REFINANCING
What is Mortgage Refinancing?
Mortgage refinancing is the process of making favorable changes to the original loan with the intent of reducing the mortgage rate and saving money on the monthly payment.
- Get a lower rate and lower payment
- Change the rate from adjustable-rate mortgage to a fixed-rate mortgage
- Change the duration of the loan
- Consolidate debt
- Switch from FHA to conventional program
- Tap into and get cash out of the equity in the home
Costs of Refinancing:
Costs depend on the loan amount, your credit score, your home equity, mortgage term, mortgage type, your lender, and your location.
- Appraisal fee: on average appraisers will charge $300 - $500.
- Origination fee: These are the fees the lender charges for setting up the loan
- Credit report fee: This fee covers the cost of pulling your credit score costing around $30 - $50
- Title search and insurance: Varies depending on your location
- Recording fee: This covers the cost to record the transaction with your county
Type of Refinancing:
Rate-and-term refinancing is the most common type of refinancing when the original loan is paid and replaced with a new loan agreement that requires lower interest payments.
Cash-out refinancing involves withdrawing the value or equity in the asset in exchange for a higher loan amount.
Cash-in refinance allows the borrower to pay down some portion of the loan for a lower payment.
Consolidation refinance is when a single loan is obtained at a rate that is lower than the current average interest rate across several credit products.
Qualifying Requirements:
Since you’re replacing your current mortgage, you’ll complete a new home loan application and re-qualify for the home mortgage.
- Minimum credit score of 620 for a conventional loan
- Minimum credit score of 580 for an FHA loan
- Must have a stable income and enough assets to pay the closing costs