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Mortgage refinancing made simple!
There are many reasons to consider a mortgage refinance. Lowering your interest rate, paying off high interest debt, improving your cash flow or utilizing the equity in your home to pursue your other financial goals. Consumers have learned that in todays ever changing market, leveraging real estate to maximize your tax deductions and improve your financial flexability is critical to growing your wealth.
Rate and term refinancing explained:
A rate and term refinance is best explained by switching out your existing mortgage for a new mortgage without taking more than $2,000 cash back at closing or paying off any other debt with your new home mortgage. This can be a very beneficial way to lower your interest rates and save thousands of dollars on your mortgage. For example, if you have a $200,000 loan balance and you are able to lower your interest rate by 1/2%, you realize an interest savings of $63 per month, $760 per year and over $22,000 in total interest if you kept the loan for 30 years!
Cash out refinancing or debt consolidation explained:
Generally your home mortgage provides you with your largest tax deduction. Leveraging your home to consolidate high interest debt is considered a cash out refinance mortgage. The major benefit to this type of mortgage is improving your overall cash flow by eliminating multiple payments and consolidating this debt into mortgage debt. Generally you are able to write off your mortgage interest and this helps redistribute your debt to put you into a better financial position. Cash out mortgages also allow people to pull cash out of their home for investments, such as a down payment on a second home or investment property.
Second mortgages explained:
A second mortgage is simply a secondary mortgage secured against your property. This is technically in second lien position and would allow you to keep your first mortgage, but refinance to consolidate debt or take cash out of your home for home improvements. Many homeowners who secured below market interest rates on their first mortgage find a second mortgage to be an appealing way to borrow against their homes equity without redoing their existing first mortgage. Common types of second mortgages include: home equity loans, fixed equity loans, fixed second morgages. Some of these programs will vary in loan term from 5 to 30 years and may allow you to make an interest only payment of principal and interest payment.
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Refinancing Q & A
How is the market for Jumbo Loans?
The jumbo loan market was hit very hard with the tightening within the credit market. Traditional full document jumbo loans are still available. If you need to apply for a reduced documentation loan or have a high loan to value you should expect to have a considerably higher interest rate.
What happens if I owe more than what my home is worth?
If you owe more than what your home is worth and you are trying to refinance you have very limited options. You most likely wont find a lender that will redo your loan. You should explore obtaining a signature loan to potentially stay under 100%
I need to refinance over 90% of the value of my home, what is my best option?
Your best option may be to refinance into a fixed rate FHA mortgage. You would be able to do a cash out refinance up to 95% of the homes value if you are able to qualify.
Will I still be able to do a cash out refinance with lender program changes?
If you can document your income, have sufficient credit scores and are looking to borrow less than $417,000 you should be able to cash out between 80-90% of your homes equity provided your lender can get your qualified.
I have an interest only loan that I refinanced into a few years ago and the rate is locked for another 4 years, when should I start looking at refinancing?
This will depend on what your present interest rate is relative to the present market. Long term interest rates are relatively stable right now and 4 years presents you with a large window to make a move.
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