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Answers to all of your mortgage refinance questions

I refinanced 4 years ago into a 15 year mortgage, but now I struggle with the house payment. Is it a good idea to refinance, even though I only have 11 years remaining on my mortgage?

You should review your entire financial plan with an advisor. If you are struggling with your present bills, refinancing may be your only option so you avoid increasing credit card debt or damaging your credit.

My credit report shows a deed in lieu, will this hurt my ability to refinance?

Yes, there is a good chance this will impact you when you are refinancing. This will depend on how long ago the deed in lieu was reported. Most lenders treat a deed in lieu similar to a foreclosure.

If I am refinancing to pay off a spouse in a divorce, will my title be cleared?

This is a very specific scenario, and every state treats title work and marriage rights separately. We would suggest you contact a real estate attorney in the state you reside.

What does the term seasoned second mean, and how does it apply to a refinance?

The term seasoned second refers to a 2nd mortgage (line of credit), that has been in place for over 1 year and has not been drawn against. This allows a lender to consider paying this off as a rate and term refinance, versus a cash out loan.

When my loan goes into underwriting, what does that mean?

This is a process of when your lender will review all of your applicable mortgage documents, verify your employment, order an appraisal, etc. This is their process of ensuring you qualify for a mortgage.

Should I consider refinancing if my arm will be adjusting in 2010 or should I wait?

This will depend on your present interest rate, the length of time you plan to be in your home and your overall financial situation. Mortgage rates are still at a great position, and long term rates are very attractive.

I have heard there are 10 year adjustable mortgages, what does this mean?

This generally would refer to a loan that has a 30 year term, and a fixed rate for the first 10 years, after which it would adjust.

On a 100,000 loan, how much interest would I save lowering my mortgage rate by 1%?

The difference in payment on 1% on a 100,000 dollar loan is about $ 65 per month. Over a 30 year period this equals $ 23,400 in interest. If you simply lowered your mortgage rate by .25% and never changed  your loan term you would still save over$ 5,760 in interest.

Do all lenders require an appraisal on a refinance mortgage?

Most lenders have loan programs that may allow them to waive the appraisal requirement. This would take into consideration the expected loan to value, debt  to income ratios and what type of mortgage you are applying for (cash out versus rate and term refinance).

I am looking to refinance a mortgage on a second home, what will be different in comparing mortgage quotes with second homes?

There should not be a significant difference in comparing a mortgage quote from a primary to second home. There are certain variables that would change this such as, the loan to value, credit score, and purpose of the mortgage refinance.

How does refinancing my mortgage affect my credit score?

Generally the only time refinancing would effect our credit score is if you were to take cash out off your home to pay down or off revolving debt, or collections. Then you may see an improvement with your credit scores.

Is it a good idea to take out a home equity loan to pay for home improvement projects?

Depending on where your first mortgage is at relative to the market, (if you have a below market interest rates). Utilizing an equity loan should allow you the benefits of a tax deduction for the interest on the mortgage, without having to redo your mortgage.

Is there a difference between origination and loan discount points?

Yes, the major difference is that loan discount points are generally tax deductible.

What does the margin refer to on an adjustable rate mortgage?

Margin is a term that reflects the amount or percentage you would add to your index (example, LIBOR) to calculate your new interest rate. For example,if you had a margin of 2 and added this to the 6 month LIBOR you would have an interest rate of 7.33, rounded up to 7.375%.

I want to refinance a construction loan, do I have to go through the original lender?

You should not be required to go through the original lender., unless you specifically signed a contract to that effect. You may receive a discount if they would like to retain you as a client. It would be wise to compare a few mortgage quotes.

I live in Iowa, midwest home prices have declined in some areas will this make it harder for me to refinance?

This will possibly impact our ability to refinance depending on your overall equity position, what your goal is with exploring a refinance and whether or not your appraisal indicates you are in a declining market.

If I take out a home equity loan to pay off some credit card debt, will I be able to refinance for a better interest rate in the future?

If we assume that this will improve your credit scores, you may be eligible to refinance in the future for a better mortgage rate. Generally your mortgage rate is a factor of your loan to value, credit score and debt to income ratios.

I am thinking about retiring in the next 10 years, should I try to have my mortgage paid off?

This was once a popular goal for many people who approached retirement age. In order to evaluate if this is the best option you need to asses your other assets, their rate of return, your projected tax bracket  & financial goals. We would suggest you meet with a financial planner.

I just received a mortgage quote to refinance my home, what is PMI?

PMI is also referred to as private mortgage insurance. This is required on certain loan programs when you do not have twenty percent equity in your home.

I am thinking about refinancing, what is the biggest mistake most people make when refinancing?

There are a number of areas where you could make a mistake on a refinance. The best way to ensure you are making the right decision, with the right lender is to clearly identify your goals, compare a few mortgage proposals, and move forward with the lender that you believe offers you the best program. This program may not necessarily have the lowest mortgage rate, but encompasses all of your goals financially.

When I compare mortgage quotes, what are considered third party fees?

