Refinance Facts & Opportunities

Refinance Facts & Opportunities

Mortgage rates have fallen again after the Fed’s decision to not raise interest rates this September and many homeowners are refinancing. With such great rates, our refinance applications have again increased by 15% from last quarter.

On the Easterbrook Team, we focus on purchases, so most of our refinances come from our past clients.  We get them into the best loan possible at the time they buy their home and we wait for options to pop up for them. Here are some of your options:

Rate and term refinance: This is the most common form of refinancing generally because they offer the best rates. A rate and term refinance replaces a mortgage with a new loan at a lower interest rate. Generally a rate and term only allows a borrower to cash out between $500 - $2000 (depending upon loan type). Fact: divorce buyouts are generally an exception to the cash out rule. We can offer the best rate to a spouse buying out a departing spouse and not have to charge extra for a cash out refi. 

Cash-out refinance: This is a refinance where more money is borrowed than the outstanding mortgage balance plus expenses and the difference is paid to the borrower in cash.  Many of our borrowers are using the proceeds from cash out refinances to pay off high-interest debt, make home improvements, pay for college tuition, or buy more real estate. 

Shorten the term: Many of our borrowers have increases in their income or their situation allows them to make a higher payment.   Cutting the timeframe for the mortgage to 20, 15 or even 10 years can be a great option to allow for lower income in retirement years.

Refinance to get rid of mortgage insurance: If a down payment of less than 20% was paid for a purchase, there was probably mortgage insurance on the loan. But in the years since the purchase, the principal balance has been paid down and, more important, the value of your house went up a lot. If the outstanding loan amount is less than 80% of the home's appraised value, it may be possible to refinance into a loan without mortgage insurance.

This can be an especially valuable tactic for borrowers with a mortgage insured by the Federal Housing Administration -- also known as an FHA loan. With modern-day minimum down FHA loans, the mortgage insurance stays on for the life of the loan. The way to get rid of FHA mortgage insurance payments is to refinance (or to sell the house).

Our loan processes are more streamlined than they have ever been.  We’re truly confident when we say that “We Make the Loan Process Easy”.  Call us today (916) 850-6050.