Loan Program Options to Refinance
There are lots of reasons to refinance, including:
- Get a lower interest rate and a lower monthly payment
- Change the type of loan (for instance, from a variable-rate mortgage to a fixed-rate mortgage)
- Get cash out for a big purchase
- Shorten a loan term and build equity more quickly
- Consolidate debt
Whatever your reason, look to Crestico Funding to help you determine if now is the right time to refinance. We’ve got 30 years in this mortgage loan industry behind us, and we’ll help you figure out the best loan options for you, get your paperwork in order, and get your new loan closed as quickly as possible.
Refinancing is easier when you have your documents ready. Here’s what we’ll need when we start your refinancing process:
- Most recent paystubs for one month
- W2s from the last two years
- Signed copies of your last two years’ tax returns, including all schedules that were filed
- Most recent bank statements for two months
- Most recent statements from any retirement and investment accounts for two months
- Homeowner’s insurance policy
- Property tax bill
- Mortgage statement(s)
There many things to consider when refinancing your home loan. The fees associated with refinancing can add up quickly so, many mortgage companies will waive fees associated with refinancing applications and legal fees. This fee reduction can amount to large savings for the home owner but may result in a slightly higher percentage rate than expected. It is important to talk about your loan options with your loan officer. Additionally, the amount of time you plan to spend in your home will impact your decision to refinance. Many mortgage lenders will allow home owners who expect to live in their home for a minimum of three to five years to pay ?points? and closing costs upfront. This option ensures the home owner obtains the lowest percentage rate available.
Evaluate Your Assets
Saving money is important to many consumers in today’s economy and refinancing your home loan is one way you can lower your monthly payments. A careful analysis combined with the advice of your mortgage broker will ensure that you make the right decision. The costs associated with refinancing are similar to those of obtaining an original home loan and include legal fees, application fees, settlement costs, and other related fees. When refinancing, additional fees will arise and they can include a fee charged if you paid off your original mortgage early, the points associated with the refinance, and the home loan interest rate. Typically the cost runs between three and six percent of the total amount of the home loan. However, many mortgage brokers can offer zero point loans and low-cost refinancing. Therefore, even if your rate change is less than one percentage point, you may be able to save some money by refinancing. Contact your home loan advisor to discuss the various costs and laws governing the fees charged by mortgage companies and the potential savings you can enjoy.
The decision on whether or not to refinance has, in the past, meant balancing the savings of a lower monthly payment against the costs of refinancing. In recent years,mortgage lenders have introduced “no cost” and low-cost refinancing packages that minimize or completely eliminate the out-of-pocket expenses of refinancing. With traditional refinancing, the interest rate for your new mortgage is often about 2 percentage points below the rate of your current mortgage. However, with the newer low and no-cost refinancing programs offered, home owners can find it valuable to refinance to obtain a smaller reduction in interest rates.
Will Paying Points Affect My Rate?
When home owners make the decision to refinance their home loan they must decide which interest rate will work best for their situation. There is typically a range of interest rates at different amounts of points. Remember, a point is equal to one percent of the loan amount. When you work with you your home loan representative you will be able to analyze the different interest rates and related points, which can save you money. Some combinations of interest rates and points may cause your monthly payment to increase though. Be sure to discuss all options with you home loan advisor before making a decision.
Your Second Refinance
Refinancing makes sense for many of our clients because refinancing can result valuable savings. Now is also a good time to refinance for a second time. The timing is important because when interest rates are falling quickly you can reduce your monthly payments even further. Your mortgage brokers will also help you understand the tax write off associated with a second refinance. The money that American?s are saving can be used to build emergency cash funds, build additions onto their homes, or they can save it for a child’s college fund.
Refinance and Taxes
Mortgage brokers are knowledgeable of the laws governing taxes that are related to mortgages. Many homeowners find the tax issues related to the home loan refinance process confusing, but your mortgage broker will guide you through the process. To explain briefly, the Internal Revenue Service (IRS) has ruled that interest paid for refinancing must be deducted over the life of the loan. However, if the home loan is being used to make improvements to your house, the borrowers may be permitted to deduct a portion of the interest right away. The exact tax laws concerning refinancing are complex and the details should be discussed with your mortgage broker. The IRS website, www.irs.gov, may also be helpful when gathering general information on the subject of taxes and refinancing.
The costs associated with refinancing are similar to those of obtaining an original home loan and include legal fees, application fees, settlement costs, and other related fees. When refinancing additional fees will arise and they can include a fee charged if you paid off your original mortgage early, the points associated with the refinance, and the home loan interest rate. Typically the cost runs between three and six percent of the total amount of the home loan.