Refinancing Options

Selecting a Refinancing Option

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There are a huge number of refinancing programs available to borrowers. Call us and we'll help you qualify for the best refinance program to fit your needs. There are several questions to ask yourself as you review your choices.

Lowering Your Payments


Are achieving reduced monthly payments and an improved rate your main refinance goals? If so, your best choice may be a low fixed-rate loan. An ARM (Adjustable Rate Mortgage) or a high fixed rate mortgage are loan programs that you may want to refinance.


Even if rates come up later, unlike with your ARM, when you close a mortgage with a fixed rate, you lock in the low interest rate for the life of your mortgage.


If you aren't planning a move in the near future (about 5 years), a fixed rate mortgage loan can particularly be a good loan option. But if you do plan to sell your home more quickly, you should consider an ARM with a low initial rate in order to achieve lower monthly payments.

Getting Out Some Cash


Is your refinance goal primarily to pull out some of your equity for an infusion of cash? Maybe you're going on a much needed vacation; you need to pay tuition for your college-bound child; or you plan to renovate your home.


In this case, you want to qualify for a loan above the remaining balance of your present mortgage. Then you will want to need to find a loan program for a bigger amount than the remaining balance on your existing mortgage loan.


If you've had your existing mortgage for quite a while and/or have a mortgage with high interest, you may be able to do this without increasing your monthly payment.

Consolidating Debt


Do you hold other debt, maybe with a high interest rate, that you need to consolidate? If you have enough equity, taking care of other debt with rates higher than your home loan (credit cards or home equity loans, for example) might be able to save you a lot of money each month.

Paying it Off Faster


Do you plan to build up equity more quickly, and have your mortgage paid off sooner?


In that case, you'll want to look into refinancing to a short term mortgage loan - for example, a fifteen-year loan. Your monthly payments will probably be higher than they were with your long-term loan, but the pay-off is: that you will pay considerably less interest and can build up equity quicker.


Conversely, if your current longer term loan has a small remaining balance, and was closed a while ago, you may be able to make the switch without paying more each month. To help you determine your options and the multiple benefits of refinancing, please contact us. We are here for you.

When to Refinance


Some have said that only in the case your new interest will be at least two points under your current rate, should you refinance your mortgage. Perhaps that was good advice a number of years ago, but since refinance costs have been getting lower, it may be time to take a serious look. Refinancing your loan has various advantages that can make it worth the up-front expenditure many times over.

Advantages of Refinancing

You might be able to bring down your interest rate (sometimes substantially) and have smaller mortgage payments with your refinanced mortgage loan. You also might have the option of tapping into the equity in your property by "cashing out" some money to renovate your home, consolidate debt, or take your family on a vacation.


With lower interest rates, you might also get the chance to build your home equity faster by changing to a shorter term mortgage loan.

Fees and Expenses

Of course, you will have to pay for the process of refinancing. When you refinance, you are paying for many of the same things you were charged for during your existing mortgage loan. These could include settlement costs, appraisal fees, lender's title insurance, underwriting expenses, and so on.


In the end, for most the amount of up-front costs to refinance are paid back very quickly in savings each month. We will work with you to determine what mortgage loan program is perfect for you, considering your cash on hand, how likely you are to sell your residence in the next few years, and what effect refinancing could have on your taxes.

Do the Math

Paying points can result in a lower interest rate. The amount you'll save over the life of the mortgage loan could be substantial if you have paid up front about 3% of the new loan balance. Please consult a tax professional before acting on hear-say that these points paid may be deducted on your federal income taxes.


Speaking of taxes, if your interest rate is reduced, of course you will also be lowering the interest amount that you will be able to deduct on your federal income taxes. This is one more expense that borrowers consider. Call us at (612) 240-9922 to help you do the math.

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