The Required Steps For A Smooth Mortgage Refinance Process

The Required Steps For a Smooth Mortgage Refinance ProcessThere are lots of people who have heard that one of the top ways to ensure the best mortgage rate possible is to refinance. At the same time, it is critical to make sure that this process is planned out accordingly.

Therefore, there are a few steps that everyone has to follow to make sure they are able to handle the mortgage refinancing process in a smooth manner that leads to the best rate possible.

Ask If A Refinance Is The Right Step

There are a lot of people who assume that a mortgage refinance is a financial win; however, it is important to keep the added costs in mind. For example, the refinancing process is going to lead to another closing. When this happens, there are going to be closing costs that must be considered.

Therefore, the refinancing process could lead to a higher mortgage payment if the money saved on interest payments is not enough to offset these costs.

Check The Credit Score First

Many people get lured into the refinance process by looking at low mortgage interest rates and assuming they are going to qualify for them; however, this is not always the case. Only the people with the top credit scores are able to qualify for these low rates. Therefore, everyone needs to take a look at their credit score and make sure that their credit report has been cleaned up. This is the only way that people are going to be able to qualify for these low rates.

Talk To A Trained Professional

Finally, many people are going to be going through the refinance process for the first time. It is important to work with a trained professional who can walk everyone through this process, ensuring that they know what they are doing as the process unfolds. This can go a long way toward ensuring that everyone has a successful refinancing experience.

Go Through The Right Steps

Following these steps can maximize everyone’s chances of making sure they end up with a refinance that works for them. By planning out the process ahead of time, everyone can go through the steps they need to make sure that the refinancing process proceeds as smoothly as possible.

3 Signs It Is Time For You To Refinance Your Mortgage

3 Signs It Is Time For You To Refinance Your MortgageIf you are looking for ways to save money on your mortgage, refinancing might be a good option. For those who might not know, refinancing can help a homeowner reduce monthly mortgage payments by switching to a lower interest rate. 

Basically, the homeowner takes out one loan at a lower interest rate to pay off the old loan, which is at a higher interest rate. While the homeowner may have to pay closing costs a second time, this could save someone hundreds of thousands of dollars over the life of the loan. Furthermore, those who want to pay off their loan more quickly may be able to do this as well. There are a few signs that someone should refinance their home loan immediately.

1. Current Mortgage Rates Are Significantly Lower

One of the biggest signs that someone should refinance is that current home loan interest rates are way lower than what they have. While everyone’s financial situations are different, if the current average interest rate is more than a point lower than your current interest rate, you should consider refinancing

While not everyone is going to qualify for the current average interest rate, some people might. This means that this is a possibility worth examining. If you can qualify for a much lower interest rate, it is time to refinance.

2. Your Credit Is Good

In order for you to qualify for home loans with lower interest rates, your credit has to be in good shape. There are ways for you to improve your credit score. Paying off credit card debt, paying your bills on time, and fixing errors on your credit report are all great ways to raise your credit score. If your credit score is good, it might be time to refinance.

3. You Are Not Moving Any Time Soon

As mentioned above, you may have to pay closing costs when you refinance. Therefore, if you plan on staying in that house for a while, this could be a good time to refinance. On the other hand, you don’t want to pay closing costs just to move again next year.

These are a few of the biggest signs that indicate it is time for you to refinance. Don’t pass up this chance to save money! 

A Guide to Financing Home Improvements

A Guide to Financing Home Improvements and How Mortgage Refinancing Can HelpIf you’re planning to remodel or renovate your home in the near future – whether to provide a better living environment or as part of a house flip – you’ll need to find a way to pay for your home improvements. There are several different possible sources of renovation money, each with their own advantages and disadvantages. One option that is gaining popularity is mortgage refinancing.

How does mortgage refinancing work, and how does it compare to other renovation financing options? How can you use a mortgage refinance to get the most out of your renovation? Here’s what you need to know.

Home Improvement Investments: Which Renovations Generate The Best Returns?

If you’re considering a mortgage refinance in order to fund your home improvements, you’ll want to concentrate on doing renovations that increase your home’s value. Otherwise, you’ll be taking on more debt without gaining anything in return.

If you want to max out your return on investment, re-finishing your kitchen is your best strategy. Remodeling Magazine’s annual cost-to-value renovation analysis shows that new appliances, a new coat of paint, and new surface finishes in the kitchen generate the biggest returns. Meanwhile, swimming pools and home offices tend to generate the lowest returns because they appeal only to a select group of buyers.

