money. In its simplest terms, refinancing a mortgage means paying off an existing loan and replacing it with a new one. Some top reasons that homeowners refinance are:
- To get a lower interest rate. With rates still at historic lows, if the rate has dropped since you originally purchased your home, it could make sense. For example, a 30-year fixed-rate mortgage with an interest rate of 5.5% on a $100,000 home has a principal and interest payment of $568. That same loan at 4.1% reduces your payment to $477.
- To convert from an adjustable-rate mortgage to a fixed rate mortgage. Again, with rates near historical lows, lots of people are refinancing to lock in the rate for a longer term.
- To tap into your home’s equity. With rising housing prices, some people are refinancing to tap into their home’s equity to deal with a financial emergency, finance a large purchase or consolidate debt.
Is Refinancing Right for Me?
It’s important to remember that it costs money to refinance your loan. You have to get an appraisal, title search and pay application fees — just like when you got your original loan. Do the math first to determine if refinancing makes sense for you.
If you are ready to take the next step, let Rising Bank help you realize your dream. Learn more here about Mortgages by Rising Bank or get pre-approved today!