Refinance Basics

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Refinancing replaces an existing mortgage with a new one, and you can customize details on the new loan including the type of interest rate, the term length, and the amount borrowed. 

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Benefits of Mortgage Refinancing

Whether interest rates are rising or falling, mortgage loan refinancing is common and there are several benefits that homeowners find with refinancing:

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• No More Private Mortgage Insurance (PMI) – Refinancing your home could allow you to get rid of your private mortgage insurance. If your home has increased in value or if you have paid enough into your home so that you owe less than 80% of what it’s worth, you can refinance into a new loan and stop paying private mortgage insurance. Eliminating PMI can lower your monthly mortgage payment, which helps you save money.

• Increase cash flow: You could lower your monthly payment by refinancing your mortgage, giving you greater financial flexibility. One of the best benefits is the relief they can provide in terms of your monthly expenses. There's no reason to pay more than you need to, and a lot may have changed since you first got your mortgage; your credit score may have improved, rates may have changed, and your home's value may have changed as well. Talking to a licensed loan officer about your options is a good first step in determining how a mortgage refinance could help you.

• Pay off debt: Refinancing could allow you to pay off high-interest credit card debt, private loans, auto loans, or other high-interest debt. With a home loan refinance, interest rates are typically lower and it would make more financial sense to make payments on a mortgage refinance rather than higher interest loans.

• Getting a better loan: Whether you want to switch from an Adjustable Rate Mortgage to a 30 Year Fixed Rate, or simply wish to lock in a lower rate, refinancing can provide an opportunity to optimize your mortgage loan.

• Increase your long-term net worth: A lower interest rate on your mortgage means you’ll save money over the lifetime of the loan. You can use the extra cash to buy real estate for retirement, save for your child’s college fund, or buy a vacation home.

• Make purchases with less interest: Financing expensive purchases with your home’s equity lets you take advantage of a lower interest rate than what’s typically available on credit cards. You could use a home loan refinance and pay for a wedding, college, or elderly care and potentially save money with a home refinance that lowers your interest rate.

• Tax deductible interest: Interest on your home’s mortgage is generally tax deductible. A licensed tax professional could assist you with determining your eligibility for any deductions.

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Types of Refinance Mortgages:

• Cash Out: It allows homeowners to increase the amount that they are borrowing by tapping into their home’s equity and pulling out the cash difference. When a mortgage refinance is used to provide the borrower a lump sum of cash, you can use the cash in nearly any manner you choose.

• Rate and Term: The interest rate and loan term are the only changes that occur with this type.

• Cash In: A homeowner brings cash to the closing in order to pay down the loan balance that is owed to the lender. This type is the opposite of a cash out refinance.

• HELOC: A Home Equity Line Of Credit lets the homeowner borrow cash against their home equity. The homeowner can borrow what they need and potentially return for additional draws, unlike a 2nd mortgage.

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Refinancing Your Mortgage: Things to Consider

A refinance mortgage typically closes more quickly than a buying a house and often requires far less paperwork. When you’re deciding whether to refinance your home, there are key factors to keep in mind.

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• How will it affect you financially? Try our refinancing calculator to figure how much refinancing might help your budget.

• How long will you live in the home? If you’re planning to sell or move in the near future, refinancing with a low interest, Adjustable Rate Mortgage could be the best choice.

• Any potential risks?  There may be a clause which penalizes you for paying down your mortgage with a home equity credit line of credit.  There may be other attorney fees and costs in addition.

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When to Refinance

Most borrowers are required to keep their original mortgage for at least one year prior to moving forward with refinancing.  You should still check with your lender, however, as each lender and their terms are different.

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While it is often best to refinance with the original lender, this is not required.  Many lenders will want to keep existing customers and so they may choose to waive a new title search, property appraisal, or other requirement for refinancing.  

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To apply for a loan, you will have to provide the lender with detailed documentation of your financial history. The lender will request a credit report from a credit agency and will verify the information provided in your loan application.

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Be prepared to provide:

• Social Security numbers for both you and any co-borrowers

• Copies of checking and savings accounts statements for the past two months

• Evidence of any other assets such as bonds, stocks, or money saved in retirement programs (i.e. 401k or 403b program)

• Recent paycheck stubs

• W-2 withholding forms, or income tax returns for the past two years to verify your income and proof of employment

• The name and address of someone who can verify your employment

• Residence history for the past two years

• Sales contract for the purchase of a new home

• Homeowner's association information with contact information if property is a condo or part of a homeowner's association

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Homeowners May Want To Refinance While Rates Are Low

US 10-year Treasury rates have recently fallen to all-time record lows due to the spread of coronavirus driving a risk off sentiment, with other financial rates falling in tandem. Homeowners with a steady payment history may benefit from recent rate volatility.

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Are you still paying too much for your mortgage?

Find Out What You Qualify For 

Call Now: 1-855-499-7608

Whether you're buying your first home, refinancing your current mortgage, or contemplating whether a loan modification may be right for you, trust that the New Vision Direct Team will go to bat for you!

Our Address

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3951 Higuera St #2020

Culver City, CA 90232 

Online @NewVisionDirect.com 

 

Our Numbers

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Phone: 1-855-499-7608 

Fax :     1-855-275-7018 

Call Now:  1-855-499-7608

Recent Results...

New payment - $1314.18 @ 3.625%
Old payment - $1,728.98 @ 5.000%
Monthly Savings - $414.80

-Valerie P.

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New payment - $1410.72 @ 3.875% 

Old Payment - $2,331.90 @ 6.750%
Monthly Savings - $921.18

-Ariana B.

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*The above are just recent client results and does not mean you will get the same results as everyone's specific situation is different .