Your Options For Financing Home Improvement Projects

Financing for a home improvement project is a critical consideration. Unless you can afford to pay $20,000 out of pocket for a remodeling project, you’ll need to secure financing of some sort.

Your options for home improvement financing include home equity lines of credit, renovation mortgages, and refinancing. A HELOC may not be an ideal solution, as repayment requires discipline, while a renovation mortgage (or home renovation loan) is typically used only for foreclosures and other properties requiring major renovation work.

Mortgage Refinancing: A Smart Option For Savvy Borrowers

If you’re looking to simply make improvements to your existing home, a mortgage refinance is likely your best option. A straight refinance gives you a lump sum of cash that you can use to pay for renovations upfront.

There’s also a “refinance plus improvements” arrangement, which can provide you with extra capital as you need it. Under this model, you can get up to 80% of your home’s post-renovation appraisal value – however, you’ll only get the money as the renovations are completed and inspected. With a straight refinance, you’re not out of pocket for any length of time.

Making smart home improvements is a great way to boost your home’s value and improve your living conditions. An experienced mortgage professional can help you to find financing for those renovations without a hassle. Contact us to learn more.

5 Expert Tips To Get The Most From Your Next Refinance

Refinancing This Winter? Follow These 5 Expert Tips to Get the Most from Your MortgageRefinancing a mortgage is a great way to take advantage of historically low-interest rates or change your payment terms to be more affordable. And with interest rates at historical lows, there’s never been a better time to refinance your mortgage. If you’re planning to refinance your mortgage this winter, you’ll want to make sure you get the best possible deal.

How can you make sure that your mortgage works for you, and not the other way around? Here’s what you need to know.

Know What Your Break-Even Point Is

Your break-even point is the point at which the extra amount you paid out of pocket for the refinance and the amount you saved in a reduced interest rate is equal. In other words, it’s the point at which a refinance actually starts saving you money – and it’s important that you know when that point is. If you pay $5,000 in refinancing fees and your refinance reduces your monthly interest payment by $200, for instance, you’ll break even after two years and one month.

Opt For a Shorter Loan Term, If Possible

Refinancing gives you the ability to turn a long mortgage into a short one. And although a shorter mortgage comes with higher payments, more of your monthly payment is applied to your principal. With a 30-year mortgage, for instance, you’ll be paying mostly interest for the first 16 years – but with a 15-year mortgage, your payments will go mostly toward the loan principal after just five years.

Try To Avoid Prepayment Penalties

A prepayment penalty is an amount of money you pay in order to pay off your mortgage early. If you experience a sudden windfall and can pay off your home in one lump sum, or if you choose to sell your home, you might incur a prepayment penalty. Not all mortgages have these penalties – so talk with your mortgage professional and let them know you are looking for a mortgage without a prepayment penalty.

Lock In Your Rate

Mortgage rates are at historical lows right now. One of the biggest reasons why people refinance their homes is to get lower interest rates – which is why, if you’re refinancing your home, you’ll want to choose a fixed rate mortgage. It’ll keep your interest payments low and manageable, so you don’t pay more than you have to.

Know Your Home’s Current Fair Market Value

Housing prices rise and fall over time, which can impact your loan rate when you refinance. Higher-value homes generally get better rates, so make sure you know your home’s fair market value.

Refinancing often means better mortgage terms, so make sure you take full advantage of this opportunity. Call us today to learn more.

Refinance Your Mortgage: Now or Wait?

Refinance Now or Wait? How to Determine the Best Time to Refinance Your MortgageRefinancing your mortgage is a great way to reduce your monthly payments or take out some of the equity in your home to reinvest in renovations, upgrades or in other areas in your financial portfolio.

Let’s take a quick look at a few questions that you can ask yourself in order to determine whether you should refinance now or wait until sometime in the future.

Can You Lock In A Lower Interest Rate?

Depending on when you first purchased your home and took out your mortgage, you may find that by refinancing now you can lock in a lower interest rate.

Getting a lower rate can end up saving you thousands of dollars a year in interest, but you’ll need to weigh the closing costs of the refinancing against the savings you’ll obtain to ensure that refinancing is worthwhile.

How Much Do You Owe On The Home?

If you still owe a significant amount on your home you may find that it’s worth refinancing, especially if you’re confident that you won’t be selling the home any time soon. Conversely, if you’re very close to having your mortgage paid off you may find that refinancing has little benefit.

