Refinancing Basics
When to Refinance
Each homeowner is unique - and we'll help you determine if it's the right time for you to refinance. Effective refinancing typically means lowering your current mortgage loan rate by at least one percent, getting out of a variable ARM and into a fixed mortgage, or consolidating your high interest debt into a lower payment. You might also want to consider changing the length of your loan or receiving cash from the equity in your house.
Using Home Equity
Many people borrow against the equity in their homes and use the cash to make improvements. Up to 80 percent of the appraised value of your home can be used to make home improvements. The equity you can use is based on the value of the home and what you currently owe, subject to applicable state laws. You can still refinance if you don't have much equity -- up to 80 percent loan-to-value (LTV) if you want to refinance your house for a new rate and term. A reappraisal of your property may be required and banks may take into consideration current real estate trends in your area.
Refinancing Costs
You will have closing costs associated with refinancing your loan, including points and processing fees. You may have the option of rolling these costs into the loan amount to reduce your cash out of pocket. Evaluate your options and be sure you understand the costs associated with each loan and how that impacts your APR.
