Why Should You Consider Refinancing?

Transcription

1

2 Why Should You Consider Refinancing? Reason 1: Lower Your Interest Rate Interest rates may have gone down due to market conditions since you purchased or last refinanced your home. Since the interest rate on your mortgage is directly tied to how much you pay on your mortgage, lower rates usually mean lower payments. With the term of the loan staying the same, lowering your interest rate can save quite a bit of money over time. Check out this example of monthly payments (principal and interest) on a 30 year conventional fixed rate loan of $180,000 at 5.5% and 4.0%. Old Loan* New Loan* Current Balance/Loan Amount $180,000 $180,000 Term 30 Year 30 Year Interest Rate 5.5% 4.00% Monthly Payment $1, $ Monthly Savings $ One Year Savings $1, Ten Year Savings $19, * Notes: This assumes at least 20% of equity in the home. The interest rate, annual percentage rate (APR) shown are subject to change without notice. The monthly payment shown includes principal and interest only. Your payment may be higher if an escrow/ impound account is required. Your APR will vary based on your final loan amount. Stated rates and terms are intended as examples only. For a 30 year loan, a $180,000 mortgage loan with a rate of 5.5% (APR 5.615%) with no points, would have a monthly payment of $1, (principal & interest). For a 30 year loan, a $180,000 mortgage loan with a rate of 4.0% (APR 4.095%) with no points, would have a monthly payment of $ (principal & interest). 1

3 Reason 2: Adjust The Length Of Your Mortgage Pay It Off Sooner Wouldn t it be nice to cut the length of your mortgage in half? You can do that by going from a 30 year loan to a 15 year and not only will you save money by paying off the loan sooner but also because interest rates on shorter terms tend to be lower. The major consideration for this option is that your monthly payments are usually higher because you are paying more towards principal each month. Add Years to Your Term Although we do not encourage families to lengthen their term, sometimes situations necessitate this change. The downside to this option is that you are increasing the total amount that you will be paying in interest. It is important to consider this as you think about your long-term financial goals. Here is an example that shows how in the short-term, your monthly expense goes down but over the long run, your interest totals more than double. Therefore, try to avoid this scenario if at all possible. Monthly Payment Total Interest Original 15 Year Loan at 5.0% $1, $78, New 30 Year Loan at 5.5% $1, $190, * Notes: This example is shown for a $180,000 conventional loan. This assumes at least 20% of equity in the home. The interest rate, annual percentage rate (APR) shown are subject to change without notice. The monthly payment shown includes principal and interest only. Your payment may be higher if an escrow/ impound account is required. Your APR will vary based on your final loan amount. Stated rates and terms are intended as examples only.for a 15 year loan, a $180,000 mortgage loan with a rate of 5.0% (APR 5.193%) with no points, would have a monthly payment of $1, (principal & interest). Reason 3: Changing From An Adjustable-Rate To A Fixed-Rate Mortgage Monthly payments on adjustable-rate mortgages can change due to changes in the interest rates. The unpredictability of this loan can be unnerving for those who want the comfort of one consistent amount that they know they can budget each month. For this reason, you may want to consider switching to a fixed rate mortgage. If you do opt to stick with your ARM, you should consider these questions: 1) Is the next interest rate adjustment on your existing ARM loan likely to increase your monthly payments substantially? Will the new interest rate be 2 or more percentage points higher than the prevailing rates being offered for either fixed-rate loans or other ARMs? 2) If the current mortgage sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing to a new ARM or a fixed rate enable you to pay your loan in full by the end of the term? 2

4 Am I Eligable to Refinance? When you refinance, the proceeds from your new mortgage loan are used to pay off your old mortgage, even if you use the same lender. You are not simply re-negotiating the terms of the old mortgage such as reducing the interest rate you are making a new mortgage, replacing your existing one. You need to expect that your home will have to be appraised again. Your credit history will be reviewed again, and there will probably be changes in your homeowners and title insurance. No money will pass through your hands unless you borrow more than your old mortgage balance. However, you must pay for closing costs unless you finance those into the new mortgage loan. The approval process will resemble what you originally went through to get your mortgage. There are many different factors that help to determine if refinancing is in your best interest. We will consider your income, assets, credit score, other debts, current property values and the total amount that you want to borrow. If you have improved your credit score, that could have a good effect on your interest rate. On the flip side, if your credit score has gone down, be prepared that your interest rate may go up, or could even cause ineligibility. In order to know when the costs incurred with refinancing will break even with your savings, use this guide to give you an estimate of the time it will take to recover all the costs. At that point in time, you will begin benefiting from the lower mortgage rate. This example assumes an original loan rate of 6% and uses a $200,000, 30 year fixed-rate mortgage at 5% with$2500 in closing costs. Current Monthly Mortgage Payment at 6% $1199 Subtract your new monthly payment -$1073 Your Monthly Savings $126 Divide total costs by monthly savings $2500/$126 Number of Months it will take to recover costs 19.8 months * Important Notices: For a 30 year loan, a $200,000 mortgage loan with a rate of 5.0% (APR 5.101%) with no points, would have a monthly payment of $1, (principal & interest).* To give you accurate rate, we will require a credit report, and the fee will be collected at that time. The rate quotes used in this report have the following assumptions: credit score above 740; property is SFR; borrower has sufficient income to qualify - The interest rates, annual percentage rates (APRs), discount points and rebates shown are subject to change without notice. - The monthly payment amount shown includes principal, interest and mortgage insurance only. Your actual monthly payment will be higher if an escrow/impound account is established or required. vyour APR will vary based on your final loan amount and finance charges. Stated rates and terms intended as examples only. Call (888) for current rates and terms. 3

