Refinance MortgageDetermine Your Goals
We get asked the question a lot: do you do refinancing? While the bulk of our work is with homebuyers, we are here to help you walk through the process of refinancing as well. Many homeowners who don’t want to sell with the volatile housing market are still considering making their home equity work for them. If you’ve thought about refinancing, all us at 828-348-1907 and start today.
What is Refinancing?
The simple answer is that a refinance mortgage is when a homeowner gets a new loan to replace the loan they have on their home. There are many reasons to do this, including benefiting from current interest rates. But the rates aren’t the only reason for refinancing. It may also affect the terms of your loan, which can give you the option to pay off your home faster. There are also cash-out refinances, which we’ll talk about later.
If you’re thinking about refinancing, we always recommend talking to an independent mortgage lender like our team at GoPrime Mortgage located in West Asheville.
Determine Your Goals
Before you decide to refinance, it’s good to understand your goals. Reasons for a refinance mortgage can include:
- Lowering your monthly payments
- Your credit score has improved
- The fixed period of your ARM is ending
- Your financial situation has changed to allow for higher payments
- You want to take cash out from your equity
A quick note on cash-out refinances —these can happen when you have built equity in your home that you can borrow against. Based on your home’s value and the amount of the mortgage you have left to pay, you can take out a portion of the difference, known as equity. However, cash-out loans are riskier, so the terms and payments are going to reflect that.
Why Should You Refinance?
Suppose any of these circumstances have changed since you initially financed your home. In that case, you should speak to Zachery Adam today to see if you are missing out on money by not refinancing!
Interest Rates Have Dropped
If mortgage rates have decreased since you took out your mortgage, you could save thousands by getting a better interest rate. Even one or two points can save you tens of thousands of dollars in interest fees over the life of the loan.
Your Credit Score Has Improved
If you got a conventional loan, your interest rate was partially determined by your credit score. If your score has improved, you may be able to refinance at a much lower interest rate, which can save you money over the life of your loan.
Consolidate Your Debts
High-interest payments for student loans, credit cards, or other debt can be expensive and challenging to keep up with. By refinancing your home loan and taking a cash-out option, you can pay off your other debts and only pay for your home loan.
Improve the Value of Your Home
Making home repairs can improve the value of your home so that refinancing could act as an investment. If the interest rate of the refi is lowered, you can also save money, so it’s a win-win!
Knowing The Right Time
As we’ve advised before, if you’re thinking about a refinance mortgage – don’t wait. Mortgage rates are low right now, and the market is always unpredictable. If you think refinancing is right for you, call us to learn more, and we can determine a plan together. We’ll also be honest with you. If now is not the right time for you, we’ll talk about other options or the possibility of waiting longer.
However, even though interest rates are a big motivation, they aren’t the only reason to consider refinancing. Getting new terms, accessing your equity, or consolidating your debt may also be reasons to consider refinancing. That’s why talking to a proven mortgage lender is essential.
Do Your Homework
While you want to talk with a lender to help you through the process, it’s useful for you to research yourself. Some things you should know before deciding to refinance:
- Your home equity
- Your credit score
- Your debt-to-income ratio
- The costs of refinancing
- The rates versus the terms
- Your break-even number
- Private mortgage insurance requirements
You can read more about these here.
Check out Available Options
There are too many potential options to list here, and that’s why we encourage you to call us at 828-348-1907 to learn more. You can read about some of our loan products here. After considering your goals and doing your homework, we can help you find a mortgage refinance that works for you.
When you talk with a lender in our office, we’ll discuss not only the financial implications of your refinance mortgage but what it means in the long run for you and your home. We will be honest about whether or not your plan to refinance is on track with your goals or the current market.
Start the Process
This post by Nerdwallet gives an excellent overview of the steps for refinancing. Our team can walk you through the process, but it helps to be prepared.
- Determine your goal
- Shop for the right loan product
- Apply for the mortgage
- Lock in your interest rate
- Close the loan
After you apply, you will need to continue to make the current mortgage and other payments on time. There cannot be any adverse changes to income or assets after you apply.
Closing Your Refinance Loan
Just like buying a new home, you will have to go through the closing process on a refinance. Just like you want to know what to expect before closing, you should also prepare for closing itself.
First, you’ll receive a Closing Disclosure to review. You must receive that information at least three days before when the closing documents are signed. Take time to review the disclosure and make sure the fees and charges are accurate. Remember to bring the closing disclosure documents to the closing.
Next, you’ll sign the refinance documents. Unlike buying a new home, there will be fewer people involved in this step of the process. Many people will be able to sign the documents at home. Always ask your mortgage lender what you need to bring to the closing.
Refinancing also has a unique stage in the process. You have the right of rescission, which was established under the Truth-in-Lending Act. It gives you an option to back out if you change your mind as long as you do so within three business days of signing the new mortgage.
Once the waiting period has ended, the documents will be recorded. If you’re receiving funds as a part of the process, you’ll get them within three to five business days.
Long-Term Mortgage Management
Keep in mind that managing your mortgage is as important as the process to refinance. You want to make sure you stay on top of your new terms and payments just like you did in the past. Create your budget, schedule your payments, and revisit the health of your finances regularly. A little preparation can go a long way if you find yourself in an emergency position in the future.
Are you ready to talk about refinancing to see what’s right for you? Call the team at GoPrime Mortgage in West Asheville.
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