Everything you need to know about refinancing your mortgage
Whether you’re ready to refinance or simply weighing your options, Jackie Barikhan with Right Choice Mortgage can help.
Jackie can help you determine when to refinance, help you choose the best type of loan, and answer any questions you have about your specific financial situation.
What is refinancing?
Refinancing is the process of getting better terms on your current mortgage by taking out a completely new loan. This new-and-improved mortgage will leverage positive market conditions, and Jackie can customize it to fit your financial goals, helping you to achieve:
- Lower monthly payments
- Shorter loan terms & greater financial stability for retirement
- Convert adjustable rate loan to a secure fixed-rate loan
- Consolidate debt
- Home improvements & renovations
- Removal of Private Mortgage Insurance premiums
Types of refinancing
The two most common forms of refinancing are traditional refinances and cash-out refinances.
Traditional refinance: This simple form of refinancing is an effective way to make mortgage payments more affordable by reducing your interest rate. With this type of refinance, you can also shorten your loan term.
Cash-out refinance: If you have equity in your home and would like to take cash out for home improvements, paying off debt, or any number of other reasons, a cash-out refinance may be a good choice. With this option, you would refinance your home based on the current appraised value.
After paying off the current mortgage, other liens, and closing costs, you will receive the equity difference in cash to use as you please. Similar to a Home Equity Loan, the interest from the first $100,000 of a cash-out refinance is tax deductible!
Government Refinance Loans
Right Choice Mortgage provides a number of government refinance loans to qualified borrowers. These refinancing options are tied to specific government-insured loan programs and require much less paperwork and easier lending guidelines, among other benefits.
Three common types of government refinance loans include:
FHA Streamline: If you financed your home with a previous FHA loan, meaning that it is insured by the Federal Housing Administration and protects the lender. The advantages of this program include: lowered lending fees, no new appraisal required, reduced processing time, and lowered monthly payments.
Home Affordable Refinance Program (HARP): This government program allows borrowers to refinance up to 125% of their home’s value. This program was established in 2009 to help borrowers who are underwater on their mortgage. HARP is only available to borrowers whose mortgage is guaranteed by Fannie Mae or Freddie Mac.
VA Interest Rate Reduction Refinance Loan (IRRRL): If you financed your home with a VA loan, you may be eligible for the IRRRL program. This VA loan lowers your interest rate & payment and it requires no appraisal or credit underwriting package. You can also convert an Adjustable Rate Mortgage (ARM) to a Fixed-Rate mortgage with this form of refinancing.
Costs associated with a refinance
While there are costs that accompany a refinance, the main concern should be the overall savings the refinance will afford you. Questions to ask: How long will it take me to break even with the costs? and What are the savings you will gain afterwards? The costs associated with a refinance will vary depending on the type of loan you are seeking, but you can expect to incur the following fees:
- Origination Charge: These fees cover the cost of checking your credit report, processing your application, and other administrative tasks associated with funding your loan.
- Appraisal Fee: This fee covers the cost for obtaining a current appraisal on your home to determine loan-to-value.
- Closing/Settlement Agent or Escrow: The professional who conducts the closing will charge a fee.
- Title Insurance and Search: A new lender’s policy is required to obtain a new loan.
- Additional Situational Expenses: Lesser charges such as flood certification fees, survey costs, pest inspection fees, and courier and notary fees may also be required, depending on your situation.
The perfect rate?
When you work with Jackie at Right Choice Mortgage, you are working with a mortgage professional that tracks mortgage rates with Mortgage Backed Securities with the best bond analysts in the market. We have up to the minute updates to make sure you get the best rate and lock in on the right day. In an ever changing market our service provides clients with the ability to capitalize on limited time opportunities and potentially save thousands. Get in touch with Jackie and she can show you the details.