Is it Time to Revisit Your Home Loan?
A Rundown on Mortgage Refinancing
A refinance replaces your current mortgage loan with a new one – usually to lock in a lower interest rate or shorter loan term. It can help you save money, reduce the total interest you pay, and even tap into your home equity. Ready to explore refinancing options?
Ready to Take Advantage of Shifting Rates?
Here’s How a Refinance Could Help You:
Save More
Refinancing gives you the chance to lock in a more competitive interest rate, which can lower your monthly mortgage payment and free up room in your budget. Even a small rate drop can add up to meaningful savings over time.
Improve Your Loan Terms
Didn't love where you landed on the first go round? Refinancing could help you shorten your loan term or lock in something more predictable if you switch from an adjustable rate to a fixed rate.
Tap Into Equity
With a cash–out refinance, you can borrow against your home equity, giving you a lump sum of cash to use towards other big-ticket items like tuition or emergency expenses.
What to Expect
Mortgage Refinance Process
Even though you’re taking the actual house hunting out of the equation, refinancing is actually quite similar to the initial process when first purchasing a home:
1. Define Your Goal
Whether you’re hoping to shave a few years off your loan term or tap into your home equity, getting specific with your goal will guide your refinance process.
2. Check Your Credit
Just like when you were originally home loan shopping, the higher your credit score, the more competitive rate you are likely to receive and the more options you’ll have.
3. Gather Documents
You already know the drill. Collect pay stubs, tax returns, bank statements, credit reports, mortgage statements, and any other files your mortgage pro may request.
4. Estimate your Equity Amount
Your home equity is the value of your home minus the amount outstanding on your current loan. A Motto home loan professional can help you run the numbers.
5. Shop Around
A Motto Mortgage pro will shop for the most competitive lender/loan program for you that could yield serious savings!
6. Budget for Costs and Fees
Closing costs, typically around 2% – 6% of the total loan value, will be the main line item. Your lender may also require an appraisal, typically running a few hundred dollars.
7. Leave a Paper Trail
Make sure you keep copies of any new loan documents, along with contact details for everyone involved and any other important files.
So, What Are the Options?
Most Common Types of Refinances
Cash-Out Refinance: Lets you take out a loan with a higher balance than your existing mortgage to withdraw cash from your home equity.
Rate-and-Term Refinance: Replaces your current loan with a new one that has different rates or terms for a lower monthly payment – no cash out.
Streamline Refinance: Simplified refinancing for government-backed loans (FHA, VA, USDA) with minimal paperwork.
When Does it Make Sense to Refinance?
You don’t love your current loan terms
Is your rate higher than what you’re seeing in the headlines? Make the most of shifting rates and discover a better fitting loan with a refinance.
When Does it Make Sense to Refinance?
You need cash
Want to renovate your home? Or do you have a big tuition bill coming up? A cash-out refinance taps into your home equity and access funds.
When Does it Make Sense to Refinance?
You’ve experienced a major life event
If you’re going through a major life change like death or divorce, a refinance could be a good time to revisit and modify who is listed on the loan.
When Does it Make Sense to Refinance?
You want to cancel your mortgage insurance
If your home equity has increased, there’s a chance you may qualify for a loan that doesn’t require mortgage insurance.
When Does it Make Sense to Refinance?
Your finances have changed
Think your credit score or debt-to-income (DTI) ratio has improved? If your finances are in a better place than when you first applied, a refi can help you capitalize on these improvements.
When Does it Make Sense to Refinance?
Your home value has gone up
Refinancing can help you tap into the equity you’ve built or even eliminate mortgage insurance.
When Does it Make Sense to Refinance?
You want to consolidate debt
A cash-out refi lets you tap into your home equity to pay off high-interest debts, consolidating them into one mortgage payment that may have a lower interest rate.
Thinking a Refinance is the Right Move?
Things to Consider Beforehand.
- The Cost. Like when you first purchased, you will have to pay closing costs with your new mortgage.
- Timing. Requirements vary by lender, but it isn’t uncommon to see a 6-month waiting period from when you first obtained your home loan before you can refinance.
- Market Conditions. Interest rates can fluctuate quickly – be sure to act fast and lock in a more favorable
- The Process. The process is just as involved as it was to get your first mortgage loan – make sure you come prepared with all the necessary documentation, so things run smoothly.
- Your Goals. Whether you’re looking to shorten your loan term from a 30-year mortgage or use your home equity, having a clear goal will guide your refinance journey and help you secure the right loan.
Motto Mortgage Blog
Refinance Resources
How Motto Can Help
Refinance Without the Hassle
Frequently Asked Questions
Refi Questions? We’ve Got Answers.
A refinance replaces your current mortgage loan with a new one – usually to secure a lower interest rate or shorter loan term. It can help you save money, reduce the total interest you pay, and even tap into your home equity.
A Motto loan originator can help you assess your situation and determine if refinancing is the right move. You’ll want to consider factors like changes in your home equity, credit score, and debt-to-income ratio.
You can expect a similar timeline to when you first got your home loan, typically 30-45 days depending on the lender. A Motto loan originator will be able to give you more specifics about your situation.
It depends. If you’re seeing rates lower than your current one, reach out to a Motto loan originator today to see if you could benefit from a refinance.
Yes, the most common types are cash-out, rate-and-term, and streamline refinances.
