Refinancing, is it right for me?

REFINANCE YOUR MORTGAGE?

Why Refinance back into a 30-Year Loan? One of the biggest reasons homeowners refinance their mortgage is to obtain a lower interest rate or lower monthly payments. By refinancing, you will pay off the existing mortgage and replace it with a new one.

There are several refinancing loan programs available depending on your current credit scores, debt-to-income ratio, type of income and asset documentation you use. Also there are loan programs with “no-points/no-fees” which are known as “no cost” to the borrower. In the no-points/no-fees scenario, you will pay a higher interest rate to the Lender for them to pay off non-recurring closing costs for the borrower. These are “one time” fees such as Escrow, Attorney Fees, Title Insurance, Document Preparation, Tax Service, Flood Certification, Processing and Underwriting fees, etc. You are still responsible for recurring fees such as Home Owner’s Insurance and Property Tax payments. I will find the best program and lowest rate available for your current situation.

Refinancing typically occurs when mortgage interest rates drop significantly, but borrowers with recently improved credit scores (from paying off credit card debt, making mortgage payments and car payments on time, etc.) are often candidates for better interest rates as well. If you haven’t checked your credit score in a while, it’s a good time to call me to see what you may qualify for.

The question most of my Clients ask is, “Why should I go back into a 30-year loan?” There are different views on this subject. I will work directly with you and your Financial Planner (if you have one) to determine what fits best for your current needs and future goals. If you would like a referral for a very good Financial Planner, please contact Jeffrey Allen at The Rein Group 952-542-0734 or email JeffA@TheReinGroup.com .

One option is to take the route of the “same payment” refinance, and actually pay off the loan faster and save money on interest fees in the long-run. If refinancing gives you a lower monthly payment, you can still continue making the same payment as your previous loan, and the extra money will be applied to the principal balance. This will pay off your new loan much faster and save you a lot of money over the term of your loan!

For example: Let’s say you have 25 years remaining in your current loan, and you refinance to a 30-year loan with a slightly lower rate, giving you a savings of $200 per month. (Note: This is only an example, the actual amount could vary.) You could then take that extra $200 per month and apply it toward the principal on the new loan. At this rate, the loan will be paid off in 22 years and 4 months.

Regardless of the reason to refinance, I will need to know terms of the existing loan, review your immediate and long-term goals, and provide comparisons for new loan programs available. Refinancing could also give a potentail deduction at tax time. I will present all the available options having your best interest in mind.

Due to the “Anti-Predatory Lending Laws” in Minnesota, refinancing your Mortgage needs to have “Net Tangible Benefits” for the Underwriter to approve the loan. This is done to protect the consumer. Some benefits are: lower rate, monthly savings, shorter term, and cash out for home improvements, debt consolidation or paying off delinquent taxes.

Being a Mortgage Professional, my goal is to provide you with the very best service possible. Please call me direct at 763-515-5050 with any questions you may have. As always, referrals to family, friends, neighbors and business associates are always appreciated!

Happy Holidays!
Steven