Refinance Choices: Why & When?

Section 11: Refinance Choices: Why & When?

The following overview is intended to provide homeowners with information on lowering your mortgage interest rates, and/or consolidating your high interest credit cards, and other high interest debt into one loan with one low monthly payment. Further considerations include home-improvement and shortening the term of your mortgage to experience significant cost savings.

A. The "BIG 3" to Keep in Mind

Most borrowers wish to achieve one of three primary goals when refinancing.

Refinance Reason # 1 - The first and most common is to consolidate debt. If you have large payments on a number of high interest loans and/or revolving credit cards, you may benefit greatly by refinancing. Paying off those high interest credit cards and installment loans, and consolidating your debts into one mortgage with one overall monthly payment is an option many homeowners are allowing their equity to accomplish for them. Today, mortgage interest paid and P.M.I. is tax-deductible.

You may well save $200, $300 or more, every month by consolidating your debt. In fact, many individuals reduce their overall expenses considerably. 

There are long-range planning strategies to implement prior to initiating a refinance mortgage.
Individual savings potential will depend upon your home's appraised value, current mortgage and lien payoff(s), and the total dollar amount of debts. For specific debt consolidation examples, see Section 12: Debt Consolidation...DO's & DON'Ts!

Refinance Reason # 2 - The second goal some homeowners have is to simply lower their current mortgage payment by either refinancing at a lower rate of interest, thereby lowering their mortgage payment each month and improving their family budget. You may also wish to reduce the term of your mortgage saving you thousands of dollars!

Refinance Reason # 3 - The third common goal homeowners have is to pay off their current higher rate mortgage and turn some of their home equity into cash to use for other purposes. Depending on the current value of your home and your existing mortgage balance, you may be able to receive up to $100,000 cash-back to you.

B. Costs of Refinancing

In effect, refinancing is simply replacing one mortgage with another.  Your new loan will be processed and underwritten in virtually the same manner as your original purchase loan with the same requirements: Application, Appraisal, Title Insurance, etc.

The main difference between your new refinance loan and your original loan, as far as costs go, is that the loan costs can be "rolled into" the new loan amount and need not be paid out-of-pocket. Your equity may be paying for you to save money!

C. Let Your Home Help You

You've lived in your home awhile. You clean, mow, repair & replace…all the Homeowner Maintenance projects you fit in after work or on the weekend. Perhaps you want to remodel your kitchen, add a deck, or even put in a pool for you and your family. If you've lived there for several years, or, if you had a substantial down payment when you purchased your property, your home has most likely appreciated (gained value). As a no-cost client service, we can help you determine your appreciation level for you and let you know how much equity you can utilize to pay for home improvement…or just about any other financial need you may have. Depending on certain variables, the increase in your monthly mortgage payment may be minimal!

D. Getting Started & "Wait for Your Window"

Your FREE EZ PreQual is the ideal option to explore all of the possibilities which may be available to you. There are "windows of opportunity" available in the Market which you may not have considered which would exceed your expectations.



Serving the Great Mid-South Region
Offices: 901-388-1588 or 901-476-9100 |
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1 STOP MORTGAGE | NMLS#215671 | TN Lic#108931 | 5909 Shelby Oaks Dr, Suite 129, Memphis, Tennessee 38134