Refinance

Below is some information about refinancing.
To get started immediately click here for our on-line application.

There are many reasons to refinance your home mortgage loan. Refinancing allows you to have lower monthly Mortgage Payments. This can be done by refinancing into a new, lower-rate home mortgage loan, a fixed ARM combination, or an adjustable rate mortgage. You can obtain fixed monthly payments by refinancing your loan into a new fixed rate loan. You have the option to consolidate debts from your home's equity by refinancing your mortgage loan.

When refinancing your mortgage, you'll be actually replacing it with a brand new loan. By doing this, you can expect to go through a mortgage application process similar to what you have experienced with your original mortgage. Refinancing is often a good financial decision that can allow you to meet a variety of needs:

• Free up cash for large expenses or to consolidate debts.
• Pay off your mortgage quickly (accelerating the build-up of equity) by shortening the term of your loan.
• Decrease your monthly payments by taking advantage of lower interest rates or extending the period of repayment.
• Decrease your interest cost over the life of your mortgage by taking advantage of lower rates or shortening the term of your loan.
• Decrease your interest rate risk by changing from an adjustable-rate to a fixed-rate loan or from a balloon mortgage to a fixed-rate loan.

Rate-Term Refinance vs. Cash-Out Refinance

A rate-term refinance has a loan amount that is just enough to repay the balance of the existing mortgage. The purpose of this loan is to either reduce your interest rate, adjust your loan term, or both. A cash-out refinance, however, has a loan amount that surpasses the current mortgage balance. The higher loan amount converts part of the home equity into cash proceeds, which you will receive at loan closing.

When to Refinance

A general rule of thumb is that if interest rates are 1/2% to 5/8% lower than your current interest rate, it is considered a good time to refinance. Numerous homeowners consider refinancing when interest rates abruptly fall or there is an adjustment in financial circumstances. Although a large decline in rates or an opportunity to pay off debts may make refinancing seem an easy decision, you shouldn't consider any individual variable on its own. You need to consider how long you plan to stay in your home and how you plan to use your equity. You also need to consider how refinancing will support your overall financial goals as well.

Selecting the mortgage that best fits you is critical to the refinancing process. Knowing and understanding your options is important. You will need to consider two things at the beginning: which loan type best fits your refinancing needs, and what loan term offers the ideal schedule of repayment.

Loan Types

The majority of home loans fall under one of two categories: fixed-rate mortgages and adjustable rate mortgages (ARMs).

• Fixed-rate mortgages have interest rates that will remain the same for the whole loan term.

- You will be protected from rising rates.

- Fixed-rate loans are a sound refinancing option when rates are low.

- You will have expected monthly payments during the life of the loan.

• Adjustable-rate mortgages have interest rates that adjust occasionally based on the conditions of the market.

- Due to the lower initial rate, ARMs can be a sound way to refinance when rates are not particularly low.

- The preliminary rate is fixed for a starting period (usually one to ten years), and is usually lower for a fixed-rate mortgage. After that, the rate will adjust annually based on the index of the market; however it cannot go above a predetermined adjustment cap.

Loan Terms

The “term” of a loan is the duration you will spend repaying the loan. The most typical loan term is thirty years, but there will be other options as well, including twenty, fifteen, or ten years. Having a longer or shorter loan term will depend on a number of factors, most likely your monthly income and long-term financial goals.

• Shorter mortgage terms will result in higher monthly payments and allow you to pay off the loan more quickly and save money on interest.

• Longer mortgage terms will result in lower monthly payments, and are a sound option if you're on a limited budget or would favor directing your monthly cash flow towards other investments or costs.