Do You Need To Tap Into Your Home Equity?

If you feel that now is the time to tap into the equity you’ve built up in your home over time in order to cover renovation or upgrade costs you may want to consider refinancing. This will allow you to take out a large chunk of cash without having to open a new loan or line of credit. If possible, try to secure a lower interest rate for added benefit.

Do You Plan On Moving?

If you’re planning on moving in the next couple of years then you may want to hold off on refinancing your mortgage. As mentioned above, there are closing costs attached with a refinancing deal and these must be factored in when assessing whether or not you stand to gain or lose.

If you’re staying in your home for the near future there’s a far better chance that the costs of a refinancing will be covered by the amount that you save.

Every financial situation is unique, and you may find that you have other questions about refinancing that aren’t listed above. Don’t hesitate to contact us today as we’ve worked with all sorts of refinancing clients and can share helpful advice that is relevant to your situation.

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Five Questions To Ask Before You Refinance Your Home

Five Questions You Might Want To Ask Before You Refinance Your HomeRefinancing your home might be a great way to save money or tap into the capital needed to pay off large debts. However, a refinance can also be an expensive endeavor, and you could even risk harming your credit rating or risk foreclosure if you’re not careful.

Before you take the plunge with a refinance, here are five essential questions that you should ask before signing on the dotted line.

How Much Equity Do I Have In My Home?

Many homeowners today owe more on their mortgage than what the property is actually worth. For mortgage refinancing to be possible, a homeowner must have at least 20 percent equity in their home in order to avoid paying private mortgage insurance. The benefit of refinancing would be negated if PMI has to be added to the cost of the new loan.

 Do I Have A Good Credit Score?

The health of your credit score plays a huge role in the type of mortgage rate you’ll be able to qualify for.

Since mortgage rates operate on a sliding scale, the lowest rates tend to be offered to those with a credit score of 720 or more. Borrowers who have a score under 620 may have trouble qualifying for a decent rate, let alone getting approved at all.

Will I Qualify For The Rate I Want?

You might be able to get a general sense of the type of interest rate you could get for a refinance as quoted on major financial websites like BankRate.com, but your specific financial details, such as the type of loan you’d like to refinance into or your credit score, will influence the actual rates that will be available to you.

If you don’t qualify for the lowest advertised refinance rates, it’s important to determine if it’s still worthwhile to refinance your mortgage at the rate you qualify for.

Will I Have To Pay A Penalty?

Most mortgages have a number of rules attached to them, including penalties for breaking a current mortgage before it comes up for renewal. It’s in your best interest to find out if there are any penalties and, if so, what that dollar figure would be.

Some penalties are so high that that they no longer make the refinancing cost-effective. Reading the fine print on your mortgage contract is crucial.

Do I Have A Second Mortgage?

Borrowers who have a second mortgage might face additional challenges when it comes to refinancing their home. In this case, you may either pay off the second mortgage or combine both loans into a bigger first mortgage.

Otherwise, the lender providing the second loan has to agree to staying in second place behind the lender holding the first mortgage, which they might not necessarily be willing to agree to.

The bottom line is: refinancing might be a great way to help you pay off large debts or save money. However, it’s critical that you analyze your specific financial situation in order to avoid getting yourself into a worse position where the only party benefitting from the refinance is the loan officer.

Call us today to discuss your needs and to determine if refinancing your home is right for you.

4 Reasons To Consider A Refinance

It Pays Off To Refinance Your Mortgage To refinance a mortgage means to pay off your existing loan and replace it with a new one.

There are many reasons why homeowners opt to refinance, from obtaining a lower interest rate, to shortening the term of the loan, to switching mortgage loan types, to tapping into home equity.

Each has its considerations.

Lower Your Mortgage Rate

Among the best reasons to refinance is to get access to lower mortgage rates. There is no “rule of thumb” that says how far rates should drop for a refinance to be sensible. Compare your closing costs to your monthly savings, and determine whether the math makes sense for your situation.

Shorten Your Loan Term

Refinancing your 30-year fixed rate mortgage to a 20-year fixed rate or a 15-year fixed rate is a sensible way to reduce your long-term mortgage costs, and to own your home sooner. As a bonus, with mortgage rates currently near all-time lows, an increase to your monthly payment from a shorter loan term may be negligible.

