Refinance your mortgage

Lower monthly payments – and potential savings overall – may seem attractive. However, when refinancing your mortgage to reduce your interest rate it is critical to consider all of the fees and closing costs involved.

Recoup Costs
Refinancing costs and fees have the potential to add up to 2% of the total new loan amount, so it’s important to ask yourself if the savings from the new loan will be equal to or more than the cost of refinancing.

Also note that refinancing costs vary from state to state and can include:

• A loan origination charge, along with fees for application and processing.
• Points that can be purchased to lower your interest rate even more (each “point” is 1% of your loan amount). 
• Any penalty for early payment on your current mortgage.
• Standard settlement charges, including fees for credit reports, title searches and insurance fees, and appraisals. 

Potential Penalties
Your current loan may also include penalty fees for early payments, which could add to your refinance costs. Contact an experienced Mortgage Loan Specialist at your nearest banking center or call 800-867-5188 to prepare for all the scenarios.

Reduce My Monthly Payment
Refinancing to have a little extra cash each month – to apply to high-interest debts or save for the long term – is appealing. But how you go about lowering your payment, as well as your unique financial situation, is important. We can help guide you to the refinance option that works for you.

Whether through reducing your interest rate or extending the length of your loan, refinancing your mortgage to get lower monthly payments can offer a variety of benefits you may not have considered.

• Monthly Savings: Lowering monthly payments gives you a little more money each month that can be used for a variety of daily expenses – retirement savings, a college fund, a vacation, home improvements and more.
• Long term savings: If you are lowering your monthly payments by lowering your interest rate, you may save money each month and over the life of your loan – but remember that your interest rate is only part of the story. You should verify that the overall savings outweigh the refinancing costs.
• Apply savings to debts: You can also apply what you save each month to the payment of other debts – either directly through the increased money you have available or through a debt consolidation loan.
• Fix your Rate: Extra cash flow is just one potential benefit to mortgage refinancing. Depending on your financial situation and loan product, you might be able to switch to a longer term or different type of mortgage – for instance, from an adjustable rate to a fixed rate loan.
• Other Benefits: If your property’s title insurance policy was recently issued, you might qualify for a reduced reissue or refinance rate. Additionally, depending on your loan type, how much you’ve paid off and payment history, you might be able to remove the cost of your private mortgage insurance (PMI).

Knock Years Off Your Mortgage
Is owning your home sooner a worthy tradeoff for higher monthly payments? Does paying off your home loan before other debts make financial sense? Let our team of Mortgage Loan Specialists help you weigh some of the pros and cons.

Most people would rather be out of debt sooner rather than later. However, the benefits of shortening your repayment period may not be as obvious as they seem. Here are some additional benefits to reducing your repayment period that you can factor into your decision.

• Pay less total interest: In general, the shorter your loan term, the less you’ll pay in total interest. Keep in mind that this doesn’t mean your interest rate will be lower – but your total interest payment will be less. Depending on your loan terms, this savings may be considerable.
• Lower your overall debt load: Paying off your home loan more quickly can give you more flexibility for expenses down the road, such as retirement or college tuition.
• Force yourself to save: Some homeowners see a shortened repayment period as an opportunity to “force” themselves to put extra money toward their property each month. They regard the reduction in total interest to be part of a savings plan.
• Leverage your home as an asset sooner: Owning your home quicker can make it available to you as a fully owned asset that can fit into your overall financial planning.
• Make your retirement plan work better for you: A strategy for some homeowners nearing retirement is to make higher payments on their mortgage while they’re still working, so they won’t face a monthly mortgage payment after retirement.
• Realize intangible benefits: It may not be a factor you can work through on a calculator, but many people simply want the sense of security that comes from home ownership as soon as possible. This is a strong motivator, especially when the calculations support this goal.
  

Don’t overlook another potential savings area, private mortgage insurance (PMI). If your home's current market value has increased and you meet certain other requirements, you may be eligible to cancel PMI, which will allow for a monthly savings.

Ready to run the numbers? An experienced Mortgage Loan Specialist can also discuss benefits and factors to consider whether reducing your repayment period will work for you.
 

In general, the lower the interest rate the less you will pay on your loan overall. But many factors go into determining the interest rate that applies to your home refinance loan. How low can you go? We’ll help you determine if refinancing for a reduced interest rate will work for you. 

The interest rate you pay on your mortgage depends on a number of factors including:

• Current market conditions 
• Your credit score
• Your down payment amount
• Your type of mortgage

The bottom line is that the better your financial shape, the better chance you will have of securing the lowest rate in a refinance. To understand your “fiscal fitness,” start by looking at yourself like a lender and consider your:

• Credit score: Don’t just look at your score, but the history that goes into calculating it – things like late payments, the length of your credit history and credit inquiries. Where possible, address and correct any issues to help improve your score.
  
• Loan to Value Ratio (LTV): The LTV is the percentage of your loan amount compared to your home's appraised value. A higher LTV often means a higher interest rate.  
• Debt-to-Income Ratio: This ratio is a measurement of your overall debt – credit cards, auto loans, etc. – against how much you earn. As with LTV, you want this number to be as low as possible, as a lender will consider it when determining if you can get the best interest rate and, most importantly, a mortgage.

Discuss Additional Loan Options
At any given time, a variety of refinancing options may be available.  How do you know if one will work better than your current mortgage loan? We have the tools and resources to help you evaluate.