Is refinancing right for you? With consumer debt at an all time high, a financial review is a great idea to ensure you are maximizing your largest asset. Below is a quick FAQ guide for homeowners interested in lowering their mortgage payments and refinancing their home loans.
While refinancing your mortgage may seem like a great opportunity to lower your monthly mortgage payments and reduce your debt, make sure to use a mortgage calculator. Calculate to see if refinancing your mortgage will actually save you money in the long run. Refinancing your mortgage should be done to reduce your interest rate, shorten your term, or consolidate any revolving debt.
When refinancing your mortgage, you have the option to take cash out or refinance the remaining amount on the loan.
Before you start the refinancing process, review your current situation to determine if you would qualify for a refinanced home loan. Consider your income, employment history, credit score and other loan qualifiers, as these will apply on refinancing loans as they do for first-time home buyers.
As you begin the refinance process, make sure to collect important documents that will be needed for home loan refinancing such as information about your current home loan, income statements, tax and property information, and homeowners insurance rates.
It’s a good idea to call us at 404.436.0013 or email HollyW@HollyWaltherTeam.com so we can give you a FREE Refinance Analysis to make sure refinancing is the right move for you.
Yes, there are fees, but with most home loans, any costs incurred for your refinance can simply be rolled into the new loan. We will keep any refinancing costs to a minimum and will go over them in person so there are not any surprises at closing.
Refinancing allows you to save money. With interest rates being much lower than they were 5 to 10 years ago, many are refinancing to get a lower rate on the remainder of their home loan balance. There are ways to reduce your interest rate, reduce any risk with an adjustable-rate mortgage (ARM), reduce mortgage loans, or cash-out refinancing
Lower rate = less interest paid = lower house payment = more money in your pocket.
There’s really not a great reason NOT to refinance. Call us today and we can talk about if refinancing is the best decision for you.
Sometimes loans turn out to not be a fit, or life happens and you want to see what other options you have. Some events such as, job changes, family changes, money gain, or equity increase, for example, can all be good reasons to refinancing.
If you have an adjustable rate mortgage (ARM), there is a set period of time in which you’re able to make fixed payments at a low rate. Once those fixed payments have ended, you may pay more than you expected. This is an ideal time to refinance your mortgage.
Even if you meet all the criteria, refinancing still may not be the best option. Here are some reasons you should wait:
More and more of your payments go toward the principal rather than the interest as you pay off their loan. If you are towards the later years of your term, the monthly payments go back to paying more interest than principal, costing you more money in the long run.
A prepayment penalty is a lenders fee for paying off your loan early, including refinancing. If you are refinancing with the original lender and have a prepayment penalty clause, ask if it can be waived. If you cannot get it waived, ask to see how much extra time it will cost to pay off this penalty versus what you would gain in monthly savings.
Planning to move? If so, the savings from lowered monthly payments might not exceed the costs of refinancing. Use a refinance calculator to determine if refinancing is worth it.
Refinancing creates a new mortgage loan, therefore, there is an approval process. You have to complete a new mortgage application, and the lender will check your credit and income. Bad credit can prevent a refinancing, especially since many conventional lenders now require higher credit scores for mortgage loans. If you can’t meet a conventional lender’s requirements, you may be able to refinance with an FHA home loan.
That’s totally up to you! We are here to help. Refinancing your home is basically like applying for a new home loan. You’ll need to apply online and enter your information. We’ll need you to provide documentation for things like your income, employment, address history and tax returns. We’ll pull credit to make sure you qualify for the refinance and work with you to determine the best new mortgage program for you.
You do NOT have to refinance your mortgage with the same company. For example, if you are not currently a customer with Holly Walther Lending Team with Success Mortgage Partners, you can still call our office and apply for a refinance of your current loan through us.
The costs associated with a refinance involve an appraisal (if needed for the loan) and any closing costs to process the loan. These are the costs typically involved in a new home loan. There is an option to roll the closing costs into the total home loan amount if needed. We go over all of this so that there are no surprises.
With a cash-out refinance, you can borrow additional money to pay off debt on other loans with higher interest rates, such as credit cards or car loans. Interest rates on most refinance and home loans are tax deductible. Contact us to talk further if this is the best option for you.
There are a handful of programs that have recently been approved by the federal government that allow homeowners to refinance, even if they owe more on their current mortgage than their home is worth. The HARP program and the FHA Streamline refinance program are both designed to NOT require an appraisal when refinancing a home loan. Call our office to see if you qualify for one of these programs – (404) 436-0013.
The amount of equity you need to refinance depends on the type of loan and the lender. For conventional mortgage loans, many lenders require at least 20 percent equity, although, depending on the lender – some banks have relaxed their standards and now only require five percent equity. If you refinance to an FHA home loan, you only need three percent equity.