When is Refinancing a Mortgage Worth It For You?
Refinancing your mortgage means you replace your existing mortgage with a new one. Your new mortgage pays off your old one, and you’re then responsible for paying off your new mortgage. But when — if ever — is the right time to do this?
When does it make sense to refinance?
The usual trigger for people to start thinking about a refinance is when they notice mortgage rates falling below their current loan rate. But there are other good reasons to refinance:
- If you’re looking to pay off the loan quicker with a shorter term.
- You’ve gained enough equity in your home to refinance into a loan without mortgage insurance.
- You’re looking to tap a bit of your home equity with a cash-out refinance.
- Mortgage rates have gone down.
- Your home has increased in value.
- Your credit has improved.
- Mortgage rates are going up and you currently have an adjustable-rate mortgage.
If mortgage rates are increasing and you currently have an ARM, you may want to consider refinancing and converting to a fixed-rate mortgage. That’s because with an ARM, your rate may increase beyond what you would pay with a fixed-rate mortgage. If you’re concerned over future interest rate hikes, a fixed-rate mortgage could provide some peace of mind.
MaraiD Lending Group offers you the flexibility you need when considering your refinancing options. We offer loan products for primary residences, second/vacation homes and investment properties. Some of our most popular options include:
- Conventional Fixed-Rate Mortgages
- Adjustable-Rate Mortgages (ARMs)
- Jumbo Mortgages
- FHA Mortgages
- FHA 203K
- FHA Streamline Refinance
- VA Mortgages
- VA Streamline Refinance
- USDA Mortgages
- Investment Property Loans (Fix N Flip and Fix N Hold)
How often can I refinance my home?
Limitations on refinancing can vary from state to state so you’ll want to check the regulations for the specific state where the property is located. Another factor to weigh is payoff fees, which are different from prepayment penalties.
While prepayment fees are meant to prevent you from paying off additional principal, an early payoff fee is a fee paid to the originating lender for loans that have only been on the books a few months. Any of our loan officer can tell you which types of loans carry these kinds of restrictions.
How long does it take to refinance a mortgage?
Many refinance loans can take 30-45 days to close but there are lots of exceptions if your finances are complex or you’re refinancing at a particularly busy time of year.
There are, however, steps you can take to limit your exposure to delays. Much of the documentation that you’ll need to provide for processing can be determined as soon as you know what kind of loan you will be applying for. Collecting and scanning documents like tax returns and income verification is a good start and can save you time during your application process.
What is equity? Why is it important for refinancing?
Equity is the appraised value of your home minus the amount you still owe on your loan. This is an important factor for refinance loans that require a minimum loan-to-value (LTV) percentage and for cash out refinances where you want to take a specific amount of cash out of your existing equity.
What documents are required to refinance?
Your documentation is what shows our underwriters that you’re a good fit for the loan you’ve selected. Here is a list of some of the most common documents that your loan officer may ask for:
- Proof of income – You will generally be asked to provide pay stubs for the past 30 days in order to verify income. Self-employed borrowers may be asked for different documentation.
- Copy of homeowners insurance – Verifying that your property is insured, or will be insured, is important to all lenders.
- Copies of your W-2 forms – Providing your W-2 forms will give your lender a much broader picture of your financial picture.
- Copies of asset information – Lenders are required to verify that you have the funds available to cover various expenses of the loan. You may be asked for statements for accounts that hold money for closing costs, statements for savings, statements for checking and 401(k) accounts and investment records for mutual funds or stocks.
- Copy of title insurance – A copy of your title insurance is important to help your lender verify your taxes, names on the title and the legal description of the property.
Your lender will also need to pull your credit report as a part of the refinance process, so have your Social Security number handy when it’s time to apply.
Is Now the Right Time to Refinance?
Ultimately, it’s critical to crunch the numbers to see if refinancing makes sense for you. Even if you’ve been unable to refinance in the past, loan programs and rates are always changing. These changes, along with rising home values in several markets, may enable you to reduce your rate or lower your monthly payments.
But you don’t have to go at it alone! MaraiD Lending Loan Officers are always ready to answer your questions and guide you along the path to a successful refinancing. Just call us Now: 305-742-8179 or send us an email: Refi@MaraidLending.com