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.
