What Every Home Owner Should Know About Refinancing

 

Surrounded By A Sea of Refinancing Confusion!

There are probably many "lifesaving" tips people have thrown you to help you determine the right time to refinance your home. You may have heard that the interest rate on the new loan must be at least two percent less than the old loan, or it is not a good decision. Another frequently quoted, but just as frequently incorrect statement, is that if your loan is less than two years old, you shouldn't refinance it now.

 

Neither one of these statements is entirely correct, and it can be extremely difficult to receive unbiased and accurate information about the refinancing decision and process. It is my desire to offer you a clear, concise guide to help you get rescued from that sea of refinancing confusion. This report has been designed to provide unbiased information that will help you make an educated decision about whether or not to refinance your home mortgage.

 When Should I Refinance my Home Mortgage?

Put very simply, the decision to refinance a home should be based on whether you will own the property long enough to recapture the expense connected with the new loan. The way to figure this can be as easy as subtracting the proposed new house payment from the existing payment to find out what the monthly savings will be. Then, divide the monthly savings into the cost of refinancing to determine how many months it will take to recapture that cost.

There are some situations in which a refinancing decision should invariably be made. If you are able to negotiate a "no-cost" mortgage (you pay no points or closing costs), and if the new mortgage rate is lower than your existing rate, than refinancing your loan would certainly be of financial benefit to you. If the remaining mortgage balance, including points and closing costs, can be refinanced at a reduced monthly payment, and still be paid off within your existing mortgage payment term, then refinancing would be highly advisable. If you need extra cash for a home equity or auto loan, and the mortgage rate is lower than alternative loan rates, then refinancing is probably the best choice. Lastly, you can generally count on it being time to refinance when your new mortgage rate is at least one to two points lower than your existing rate, and you plan on staying in your home for at least three to five years.

What Refinancing Myths Do I Need to Watch Out For?

One widespread myth that needs to be dispelled, is the idea that lowered monthly payments are the financial yardstick that wise refinancing is measured by. Monthly payments are only comparable if they are based on the same loan duration! In fact, lowered monthly payments can be achieved even at a higher mortgage rate, if the new mortgage has a longer term than the remaining years of the old mortgage.

Another common misconception about refinancing is that if the new rate is not at least two points lower than your existing mortgage rate, then refinancing is not worth the time and trouble. In many cases, especially if you are planning to stay in your home at least three to five years, even a one point reduction can make an enormous difference in your overall home mortgage cost. In addition, with the constant technological advances in the mortgage industry, obtaining a mortgage loan or refinance is now faster and easier than ever before. If you have any confusion or apprehension about your refinancing decision, you can contact me at (925) 997-1156. I will be glad to meet with you at your convince to review your situation at no charge or obligation.

What Exactly Do I Need To Consider About Refinancing My Home?

To accurately sum up your refinancing decision, you need to thoroughly consider the following five factors:

  1. The amount of reduction in the mortgage interest rate
  2. The amount of reduction in the monthly payment
  3. Any prepayment penalties on the old mortgage
  4. The amount of closing costs, including any points loan origination fees, application fees, inspection fees    appraisal fees, title insurance, mortgage insurance, etc.
  5. The number of years you plan on retaining your home
 What Will Actually Be Involved When I Refinance My Home Mortgage?

When you refinance, the proceeds from your new mortgage loan are used to pay off your old mortgage. Even if you use the same lender this is true. You are not simply re-negotiating the terms of the old mortgage, such as reducing the interest rate.

You will receive back the old note that you signed, the mortgage contract, and your lender will file a Mortgage Record Change. You will sign a new note and mortgage contract which your new lender will record. No money will pass through your hands, unless you borrow more than your old mortgage balance. However, you must pay for points and closing costs unless you finance those as well as the old mortgage balance.

You need to expect that your home will have to be appraised again, and possibly inspected. Your credit history will be reviewed again, and there will probably be changes in your mortgage and title insurance.
 
Of course money doesn't just grow on trees, but if it is truly the right time for you to refinance, then with the money you will be saving after twelve to eighteen months, you should begin to feel like your money trees are in full bloom!

Refinancing and consolidating your debt with an Classic Home Loans loan can lower the total amount you pay out each month. You can even arrange to have extra cash. Here are some reasons you may want to think about:

  • Consolidate your high-interest debt. Consolidate high-interest debt such as credit cards. Your overall monthly payments will be reduced and may even be tax deductible.*
  • Get extra cash. Refinancing can give you extra cash for the things you've always wanted to do. Like taking that long-deserved vacation, or paying for a college education. It's your choice.
  • Home Improvement Loans. Fix the roof, purchase new kitchen cabinets, or remodel to increase the value of your home.
  • You'll get your money fast. And we can close your loan in days, not months.
  • 24 hour preliminary approval. You'll know if you qualify in as little as one day.
  • Take a 30-day break from payments. Your first payment is usually not due for 30 days or more.
  • The care you want. The service you deserve. As your mortgage specialist I will take care of you through every step of the loan process - from application to approval.
 We’ll help you qualify even if other lenders have turned you down

Classic Home Loans looks beyond the numbers and credit reports. We regard you as an individual. After all, you're a homeowner. You've already shown you know what it takes to succeed. Even if others have turned you down, Classic Home Loans wants to give you the respect and credit you deserve.

We're different - and it's a difference that can save you time and money.
  • Hard to prove income. We have home loans that don't require traditional income documentation.
  • Too much existing debt. Conventional lenders will turn you down if they think you have too much debt. At Classic Home Loans, our flexible lending standards let us look at you as an individual.
  • Less-than-perfect credit. We specialize in debt consolidation even if your credit is not perfect. You're not alone. We can help.
  • Bankruptcy or Foreclosure. Even if you've had a bankruptcy or foreclosure in the past, we'll work hard to help you get the cash you need.
*See your tax advisor for details.

The 30-Day Break From Payments is an available feature on all home loans from Classic Home Loans. For example, if a Classic Home Loans loan closes between June 2 and June 30, the first mortgage payment would not be due until August 1, thus allowing a 30-day or more break from payments.
I Can Do All of this For You At No Cost or Obligation

I, Aaron Thomas, Bay Area Mortgage Expert, am trained to take care of all those details for you, and I will gladly meet with you at your convenience to discuss your specific refinancing situation. This consultation is absolutely free, and there will be no obligations or salespeople hounding you if you decide that it is not the right time for you to refinance. Remember that refinancing your home mortgage does not need to be a tedious, overwhelming task.

 
Please contact me directly at 925-997-1156 for a FREE home loan analysis to determine exactly how much you can qualify for.
Let me show you just how quick and hassle-free creating increased cash flow through your home mortgage refinance can be!