Blog

Refinance

It’s always a pleasure to help you understand the benefit, cost, and process of refinancing.

Here is the key information that’ll help me provide guidance to you, and you can email me this info E-mail me. If you don’t have all the answers to the below, that’s OK!:

1. Your property address
2. Your original loan amount
3. Your current loan amount
4. Your current interest rate
5. Your current type of loan (30/15 year, FHA, conventional, etc)
6. Any thoughts on what type of loan you may be interested in (and we can/will go through what’s available together)
7. What you think your credit score is
8. What you think your home is worth
9. Do you live in your home?  Do you own any other real estate?
10. How long you feel like you’ll keep your home for

 

To get underway / proceed, here are the steps:

 

1. Create an account, register, and fill out/submit online form at https://firsthomemortgage.mymortgage-online.com/?loanapp&siteid=1276844701&lar=ajaffe&workFlowId=47247
2. Provide these docs by uploading them to the same web portal you applied to.  This is the list presuming you only own one property, are an employee of an organization, and we are refinancing with a conventional loan:
   1. Last w2
   2. Driver’s license or other government photo id
   3. Last 2 pay stubs
   4. Last 2 bank statements
   5. Current mortgage statement (If First Home services your loan, I don’t need this)
   6. Homeowners association fee bill (if applicable)

If you own any additional real estate, or have business income, the list will slightly differ!

To schedule a conversation to go through everything you’re welcome to view my calendar and block off a time https://calendly.com/alexjaffe/30min

 

Learn more about how working with me is different from other loan officers: My Team

 

There are three reasons to refinance:

1. You want a lower rate. If rates have come down since when you purchased or when you last refinanced, a refi is a great way to get your monthly payments down.  Most people refinance for this reason!

2. You want to cash out. Have other debts you want to consolidate? Rolling credit card revolving payments into a lower fixed-rate mortgage may be the best option. Want to remodel? A cash out refinance can finance the costs with a low, fixed-rate secured loan.  Cash out refinances will be limited to 80% of your home value if it’s a primary residence, or 75% of your home value if a secondary or investment property.

3. You want to switch loan programs. Want to switch from a 30 to 15 year to cut down on life of loan interest? Or  switch from an ARM to a fixed rate and set the rate for the life of the loan? Or 15 to 30 to lower the monthly payment significantly?

 

Closing costs / cash to close

There are closing costs associated with a refinance but that’s not the only “cash to close” due at a time of refinance.  Commonly, clients choose to finance a greater loan amount than their existing loan amount so as not to incur the cash to close due upfront. Due as a part of your cash to close at the time of the refinance are:

1. Interest for the month in which you refinance.  Depending on the day in which we settle your refi, you’ll have various days of unpaid interest due on your current loan, and various days prepaid interest due on your new loan.  Recall that whenever you make a mortgage payment, you pay interest for the month prior.  And so on the day of the refi, you’ll pay (early) the interest that is due for the existing month and because of you paying this, there is no mortgage payment due on either loan the following month.  Meaning if you close your refi today, there is no payment due on the next 1^st of the month, and the first payment on the new loan is due on the next 1^st of the month.
2. Funding your new escrow account with prepayment of several months of taxes and insurance is also needed.  Learn more: https://www.alexjaffe.com/what-is-escrow.  You likely have an escrow account with your existing mortgage into which you pay monthly your property tax and insurance. That account likely has a balance.  We need to setup a new escrow account with your new loan for property tax and insurance.  After we settle your refinance though, your current lender will send you a check with whatever funds (if applicable) you have in escrow. This ordinarily takes 3-4 weeks after your refi settles. You can check in your online mortgage account what is the existing escrow balance (I am not privy to this information).

 

Because of this, the closing costs are not the only ‘cash to close’ due at settlement, it’s a bit higher for the above two reasons.  But you will skip the next month’s mortgage payment.  And you will get your escrow balance refunded post-closing.  And so in a way these funds are recouped, with time.