Refinancing a home mortgage can be a big decision for many homeowners. Your situation and needs change over time, so why shouldn’t your mortgage? Now might be the right time to refinance into a lower-rate mortgage. You should take the time to consider the following questions to see if refinancing makes sense for you.
Refinancing is an easy way to solve many of your mortgage worries. Getting a lower monthly rate and paying less over the life of your loan makes sense. At Glory Mortgage, we’re ready to find the right refinancing solution for you. Our staff of refinance experts will help you evaluate your mortgage needs and draft a refinancing plan that will save you money.
Check out our mortgage refinance center to get the information you need to make a sound decision for you and your family.
Determining if a home refinance loan is right can be confusing. That's why we've compiled a list of common questions homeowners have when considering refinancing.
What is Refinancing?
Refinancing is simply getting one loan to pay off another.
What does refinancing cost?
Typically, the closing cost of a refinance is between 1-4% of the loan amount, lender fees included. You may choose to pay points (see below) to lower your interest rate, or you could want to do a Low- or No-cost refinance.
What are discount points?
Points (or discount points) are a way of lowering your interest rate. By paying 1% of the total loan amount up-front, a borrower can lower his interest rate by about 1/8%.
How does the APR differ from the interest rate?
The rate refers to the percentage of your loan you will pay monthly interest. In contrast, the annual percentage rate (APR) is an adjusted percentage that expresses the yearly cost and includes certain charges.
What are FRM & ARM?
The interest rate of a Fixed-rate Mortgage (FRM) will not change for the life of the loan. Alternatively, an adjustable-rate mortgage (ARM) will be subject to periodic interest rate adjustments based on interest rates around the country.
Should I modify my loan or apply for a refinance?
It depends. When you refinance, you may be able to get lower interest rates, but there are additional costs. On the other hand, a loan modification usually means extending the loan term and increasing the interest rate but adding no other fees.
When Should You Refinance?
The 1% rule states that you should aim for a 1% lower interest rate to ensure that the savings generated by your new loan will offset the cost of refinancing, provided you’ve lived in your home for two years and plan to stay for at least two more.
While this rule is applicable as a point of reference, it shouldn’t be adhered to strictly. For example, if you think you will stay in your home for five or more years, even a 1% interest rate reduction will pay off for you. Additionally, with low- and no-cost refinancing options available, the cost of refinancing can be recovered much more quickly.
What is PMI?
PMI stands for Private Mortgage Insurance. Borrowers with less than a 20 percent down payment are required to carry this insurance to protect the lender against default.
Will I need to get an appraisal when I refinance?
Yes.
Does bad credit exclude me from a refinance loan?
Not exactly. When considering a refinance loan, it's important to remember that the better your credit score, the better interest rate you can get. So, if you don't have perfect credit, you can still qualify for a refinance loan, but you'll want to make sure that you're lowering the interest rate on your loan enough to make a refinance worth it.
Do I need to have equity in my home to refinance?
Yes. The general rule is to have a 90% loan-to-value ratio before you can refinance. This means that your home is worth about 10% more than the loan that is current on the house. Additionally, your home will likely have increased in value since you purchased it.
Can I get cash from a refinance loan?
Yes. Depending on the refinance loan you opt for, you can take out cash for bills, home repairs, or whatever you might need.
Can I "lock in" an interest rate on a refinance loan?
Yes. Now is the time to refinance because interest rates are so low.
How long does it take to go through the refinance process?
A typical refinance usually takes between 2 and 4 weeks. Getting your home appraised is usually where most hang-ups occur, so if you can schedule a home appraisal right away, getting a refinance loan is usually very quick.
Many refinancing options are available, and each has unique benefits. Whether you want to reduce your payments or consolidate your debt, we can help. Call or come in today to get your process moving.
Lowering your Monthly Payment
Cashing-out Equity
Consolidating Debt
Dropping Private Mortgage Insurance
Buy Down your Rate
Low-cost Refinancing
When you refinance, certain documents and information will help the process move forward more quickly. Below are listed some of the more common documents needed to refinance. The more information you have, the faster your refinancing will go.
You are likely to need:
Employment Information
Assets & Obligations Information
Insurance Information
People refinance for several reasons. You may like consolidating first and second mortgages, getting a lower interest rate, or lowering your monthly payment. Perhaps you want to switch from an Adjustable to a Fixed-rate Mortgage or stop paying Private Mortgage Insurance (PMI). Maybe you're just looking to cash out some of your equity for home renovations. Refinancing allows you to redefine your mortgage loan to fit your current needs better.
However, there are many things to consider before deciding to refinance your mortgage. With so many options, it's essential to refine your finances correctly. At Glory Mortgage, we’re happy to show you all your options so you can make the best decision on a refinance loan. If you want to find out if a refinance is right for you, call us today at 478-284-6548
Are you planning on moving soon, or are you in it for the long haul?
If you plan on staying in your home for over two years, then a refinance mortgage is a great option. Because a refinance loan requires closing costs, homeowners who plan to stay in their home for more than two years usually make up for those costs with lower monthly payments. If you want to move within the next two years, a refinance might be a good idea, depending on how far your rate drops.
Do you need to tap into the equity of your home?
For most people, a home is their most important and substantial investment. History proves that home values increase over the long run. If your home is now worth more than it was when you purchased it, you can use a refinance loan to access that extra value and turn it into cash to pay for unexpected bills, pay for college, or start a business.
Is it time to grow your home?
As families grow, homes can feel smaller. Refinancing your mortgage is a great way to grow money for a home improvement project. The most attractive part of this is that a home remodel can increase the value of your home. This refinance can pay for itself in the end.
Are the terms of your mortgage outdated?
Likely, your situation in life is not exactly what it was when you first closed on your home. If that's the case, your mortgage terms may need a little updating, too. Refinancing is a great way to switch from an adjustable to a fixed rate loan or to get into a 15-year loan as opposed to a 30 year.
Don't pass up the chance to improve your mortgage situation today by calling our lending professionals to see if refinancing is right for you.
These materials are not from HUD or FHA and were not approved by HUD or a government agency, and in some cases, a refinance loan might result in higher finance charges over the life of the loan.
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