Blog with MAE Capital

More on When to Refinance

October 20th, 2014 5:39 PM by Gregg Mower

So is it time to refinance my home?  A question millions of Americans are now asking themselves.  I have written numerous articles on this subject so if you want more than I am offering in this post scroll through my previous posts and there should be three to five more articles on this subject.  Since we have had tremendous volatility in the Stock Markets of late, investors have taken their money from equities and placed into more secure long term bond investment.  This has pushed rates to a new two year low so if you have been contemplating refinancing to lower your monthly payments or take some cash out of your home this would be the window of opportunity you have been waiting for. 

If you are contemplating lowering your payments by refinancing there are several things you should be aware of other than your interest rate.  The first of which would be the value of your home, has it gone up or down since your last refinance or when you bought the house?  If the value has risen and you had either FHA mortgage insurance on your home or conventional mortgage insurance you might just get a double bump downward.  If you bought your home using an FHA loan and the value has risen you might be able to refinance to a conventional loan and either lower the mortgage insurance or eliminate it all together.  Just the elimination of your mortgage insurance could lower your monthly payment a few hundred dollars a month without even lower your interest rate.  If you have increased your equity by 10% since you bought, or your last refinance, you might still be able to lower your monthly mortgage insurance and coupled with a lower rate be able to significantly lower your monthly payments.  Any combination of lowering your monthly mortgage payment is a good thing, so don’t assume that your interest rate not being lower would stop any discussion of refinancing your home.  We have actually refinanced folks to a higher interest and lowered their monthly payments significantly simply because we eliminated their mortgage insurance. The analyses is simple, all we need is your home address and a current mortgage statement and we can determine the value of your home and if we can help get rid of your mortgage insurance, lower your interest rate and lower your overall monthly payment.

You may not know that you can refinance your current mortgage to another type of loan to lower your payments as well.  For example; you have an FHA loan on your home now you can refinance to a Conventional loan or a VA loan to lower your payments and or take cash out of your equity.  If you had never used your VA benefits and you bought a home a year ago or more and you still have little or no equity in your home you can use your VA benefits to do a 100% loan-to-value loan on your home and drop your FHA mortgage insurance.  You may have a private loan on your home now and need to refinance, you can use an FHA or VA or conventional loan to do so.  The possibilities are endless, but if you don’t make the call you can’t find out if you can be helped.  The phone call is free and for the most part so is our services as they are paid for by the lender in the interest rate.  Which also brings me to another point, that is, you can always put money into your home to buy down the equity and qualify to drop your mortgage insurance.  You could also buy down the interest rate by paying more points, you see the more points you pay the lower the interest rate you can get.  However, when doing this there would be a tradeoff of buying an interest rate or simply paying down your existing loan amount.  Again this would be an analysis that we would do for you.  You could also use one of our easy to use calculators, but I would recommend the human touch to give you the right answers and so you get it right the first time.

There are types of refinances that are available right now to help you if you have little or no equity even if you owe more than the home is worth.  If you have an FHA loan you can use the streamline refinance option.  This refinance allows you to refinance your loan to a lower rate with no appraisal and no real qualifications.  The catch to this loan is that you have to have made your mortgage payments on time for the last consecutive 12 months with no late payments.  This is also offered if you have an existing VA loan, it is called an “Interest Rate Reduction Refinance Loan” or IRRRL “earl” ,as we call it in the industry.  Conventional Loans have a similar program; it is called the Home Affordable Refinance Program or “HARP”.  The HARP loan is offered for those that have their mortgage currently securitized by the Federal National Mortgage Association “FNMA” or Fannie MAE and or the Federal Home Loan Mortgage Corporation or FHLMC or “Freddie Mac”.  That sure is confusing just by the names, but  to find out if your loan is securitized by one of those two agencies simply give us a call and we can look it up for you or you could go to their linked sites and look it up yourself.  The HARP loan will not only require you to have made your mortgage payments on time you will also have to have a minimum credit score.  Unfortunately, you can’t do a HARP from a conventional loan to a FHA loan or a VA loan.  All these types of refinances that don’t require an appraisal will have be done from like loan to like loan, such as FHA to FHA and VA to VA and Conventional to Conventional. 

Taking cash out of the equity of your home to buy other things or home improvement will require that you have equity built up in your home and that would have to verified with an appraisal.  The good thing is that if you do have significant equity in your property we can take up to 70 or 80% of the value of the home out in cash if you can income qualify.  This is not for everyone as using your equity in your home to purchase items is a risky business and does not bode well for retirement planning.  Most people that do take cash out of their home should have a good financial plan in place, but the problem is most folks don’t.  We don’t do financial planning as we don’t hold the license to do so; however, we can and will explain the ins and outs of changing markets and what history has shown with regards to taking too much out of your home. 

So if you have been thinking about refinancing your home give us a call, we can easily and quickly determine what is best for you.  Let our licensed Loan Professionals guide you through the process.  We hold both a real estate license as well as the NLS license so we can easily ascertain the value of your home and answer all your real estate questions.  As usual leave any comments or continue to research our site for more answers but don’t forget to contact us to help you get this started.

Posted in:General
Posted by Gregg Mower on October 20th, 2014 5:39 PM

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