Entries by Brandon Staples

What Does it Mean to Refinance Your Mortgage?

Should I Refinance?

When homeowners refinance, it gives them access to a new mortgage loan replacing its existing one. Homeowners can customize the details of a new mortgage loan including the loan’s mortgage rate, loan length in years and the amount borrowed. So, what makes a refinance attractive? Refinancing can be taken advantage of to reduce the monthly mortgage payment, withdraw cash for home improvement projects, cancel mortgage insurance, among other helpful uses.

Here, we will break down the different types of refinance mortgages.

Rate and Term Refinance

This type of refinancing changes the interest rate and/or the length of the term and does not change the amount of principal. Perhaps the original mortgage terms made sense for you when you initially agreed to it but as time goes on, circumstances may change. For example, if you’re looking to trade your 7-year adjustable rate mortgage for long-term stability, doing a rate and term refinance into a 30-year fixed rate loan may be better for you. On the other hand, if you’re looking to pay off your mortgage sooner than later, you could also refinance into a shorter loan term.

What if the interest rate on your mortgage is significantly higher than current interest rates? You can refinance to get a better rate and help you save money on your mortgage monthly payments.

Cash-out Refinance

cash-out refinance is a refinance option where the new mortgage loan is for a larger amount than the current mortgage loan and you receive the difference between the two loans in cash. One of the most common reasons why homeowners do a cash-out refinance is to transform the equity (ownership) that’s been built up in their home into cash. This cash can be spent on home improvementspay off student loans, debt consolidation or other important financial needs.

This type of refinancing has slightly higher interest rates due to a higher loan amount. The cash-out amount limits to 80-90% of your home’s equity. For example, if your home has a value of $200,000 but your remaining mortgage balance is $100,000, then the equity in your home is $100,000. If you are needing $50,000 for a home improvement project or using it for other financial priorities, you can choose to refinance your loan for $150.000 and receive $50,000 in cash at closing.

HELOC (Home Equity Line of Credit) Refinance

This particular type of refinance is a loan that’s set up as a line of credit for some maximum draw instead of a fixed dollar amount. It is a revolving line of credit that uses your house as collateral. The bank gives you an amount that you may borrow and may access at any point in time. There are two main ways of tapping into this line of credit; writing a check or using a credit card that’s connected to the account.

If you’re a homeowner that has built some equity in your home and need some additional cash for helping your child pay for college, renovating your home or buying a car, borrowing money this way may offer low interest rates and improve financial flexibility.

Ready for the first step to refinancing your mortgage? Here at Sun American Mortgage we want to help you find the best possible solution and save you money at the same time. Call us to talk about some of your options, or start with our simple online application.  480-832-4343

References:

https://www.nerdwallet.com/blog/mortgages/refinance-cash-out/

https://www.mtgprofessor.com/A%20-%20Second%20Mortgages/what_is_a_heloc.htm
 
August 14, 2018  by Cathy Ly 

5 Apps that will help get you ready to buy a home!

I get a lot of questions from clients wondering what they can do to prepare to purchase a home a year or more down the road. Here are the apps I tend to recommend to my clients! 1.Clarity Money! – This wonderful app helps us save our $$ by identifying waste. This free app does […]

Don’t miss out! [Parade of Homes Details]

Here are the need to know details for the 2018 Saint George Parade of Homes! When: February 16th-25th! Hours: The homes are open from 10am -7pm Where: The locations to the houses will be announced on February 15th. You can also download the free mobile app for details on each home! Cost: The tickets run $15 per person Details: The […]

What the heck is an escrow account?

When I meet with new  clients and especially first time home buyers I can usually count on hearing several questions, ranging from their monthly payments, to estimated down payments. However, when it comes down to it even some of the most seasoned home buyers and sellers don’t know exactly what an escrow account is. The […]