Questions & Answers

• Should I refinance?
• Should I refinance from an adjustable-rate to a fixed-rate mortgage?
• Are interest rates higher for a cash-out refinance?
• When should I "lock in" an interest rate?
• Should I pay points to get a lower rate?
• Are there really loans with "No Closing Costs"?
• How long does it take to refinance?
• How much money will I need to bring to closing?
• How can I reduce my closing costs?
 

Q. Should I refinance?

Sometimes it makes sense to refinance. Sometimes it doesn't. It depends greatly on what your financial goals are. For instance, a lower interest rate and lower payments are good reasons to refinance, but there are other factors to consider. Here are a few things to ask your self when considering refinancing:

How long you expect to be in the home?

How much equity you have in the home?

What your closing costs will be

To get that low rate, will you have to pay points?

Will your lower payments more than make up for the closing costs, fees and points if any?

Our refinance experts can help you decide if refinancing makes sense and then find the best mortgage program for you. In the meantime, our Refinance Calculator can give you an idea if refinancing might be right for your situation. 

Q. Should I refinance from an adjustable-rate to a fixed-rate mortgage?

It depends on your situation. Generally, it's a good idea to get the lowest fixed-rate possible. However, if you're in the first year of a five-year Adjustable Rate Mortgage (ARM) and you plan on moving in three years, it may not make sense for you to refinance. One of our refinance experts can help you make the best decision. 

Q. Are interest rates higher for a cash-out refinance?

The interest rate you pay on a cash-out refinance loan will generally be the same that you pay on a non-cash-out loan. There may be an incremental fee associated with a cash-out refinance loan depending on the specific loan program you choose and the loan to value ratio. Using the equity in your home to pay off other bills can be a smart thing. Consider taking some money out to pay off credit card bills, auto loans and any debt that has interest that is not tax deductible. You may be able to deduct the interest on the money you take out to pay off that debt. Consult your tax advisor to be sure. 

Q. When should I “lock in” an interest rate?

We cannot predict interest rates — nobody can. But historically, rates go up much faster than they come down. So if you're thinking about buying a home or refinancing your mortgage - get the good rate now (you can always refinance later if rates drop again). Any in-the-near future drop in interest rates may not be drastic enough to impact your monthly mortgage payment. Of course, every situation is different, so it's important to consider all of your options. 

Q. Should I pay points to get a lower rate?

If you're refinancing your mortgage, paying points may not be your best option. Points paid on a refinance can be deducted from your taxes only in small increments — 1/30th a year for a 30-year mortgage - meaning it could be several years before your lower rate makes up for the points you pay. If you're buying a home however, points paid are a deductible expense for that year. Consult your tax advisor to be sure. 

Q. Are there really loans with “No Closing Costs”?

There are few loans that truly have no closing costs. Sometimes lenders will not charge application fees and agree to pay the appraisal and title fees, but they may increase the interest rate. Lenders can also roll the costs into the amount of your loan. So, because you're not paying costs up front, it's called a "no closing cost" loan. While slightly increasing your mortgage might be acceptable to you, keep in mind that it's not really a cost-free loan. 

Q. How long does it take to refinance?

Refinancing normally takes between two and four weeks, depending on a few things.

Do you have a recent home appraisal?

Are you in an area that appraisers can get to easily?

Are there plenty of comparables in your neighborhood?

Often times, the home appraisal is what takes the longest to obtain. And during refinancing booms, appraisers can be difficult to schedule. Also, have your paperwork ready. Being prepared helps tremendously to speed the process. 

Q. How much money will I need to bring to closing?

A general guideline is that you'll need 2% of the purchase price of the home for prepaid interest to cover the time between the date you close and your first mortgage payment. Some states may also require prepayment of property taxes. When refinancing however, your old mortgage will most likely have money in escrow (pop-up Mortgage Glossary) that can cover these costs. Some borrowers get short-term loans while this escrow transfers back to them, but most pay the money at closing knowing they'll get it back when their escrow is returned. 

Q. How can I reduce my closing costs?

If you're refinancing, you may be able to eliminate some costs by talking to your lender. For instance, your lender might reuse your last home appraisal or your credit report if they're recent. Another option may be to have your mortgage lender re-certify some documents (appraisal, title, etc.) for less than the cost of getting new ones.

Talk to a Refinance Expert!

Take 30 seconds to provide some information and we'll contact you to help determine the best home loan for you.





Terms Used in this Refinance Article

Points (or Discount Points)

Points are an up-front fee paid to the mortgage lender at the time that you get your loan. Each point equals one percent of your total loan amount. Points and interest rates are inherently connected: in general, the more points you pay, the lower the interest rate you get. However, the more points you pay, the more cash you need up front since points are paid in cash at closing.

Adjustable Rate Mortgage Loans (ARM)

Loans with interest rates that are adjusted periodically based on changes in a pre-selected index. As a result, the interest rate on your mortgage and the monthly payment will rise and fall with increases and decreases in overall interest rates. These mortgage loans must specify how their interest rate changes, usually in terms of a relation to a national index such as (but not always) Treasury bill rates. If interest rates rise, your monthly mortgage payments will rise. An interest rate cap limits the amount by which the interest rate can change; look for this feature when you consider an adjustable rate mortgage.

Lock or Lock-In

A mortgage lender's guarantee of an interest rate for a set period of time - usually between loan application approval and loan closing. The lock-in protects you against mortgage rate increases during that time.

Closing Costs

Also known as settlement costs, these costs are for services that must be performed to process and close your loan application. Examples include title fees, recording fees, appraisal fee, credit report fee, pest inspection, attorney's fees, taxes, and surveying fees.

Escrow

A transaction in which a third party acts as the agent for home seller and home buyer, or for borrower and mortgage lender, in handling legal documents and disbursement of funds.

Credit Report

A report detailing the credit history of a prospective borrower that's used to help determine creditworthiness.

Title

A Document that gives evidence of ownership of a property. Also indicates the rights of ownership and possession of the property. Individuals who will have legal ownership in the property are considered "on title" and will sign the mortgage and other documentation.

Appraisal or Home Appraisal

An appraisal is a written analysis of the estimated value of your property. A qualified appraiser who has knowledge, experience and insight into the marketplace prepares the document. It demonstrates approximate fair market value based on recent home sales in your neighborhood and is required to purchase or refinance your new home or property.

Comparables

An abbreviation for “comparable properties” used for comparative purposes in the home appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.


• Cash Loan
• secured loans
• Payday Loan
• cheap home loans
• car loans rates | car loan