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Refi or Wait? How to Choose Between Refinancing Your Mortgage Now or Waiting Until You Need the Money

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Refi or Wait? How to Choose Between Refinancing Your Mortgage Now or Waiting Until You Need the MoneyRefinancing your existing mortgage may provide you with the opportunity to lower your interest rate, reduce your mortgage payment and adjust your loan term. For those homeowners who have lived in their home for more than a few years, pulling equity out of the property for everything from a luxurious vacation to making home improvements is a tempting potential benefit.

However, with property values and interest rates adjusting frequently, you may wonder if now is the best time to refinance your mortgage.

Using Equity From Your Refinance

One factor to consider when debating between refinancing now and waiting relates to pulling equity out of your home. If you need access to the cash now for home improvements or other purposes, refinancing now may be ideal. Even if you do not need access to your equity for several months or longer, you can lock in today’s rates and invest the money in other vehicles, such as CDs or bonds, until you need the cash.

Anticipating Market Changes

You may have heard that the interest rates for home mortgages have been slowly rising, and while they remain close to historic lows, they are projected to continue to rise. Nobody can predict with certainty how interest rates will adjust in the next few months and years, and locking in today’s rates may be beneficial. Keep in mind that if rates decline significantly in the near future, you can always look into refinancing again.

Reducing Your Principal

If you have a higher interest rate on your existing mortgage, your principal balance may be reduced at a slower rate than if you refinance to a lower interest rate. In addition, if you refinance from a 30-year term to a shorter term length, your principal balance will also be reduced more quickly in most cases. In many situations, refinancing your home mortgage today may establish a more efficient repayment schedule that allows you to accrue equity at a faster rate.

Each homeowner has unique factors to consider when refinancing based on property value, credit rating, existing loan terms and other factors. While many will benefit by refinancing an existing mortgage today, you can speak with a mortgage professional for specific advice and recommendations regarding your situation. Call your trusted mortgage representative today to inquire about the options and to begin working on your refinance loan application.

3 Signs It Is Time For You To Refinance Your Mortgage

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3 Signs It Is Time For You To Refinance Your MortgageIf you are looking for ways to save money on your mortgage, refinancing might be a good option. For those who might not know, refinancing can help a homeowner reduce monthly mortgage payments by switching to a lower interest rate. 

Basically, the homeowner takes out one loan at a lower interest rate to pay off the old loan, which is at a higher interest rate. While the homeowner may have to pay closing costs a second time, this could save someone hundreds of thousands of dollars over the life of the loan. Furthermore, those who want to pay off their loan more quickly may be able to do this as well. There are a few signs that someone should refinance their home loan immediately.

1. Current Mortgage Rates Are Significantly Lower

One of the biggest signs that someone should refinance is that current home loan interest rates are way lower than what they have. While everyone’s financial situations are different, if the current average interest rate is more than a point lower than your current interest rate, you should consider refinancing

While not everyone is going to qualify for the current average interest rate, some people might. This means that this is a possibility worth examining. If you can qualify for a much lower interest rate, it is time to refinance.

2. Your Credit Is Good

In order for you to qualify for home loans with lower interest rates, your credit has to be in good shape. There are ways for you to improve your credit score. Paying off credit card debt, paying your bills on time, and fixing errors on your credit report are all great ways to raise your credit score. If your credit score is good, it might be time to refinance.

3. You Are Not Moving Any Time Soon

As mentioned above, you may have to pay closing costs when you refinance. Therefore, if you plan on staying in that house for a while, this could be a good time to refinance. On the other hand, you don’t want to pay closing costs just to move again next year.

These are a few of the biggest signs that indicate it is time for you to refinance. Don’t pass up this chance to save money! 

The Four Best Questions To Ask Before Refinancing Your Mortgage

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The Best Questions to Ask Before Refinancing Your Mortgage1) Do I have enough equity to get a mortgage?

To get a conventional loan, you will usually need to have at least 20 percent equity. This means that your house will have to be worth at least $250,000 to get a $200,000 loan. If you have less equity, you could end up having to pay for private mortgage insurance, which can easily add $100 or more to your monthly payment.

2) How’s my credit?

Most lenders will look at your credit score as a part of determining whether or not to make you a loan. With conventional lenders, your rate will depend on your score and the higher it is, the lower your payment will be. Other lenders, like the FHA and VA programs have an all or nothing rule. If you qualify, your rate won’t be based on your credit, but if your score is too low, you won’t be able to get any loan. 

3) What do I want to accomplish?

Mortgages typically offer a choice as to their term. While the 30-year loan is the most popular, shorter term mortgages save you money since you pay less interest over their lives. They also get you out of debt sooner, at least with regard to your house.

The drawback is that they carry higher payments since you pay off more principal every month. This can make them less affordable for some borrowers.

4) How’s my current loan?