Convert ARM To Fixed Rate Mortgage

Homeowners with adjustable-rate mortgages may want the comfort of a fixed-rate payment. Mortgage rates for fixed-rate mortgages are often higher than for comparable ARMs so be prepared to pay more to your lender each month.

Access Equity For Projects, Debts, Or Other Reasons

Called a “cash out” refinance, homeowners can sometimes use home equity to retire debts, pay for renovations, or use for other purposes including education costs and retirement. Lenders place restrictions on loans of this type. A refinanced home loan can help you reach specific financial goals or just put extra cash in your pocket each month – just make sure that there’s a clear benefit to you.

Paying large closing costs for small monthly savings or negligible long-term benefit should be avoided. Many lenders offer low- or no-closing costs options for refinancing. Be sure to ask about it.

Contact us!

4 Of The Best Questions To Ask Before Refinancing Your Mortgage

The Best Questions To Ask Before Refinancing Your Mortgage1) Do I Have Enough Equity To Get A Mortgage?

To get a conventional loan, you will usually need to have at least 20 percent equity. This means that your house will have to be worth at least $250,000 to get a $200,000 loan. If you have less equity, you could end up having to pay for private mortgage insurance, which can easily add $100 or more to your monthly payment.

2) How’s My Credit?

Most lenders will look at your credit score as a part of determining whether or not to give you a loan. With conventional lenders, your rate will depend on your score and the higher it is, the lower your payment will be. Other lenders, like the FHA and VA programs have an all or nothing rule.

If you qualify, your rate won’t be based on your credit, but if your score is too low, you won’t be able to get any loan. Generally, 620 credit scores are the lowest that will qualify you for any loan.

3) What Do I Want To Accomplish?

Mortgages typically offer a choice as to their term. While the 30-year loan is the most popular, shorter term mortgages save you money since you pay less interest over their lives. They also get you out of debt sooner, at least in regards to your house.

The drawback is that they carry higher payments since you pay off more principal every month. This can make them less affordable for some borrowers.

4) How’s My Current Loan?

If you have an adjustable rate mortgage, you may want to switch to a fixed rate mortgage simply for the additional security it offers you. On the other hand, if you are planning to move relatively soon, your current mortgage could be a better deal whether it’s fixed- or adjustable-rate.

When trying to decide what to do, compare the cost of refinancing with what it would cost you in additional interest to hold on to your existing loan. While the breakdown is different for every borrower, generally, you’ll need to keep your current house and loan for anywhere from three to six years to break even on the costs of refinancing.

Deciding what to do with your mortgage can be complicated. Working with a qualified loan broker that can consider every angle with you can help you to make a better decision. Contact us today!

Shortening Your Mortgage Term: Important Factors To Consider

When you first bought your home a few years ago, perhaps you started off with a 30 year mortgage. Now, you are considering refinancing and changing it to a 20 year or even a 15 year mortgage.

Shortening your mortgage term and refinancing can be a smart financial move, but before you make this decision there are a number of factors that you should consider.

Switching to a shorter mortgage will mean that your monthly payments will be higher, but you will be 100% paid off much sooner and you will save thousands of dollars in interest rates. Here are a few of the factors to consider before making this decision:

Has Your Situation Improved?

Perhaps you have moved to a higher paying position, allowing you to earn a higher income and pay off more of your mortgage every month? Or maybe you have received an inheritance, which will help you to make the payments? Perhaps your expenses have gone down and you will have more money left over from your wage?

Whatever the reason, if your financial situation has improved you might want to consider switching to a shorter mortgage. With your spare money, you will be able to make the larger payments and get your house paid off sooner.

Is The Improvement Long Term?

However, it is important to consider whether this improvement will last for the long term. Will your higher wage stay that way for the next several years? Are there any hidden expenses that you are failing to factor in?

You might be set up to repay larger monthly amounts on your mortgage at the moment, but you don’t want to set yourself up for failure in the future if your finances change.

What Are The Refinancing Costs?

Keep in mind that refinancing often comes with costs and fees, so make sure that you subtract these when you are making your calculations. It can sometimes take at least two or three years to recoup the fees, so make sure that you don’t plan on selling your home in the short term.

Can You Get A Better Rate?

One of the advantages of refinancing to a shorter mortgage is that you can sometimes get the opportunity to find a better rate. Perhaps if you have an adjustable rate you will be able to convert it to a fixed rate. Take a look at what is available and ask your financial advisor for help.

These are just a few important factors to consider when it comes to shortening your mortgage term. For more info about your home, contact us today.