Given your situation, refinancing could save tens of thousands of dollars in interest and years of mortgage debt repayment. It takes a lot of time and planning to figure out if refinancing is the best option for you. You need to find out if you qualify and then how to start. Loan Web USA has years of experience dealing with refinancing and the many ways to go about doing it.
Use our mortgage calculator to see what your new payment might be if interested in a refinance. If the outcome is something you are comfortable with, we can guide you the rest of the way!
When to Refinance
It's generally a good time to refinance when mortgage rates are 2% lower than the current rate on your loan. It may be a viable option even if the interest rate difference is only 1% or less. Any reduction can trim your monthly mortgage payments. Example: Your payment, excluding taxes and insurance, would be about $770 on a $100,000 loan at 8.5%; if the rate were lowered to 7.5%, your payment would then be $700, now you're saving $70 per month. Your savings depends on your income, budget, loan amount, and interest rate changes. Your trusted lender can help you calculate your options.
Refinancing may shorten the term of your loan.
Instead of extending repayment, you can also refinance into a shorter term loan. For example, you might have a 30-year home loan, and that loan can be refinanced into a 15-year home loan. That move might make sense if you want to make larger payments to get rid of the debt more quickly. You can also just make extra payments without refinancing. Making larger payments without refinancing would help you avoid paying closing costs and keep some flexibility (you can pay more than the minimum, but you don’t have to if something comes up).
Refinance to lower your interest rate.
If your home is now financed at a higher interest rate, it may be a great time for you to consider refinancing. You could literally save tens of thousands of dollars just by taking the time to fill out the necessary paperwork and gather the needed documents.
Refinance to lower your payment.
When you refinance, you essentially restart the loan clock. You extend the amount of time you’ll take repay a loan. Since your balance is most likely smaller than your original loan balance and you have more time to repay, the new monthly payment should decrease.
Refinance from an adjustable-rate mortgage to a fixed-rate loan.
If you currently have an adjustable-rate mortgage, now may be the perfect time to refinance into a fixed-rate loan. Interest rates are low now, but they may not stay this low forever. Locking into a low, fixed rate can protect you from rising interest rates in coming years. Additionally, a fixed payment is easier to plan for and budget.
Refinance to cash out home equity.
It may make sense to cash out some of your home equity in order to buy an investment property or start a business. It mostlydepends on what you are trying to achieve and if you are someone who can manage your debts responsibly.
Do you qualify for a refinance?
According to MakingHomeAffordable.gov, your loan must meet several requirements in order to qualify:
The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
The current loan-to-value (LTV) ratio must be greater than 80%.
The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.