If you have an adjustable rate mortgage, you may want to switch to a fixed rate mortgage simply for the additional security it offers you. On the other hand, if you are planning to move relatively soon, your current mortgage could be a better deal whehter it’s fixed- or adjustable-rate.

When trying to decide what to do, compare the cost of refinancing with what it would cost you in additional interest to hold on to your existing loan. While the breakdown is different for every borrower, generally, you’ll need to keep your current house and loan for anywhere from three to six years to break even on the costs of refinancing.

Deciding what to do with your mortgage can be complicated. Working with a qualified loan broker that can consider every angle with you can help you to make a better decision.

The Pros and Cons of A Fixed Rate Second Mortgage vs. Opening a Home Equity Line of Credit

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The Pros and Cons of Refinancing Your Mortgage vs. Opening a Home Equity Line of CreditWhen it comes to a mortgage and the financial stability of your home, there’s no such thing as too much you can know in the case of keeping your biggest investment safe. If you’re looking at paying off debt and are considering using the equity in your home, here are a few things you’ll need to know about refinancing your mortgage and home equity lines of credit.

Fixed Second Mortgage vs. HELOC

Refinancing your mortgage to access equity (without changing the existing first mortgage)comes in two basic flavors: a fixed rate mortgage or a Home Equity Line of Credit (HELOC). A fixed rate second mortgage is also known as a home equity loan. While you’re expected to pay the amount loaned back in monthly payments for a pre-determined number of years, you’ll receive this money at a fixed rate of interest. On the other hand, a home equity line of credit (HELOC) is similar to a credit card where the amount you can borrow is determined by your credit history and income, and funds are withdrawn using this line of credit, can be paid down, and then drawn back on again.

All About The Interest Rates

When you refinance using a fixed rate second mortgage, the interest rate will be fixed so you won’t have to worry about any volatile increases down the road. Since this qualifies as a second mortgage, the interest rate on it will be higher than your typical first mortgage but lower than a HELOC. When it comes to HELOC’s, the amount of interest you’ll be paying will be linked to the prime rate and will fluctuate with the market, and this means you may end up paying a higher amount of interest than you bargained on.

How The Interest Is Calculated

While refinancing your mortgage can seem like a great opportunity since you’ll be able to deal with a fixed interest rate, it’s worth noting that the way you’ll be charged is different. A mortgage refinancing will charge you interest on the total amount of your loan while a HELOC will only require you to pay interest on the money you’ve withdrawn from it, so you’ll want to consider which option works best for you.

When it comes to getting a second mortgage or opening a HELOC, there are pros and cons to both that should be considered before delving into either. As these can risk the security of your most important investment, you’ll want to carefully weigh what will work best for you. If you’re curious about other homes in your area or are thinking of downsizing, you may want to contact one of our local mortgage professionals for more information.

HARP Refinancing Ends in 2016: Here’s How to Take Advantage Before It’s Gone

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HARP Refinancing Ends in 2016: Here's How to Take Advantage Before It's GoneMany homeowners are struggling to keep up with their mortgage payments on a monthly basis, and it can often seem like there are limited options for remedying the situation. If you haven’t heard of HARP refinancing and you’re a homeowner who’s looking for a lower interest rate, this may be the right solution to your payment woes. Instead of letting the opportunity blow by, here’s all you need to know before this option ends in 2016.

The Details On HARP Refinancing

Known as HARP, the Home Affordable Refinance Program was created in 2009 following the economic crash that was brought on by the housing crisis. In the wake of hard economic times, the program was devised as a means of streamlining the process for those who couldn’t refinance their mortgage. Instead of reliable homeowners being stuck with a rate because they don’t qualify for refinancing, HARP enables them to acquire lower interest rates.

Some Of The Requirements For HARP

In order for you to be able to apply for a HARP refinancing, you must have a mortgage owned by Fannie Mae or Freddie Mac that was provided to you on or before May 21, 2009. While you’ll want to check with your mortgage holder to determine if you are eligible for this refinancing option, you’ll have to be up-to-date on your mortgage payments with a loan-to-value ratio that is above 80%. For more information on a HARP refinancing, you can visit their website for all the details.

Carefully Consider The Closing Costs

While refinancing your mortgage and acquiring a lower interest rate may sound like instant money savings, it’s important to find a lender that can offer HARP without any closing costs, or at least costs low enough they’ll balance out in your favor. HARP refinancing can certainly be an option worth serious consideration, but if you have lowered interest rates and a high closing cost, it’s possible that you will not be able to re-coup the extra money you’re paying.

HARP refinancing is set to end in 2016, but if you’re a homeowner who is looking to refinance you may want to look into this program for saving money on your mortgage. By familiarizing yourself with the requirements and determining if the closing costs balance out, you may have an easier monthly payment on your hands. If you are paying off your home but are interested in what’s available on the market, you may want to contact your local mortgage professional for more information.