There's always a someday. Someday, I'll improve my less-than-perfect credit. Someday, I'll have all my loans paid off. Someday, I can use my home to my financial advantage. Sound familiar?
You took the first step in securing your financial future when you invested in your home. Now, you can put the equity of your home to work for you.
Don’t wait for someday…use your home to help you reach your financial goals!
Why Refinance Your Home Loan?
You may be able to refinance your home loan and get back in control of your finances.
Improve the terms of your home loan.
Use the equity you've built to consolidate other high-interest rate loans.
Refinancing is when you apply for a new home loan to pay off your current home loan. Even if you have less than perfect credit, your home may provide you with several financial advantages, including:
One Monthly Loan Payment
Simplify your life! You may be able to consolidate multiple bills into one loan. One loan means one bill, one due date to remember and one check to write.
Restructure Other Bills
Do you have existing loans or credit card balances with high interest rates? If so, you may want to consider combining those obligations into a new home loan. Even if you have less than perfect credit, this may be the option for you.
Convert To A Fixed-Rate Mortgage
With a fixed-rate mortgage, you can have the security of knowing that your monthly principal and interest payment will remain steady, regardless of the current market environment. This loan option is attractive to many homeowners because of its predictability.
Get Cash In Hand
One way to put more money in your pocket is to tap into the equity you've built in your home with a cash-out home loan refinance. If you have sufficient equity in your home, you can refinance the existing loan secured by your home and take the extra funds as cash. This can provide money for remodeling your home, making a large purchase, such as a car or boat, or taking the vacation of your dreams.
Want to get an idea of how much money you can borrow? Use our home equity calculator to quickly estimate how much you could borrow based on the equity in your home.
Refinance Home Loans
When you refinance your home loan, you can choose payment terms that will keep your monthly payments at a comfortable level. You can choose from a range of loan repayment periods to meet your needs. Best of all, the interest you pay on loans leveraging your home may be tax deductible!1
Are you ready to refinance your home loan? It's easy to apply and only takes a few minutes, so apply today!
Mortgage Refinance Loans – FHA and Conventional
Now may be the perfect time to buy a new home or refinance a current one. If you're looking for a refinancing option with flexible guidelines that allow more applicants to qualify, call us now or apply for a conventional or FHA debt consolidation loan.
How Do I Get Started?
The steps to refinance your home loan are simple:
Home Loan Application:
During the application process, the subject home will be appraised to determine its current value and the homeowner's credit file will be reviewed.
Order Title
The lender will also order a title report on the property to identify all liens against the home.
Pay Off Loan
If approved, the proceeds of the new loan will be used to pay off the old mortgage loan, as well as all other liens against the property identified in the title report.
Whatever your home financing goals, we have the tools and information you need to refinance quickly and easily.
The Refinancing Process
Master the essentials of the refinancing process with this online step-by-step reference.
Deciding to Refinance
When you refinance your mortgage, you're actually replacing it with a brand new loan. In doing this, expect to go through a mortgage application process similar to what you experienced with your original mortgage. Refinancing can be a sound financial choice that can allow you to meet a variety of needs:
- Reduce your monthly payments by taking advantage of lower interest rates or extending the repayment period.
- Reduce your interest rate risk by switching from an adjustable-rate to a fixed-rate loan or from a balloon mortgage to a fixed-rate loan.
- Reduce your interest cost over the life of your mortgage by taking advantage of lower rates or shortening the term of your loan.
- Pay off your mortgage faster (accelerating the build-up of equity) by shortening the term of your loan.
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Provide funds for major expenses or to consolidate debts.
Rate-Term Refinance vs. Cash-Out Refinance
A rate-term refinance has a loan amount that is just enough to repay the balance of the existing mortgage. The purpose of the loan could be either to reduce your interest rate, adjust your loan term, or both. A cash-out refinance, on the other hand, has a loan amount that exceeds the current mortgage balance. The higher loan amount converts some of your home equity into cash proceeds, which you receive at loan closing.
A Good Rule of Thumb
A good rule of thumb is that if interest rates are 1/2% to 5/8% lower than your current interest rate, it may be a good time to consider a refinance. You'll receive periodic rate updates by email, and can choose to be notified when rates drop below a certain level.
The Right Time to Refinance
Many homeowners consider refinancing when interest rates suddenly fall or there's a change in financial circumstances. But even though a large decline in rates or an opportunity to pay off debts might make refinancing seem like an easy decision, you shouldn't consider any single variable on its own. Think about how long you plan to stay in your home, how you plan to use your equity, and how a refinance can support your overall financial goals.
