Refinance CenterThinking about refinancing your home can be just as daunting as it was when you bought for the first time. Mortgages are always changing and the media is full of advice on what you should or shouldn’t do. How do you make sense of it all? We can help. We will sit down with you, discuss your current loan, look at options, and actually crunch numbers before you start spending time or money on refinancing. No sales pitch, no gimmicks, just sound advice that you can trust.
When Is Refinancing Worth It?A definite bet would be when you can get a rate that is 2% below your current interest rate. Even if the difference is less, it might still be worth it. Consider how long you expect to live in the home, if you can roll the closing costs into the loan, and what the difference will be in your payment. Divide the total costs by what you will save each month- the result is how many months it will take to break even on the deal. Then you will know if it is worth it. Reasons to RefinanceRefinance and renewal do not mean the same thing. A renewal really doesn’t take too much thought, and doesn’t require too much effort. A refinance requires almost as much as buying the home the first time. You still have to apply and be approved. You might chose to refinance at renewal, refinance for extra cash, to reduce your interest rate, or if you are having credit problems. You might also refinance because you have cleaned up your credit problems and now want to get a better rate. It is worth looking into as well, if you have pre-payment penalties on your current loan, because, depending on how much interest you can save in today’s volatile market, it might still be worth it. How Much of Your Home’s Value Can You Borrow?This depends on a variety of factors. Most borrower’s can borrow up to 80% of the value of their home (after all mortgages are totaled), and some can borrow even more. There are several loan options to borrow more, some require PMI insurance, and there are also 2 mortgage options like the 80/10, 80/15, or 80/20. The biggest appraisal issue that we are experiencing in our area of the country right now is availability of comparable sales to determine value. To get a fixed rate loan, the home’s appraisal must meet Fannie Mae and Freddie Mac guidelines, and these have become more strict with the sub-prime market crisis. Those guidelines require 3-5 comparable homes that have sold within the last 12 months, within a certain mile radius of your home. Sometimes that can be difficult for an appraiser. Homes similar to yours may be being built all over Sullivan, but if they aren’t sold, they can’t be used as a comparable, therefore, can’t be used to help determine the value of your home. Applications |