Generally third party fees are referred to items such as your appraisal, title work, title insurance policy, recording fees, etc. They are not considered as fees paid to your lender to close your mortgage.

If the FED lowers the prime rate, should I keep my adjustable mortgage or should I still refinance out of this?

This is a great question. You should review your mortgage note to see where your current rate would adjust too based on your present index and then compare this with a few mortgage quotes. Long term fixed mortgage rates are at a very good level and this may be a great time to lock in a low fixed rate.

I would like to refinance into a 20 year term loan, will interest rates be lower on this type of mortgage?

Many lenders today offer both 20 and 25 year mortgage loans. Generally these mortgages have interest rate very similar to that of a thirty year mortgage loan.

I am exploring a refinance to pay off my equity line of credit and some credit card debt, will I be able to do this with 1 loan if my home does not appraise with twenty percent equity?

Many lenders now offer refinance options that go above 80% of your homes value. You may be required to pay mortgage insurance, although some lenders have programs with no MI over 80% loan to value.

I want to get the lowest mortgage rate, will I need to pay points?

This will depend on the lender and what loan program you decide on. Typically you can buy down the interest rate on a mortgage, by purchasing discount points up front. You will need to review how long you plan to keep your mortgage to determine if this is a good investment.

My home was just recently appraised by a local bank, will I be able to use this to refinance with a different lender?

Every lender has their own set of guideline with regards to appraisals. They may consider using this appraisal if its an appraiser they are familiar with and depending on what type of loan program you are qualifying into.

I originally took out a 15 year mortgage on an investment property that I now would like to refinance to try and improve my cash flow, what are the benefits of refinancing this with an interest only loan?

The major benefit to refinancing this mortgage with an interest only loan would be more control over your cash flow. In most cases you can always pay extra on your interest only payment, but this type of loan provides you with a very low house payment, which may be beneficial if you are in between tenants.

If my credit score is below a 670, will I be able to qualify for a debt consolidation refinance to 100% of my homes value?

There are other important variables that will ultimately decide your ability to qualify such as your mortgage payment history, debt to income ratios, assets and your employment history. Many lenders can do 100% financing with credit scores at 620 or higher.

I want to apply for a second mortgage but would like to have a fixed interest rate, is that possible?

Most of our lending partners offer fixed rate second mortgages, on a wide range of terms from five to thirty years. Many lenders also now offer a fixed interest rate home equity line of credit. Traditionally this has been a variable loan with an interest rate attached to prime.

I bought a home late last year, how long before I can refinance this?

You can pursue a refinance at any time. There may be certain limitations on loan programs that you may, or may not be eligible for on a refinance due to seasoning requirements that loan programs may have. Seasoning requirements refer to utilizing a homes new appraised value versus its purchase price for a refinance during the first year of ownership.

I am considering refinancing my home mortgage to consolidate my credit cards, should I look into an interest only mortgage?

Depending on your ability to qualify, there are many benefits to an interest only mortgage including; increased cash flow, payment flexibility and the option to always pay towards your principal balance. We would recommend comparing an interest only mortgage with a traditional mortgage and determine which loan will help you accomplish your financial goals.

I plan to retire in 10 years and want to pay off my house as soon as possible, should I refinance into a 15 year mortgage?

We would recommend you meet with a financial planner to review your entire financial picture. Refinancing into a 15 year mortgage may be an option, but you need to asses how this may impact your savings ability and cash flow.

I live in California, is there a difference in mortgage interest rates between states?

Mortgage interest rates and closing costs will vary from state to state and lender to lender. Different states may have different required fees associated with specific loan programs. The best way to insure you get a competitive mortgage quote on a California mortgage loan is to compare a few mortgage quotes from top lenders, of the same type of loan program.

Should I refinance out of my present adjustable rate mortgage, my interest rate is locked in until 2009?

This I often a situation that requires a number of follow up questions to best answer. You should analyze these points: How long are you planning to stay in your home, when you rate adjusts initially how much could it adjust up or down, how often will it adjust beyond that, do you presently have any inefficient debt (credit cards). We would also recommend pursuing a free mortgage quote to do an comparison to your present mortgage

The Federal Reserves just announced they would not change rates, does that mean my adjustable rate mortgage will stay at the same rate?

Almost all adjustable rate mortgage loans will adjust based on the terms spelled out in your mortgage note. The feds decision to leave the prime rate at 8.25 will indirectly effect your mortgage by influencing the index that your note is tied into.  It is important to understand that the federal reserve does not directly raise or lower mortgage interest rates when they change the fed funds rate. Changing the fed funds rate, effects how banks borrow money and ultimately is felt in many areas of the economy, but is not directly tied into mortgage interest rates. Mortgage rates are generally priced based on mortgage backed securities and mortgage bonds which can be impacted by the overall economy and factors such as job growth, GDP, housing starts, PPI, CPI and other world economic events.

I just received a mortgage quote and I think I have a pretty good offer for a new mortgage, when do I lock in the mortgage rate?

This is an item you should review with your lender. Every lender's policy is different for how they handle rate locks. Important factors will be how soon you will be ready to close and whether or not there are fees to lock the rate.



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