Choosing a Loan
You may already have some goals in mind for refinancing, but do you know which loan option will help you meet those goals? Selecting the right mortgage is central to the refinancing process, so it's important to understand your options. You'll need to consider two things at the outset: which loan type meets your refinancing needs, and which loan term can provide the ideal repayment schedule that meets your needs.
Loan Types
Most home loans fall into one of two general categories: fixed-rate mortgages and adjustable rate mortgages (ARMs). You'll also encounter other basic loan types such as renovation loans.
- Fixed-rate mortgages:
- Have interest rates that stay the same for the entire loan term.
- You will have predictable monthly payments throughout the life of the loan.
- You'll be protected from rising rates.
- Fixed-rate loans can be a good refinance option when rates are low.
- Adjustable-rate mortgages:
- Have interest rates that adjust periodically based on market conditions.
- The initial rate is fixed for an introductory period (usually three to ten years), and is typically lower than for a fixed-rate mortgage. After that the rate adjusts annually or semi-annually depending on the product and based on a market index, but can't go above a predetermined adjustment cap.
- Renovation loans:
- Can provide a good alternative to taking out a second mortgage for borrowers who are planning home improvements.
- The amount you can borrow is based on the projected value of your home after renovation.
- You can finance the repayment of your additional mortgage, and get extra cash to fund your improvement project.
Loan Terms
The “term” of a loan is the period of time you will spend repaying it. The most common loan term is 30 years, but other options are also available. There are 20-, 15- and 10-year mortgages for those who want to repay their loan faster.
Whether you'd be better off with a longer loan term or a shorter one depends on a number of factors, most notably your monthly income and long-term financial goals.
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Longer mortgage terms usually feature lower monthly payments, and can be a good option if you're on a tight budget or would prefer to direct your monthly cash flow toward other investments or expenses
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Shorter mortgage terms mean higher monthly payments, but allow you to repay the loan faster and can potentially reduce how much you spend on interest.
Whatever loan type or term you choose, your lender provides a wide variety of loan options to meet your unique refinancing needs. Our home mortgage consultants can help you find the right combination of loan features to support your financial goals. Contact us to get started today!
Applying
When you apply for a refinance loan, your home mortgage consultant will take your application using a Uniform Residential Loan Application form. The application has six areas:
- Personal Data - Full names, addresses, and Social Security numbers of all borrowers.
- Income - The amount and source(s) of income for all borrowers.
- Assets - Information on all assets such as checking and savings accounts, stocks and bonds, retirement plans, and other real estate owned.
- Debts and Obligations - Information on all outstanding debts and any other financial obligations.
- Credit References - Information concerning loans or debts that have been paid, plus any other references to good credit use.
- Property Information - Specifics on the property you wish to buy, if you've chosen one.
Much of the information above can be gleaned from your credit report, so you don't have to have it all in front of you when you apply. Your home mortgage consultant can tell you what you'll need to have on hand to complete the application.
Processing. . . and a Decision
After you've completed the application, a mortgage specialist (or processor) will begin verifying all the information you provided. The information will then be used to make an underwriting decision regarding the degree of risk involved in lending you money. Conditional loan decisions can sometimes be made right over the phone.
Closing
The closing is the final phase of your refinancing process where you will meet with the closing agent–usually a title company, signing company, or attorney–to sign your loan documents. As the closing date approaches, you should do the following to make sure it goes smoothly:
- Stay in touch with your lender to keep abreast of any issues with your loan. Make sure you know ahead of time if you need to bring any documentation to the closing.
- Review your insurance policies to make sure you have adequate coverage for the value of your home and its contents. Make sure your policies list your refinance lender as the payee for losses.
- Consider your second mortgage, if you have one on your property. You'll likely need to obtain a document called a “subordination agreement” from your second mortgage lender. This agreement simply means that the second mortgage will be subordinate to your new refinance loan in terms of which lender has primary claim to your assets if you should ever declare bankruptcy.
- Evaluate your escrow account for your current mortgage, to find out if you have either a deficit or surplus of funds.
- Verify the amount of cash you'll need to pay for closing costs. Your closing agent should let you know ahead of time how much you will have to bring to closing. You should get a certified or cashiers check in this amount from the bank–cash or personal checks are generally not accepted.
After the closing, your refinance process will be complete. All you'll have to do is start taking advantage of your new financial opportunities.