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Lower Your Interest Rates and Payments with a Refinance

If you’re not satisfied with your monthly payment or want to take advantage of historically low interest rates, it’s time to refinance. This is a great way to free up funds every month or pay off your home more quickly*.

The Benefits of Refinancing:

  • Decrease your monthly payments or shorten the length of your loan (*although the total finance charges may be higher over the life of the loan)
  • Use cash to pay off high interest credit card debt
  • Combine a first mortgage with a home equity loan
  • Take out cash to pay off student loans or other large expenses
  • Switch into a fixed-rate mortgage to take advantage of historically low interest rates

Fixed Rate Loans Offer Stability

Fixed loans are optimal if you are looking for a consistent payment over a long period of time with no surprises. The peace of mind of a fixed-rate loan will offset the slightly higher overall long-term payment. When rates are very low, you can refinance into a fixed-rate loan to lower your monthly payment or convert the fluctuations of an adjustable rate to a steady fixed-rate.

Great news! If you have a large Home Equity Loan or high interest credit cards that are not fixed, you have the option of refinancing them all into a fixed-rate loan which will save you thousands of dollars over the life of the loan.

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Refinancing Requirements

When you refinance, there are three primary factors your lender will consider: your Debt-To-Income ratio (DTI), equity, and credit. Typically you should have a DTI less than 43%, at least 22% equity in your home, and a credit score above 680, although lender requirements vary.

If you don’t quite meet those requirements, you’re not out of luck. There are FHA options available for borrowers with a less than ideal profile. If you’re not sure which option is best for you, just contact us!



Cost of a Refinance

Refinancing has many of the same closing fees that come with a first time mortgage. Costs should range from 3-6% of the outstanding principal balance of the loan being refinanced. However, oftentimes these costs can be minimized by making minor adjustments to the interest rate or rolling them into the new loan to avoid out-of-pocket expenses.

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*Disclaimer: Refinancing could decrease the amount of money you spend each month, but keep in mind that the total finance charges may end up being higher over the life of the loan if you choose this financing option.