5 Still Not Sure? If after reviewing this report you are still not sure whether you should refinance your home, it is time to call on someone specifically trained to help you interpret your individual mortgage situation. The Home Loan Specialists at Churchill Mortgage are happy to meet with you at no cost to consider your refinancing needs. Our team is trained to take care of all those details for you, and will gladly meet with you at your convenience to discuss your specific refinancing situation. This consultation is absolutely free, and there will be no obligations no salespeople hounding you if you decide this is not the right time for you to refinance. Remember that refinancing your home mortgage need not be a tedious, overwhelming task. Give us a call and let us show you just how quick and hassle-free creating increased cash flow through your home mortgage refinance can be! Call us at , us at hello@churchillmortgage.com, or visit us at: * Important Notices: To give you accurate rate, we will require a credit report, and the fee will be collected at that time. The rate quotes used in this report have the following assumptions: credit score above 740; property is SFR; borrower has sufficient income to qualify - The interest rates, annual percentage rates (APRs), discount points and rebates shown are subject to change without notice. - The monthly payment amount shown includes principal, interest and mortgage insurance only. Your actual monthly payment will be higher if an escrow/impound account is established or required. - Your APR will vary based on your final loan amount and finance charges. 4

6 To Learn More, Visit our website at: Copyright Churchill Mortgage Corporation NMLS ID# 1591 All Rights Reserved. Company NMLS ID # 1591 ( AL 20934; AR 32094; AZ ; CA , Licensed by the Department of Business Oversight under Churchill Mortgage Corporation, which will do business in California as Churchill Mortgage Home Loans; CO Mortgage Company Registration, Churchill Mortgage Corporation, 761 Old Hickory Blvd. Ste 400, Brentwood, TN 37027, Tel , Regulated by the Division of Real Estate; CT-ML-1591; DC MLB1591; FL MLD1264; GA 23146; ID-MBL-8038; IL MB , Illinois Residential Mortgage Licensee, Department of Financial and Professional Regulation; IN & 10931; IA ; KS-MC , Kansas Licensed Mortgage Company; KY MC19522; LA- Residential Mortgage Lending License; MD 18840; MI-FR & SR ; MO A, 435 Nichols Road, Ste 200, Kansas City, Missouri ; MN-MN-MO-1591; MS 1591; NE 2037; NM 03780; NC L ; OH-MBMB & SM ; OK MB & ML002574; OR-ML-5134; PA-41761, Licensed by the PA Department of Banking and Securities under Churchill Mortgage Home Loans; SC MLS 1591; SD-ML.05137; TN ; TX Mortgage Banker Branch Registration, 761 Old Hickory Blvd. Ste 400, Brentwood, TN 37027; VA MC-5222, Churchill Mortgage Corporation of TN; WA CL-1591; WI-1591BA & 1591BR; WY ; Tel ; All other states, Churchill Mortgage Corporation HBM2 is a licensed real estate brokerage services company in the Scouting Report (HSR). The role of the mortgage company is to work with the agent in the area of converting lost contacts to sales and to assist in determining a comfortable price range for HBM2 to use when searching for property listings within the buyer s search criteria. The Home directly to prospective home buyers by HBM2 and its real estate brokers as part of their ordinary real estate brokerage services. Copyright 2015 Home Buyers Marketing II, Inc. (HBM2) All contents of Mortgage Coach Services are Mortgage Coach(c) 2012 All Rights Reserved. This report may not be reproduced or transmitted in any form without the written permission of the author. Although the author and publisher have prepared this guide with the greatest of care, and have made every effort to ensure the accuracy, we assume no responsibility or liability for errors, inaccuracies or omissions.