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


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 this by helping identify subscriptions you aren’t using or just don’t need. Another great perk is that it helps you negotiate your monthly expenses down to a lower rate! Lastly, it helps you with accountability and ensure you stay on your budget! I love this!

2. Acorns! – I cannot overstate how much I love this one. Acorns helps you round up your purchases on your credit and debit cards that you link to the app. The differences that are rounded up to the nearest dollar are then transferred to your Acorns account. This account starts to work for you as it is invested into exchange traded funds. These funds are manageable as you can direct them to conservative or aggressive funds based on your comfort level.

3. Scoutmob – This app helps you identify local and regional deals for most major cities across the country. Yes, it is like Groupon or other local deals. However, I prefer this one more as it tends to search out more valuable information and greater savings. The more you save the more you have in assets and the easier it is to get a loan.

4. LifeLock – Your credit is key to getting a loan. Most loans would prefer to have your scores over 620. LifeLock is key to keeping an eye on your scores, fixing any credit dings, and monitoring any suspicious activity. For example, if someone were to set up a fraudulent car loan you could count on an almost immediate notification from the app. Please note there are several different membership programs so make sure pick up the one that is best for you. Credit is king when it comes to lending. Let’s keep that credit score up!

5. Mortgage Calculator – Most clients tend to be excited about purchasing or building a home. We get it. Mortgages just aren’t as pretty as that new kitchen you’ve been looking at. However, it is always best to check on your buying power before you go look at a home. Once you know what your monthly budget is with the help of your loan officer you can then go look at homes with confidence. With a mortgage calculator you can get a rough estimate of what your payment would be. We want you to know what you can buy before you go looking!

– Brandon Staples | Mortgage Consultant

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 way I like to describe it is by comparing it to buying a car. When you purchase a car, the banks often trust you to make your monthly insurance payments as well as pay your your taxes, and registration fees when you renew your registration every year.

Well, what is it?

With a mortgage, they are a bit more hands on in requiring that you set up a special escrow account that holds your money to pay the most important expenses associated with the home. For example when you start your mortgage they pre-fund a few months worth of expenses to pay your property taxes and property insurance on the home. The amount they fund can vary depending on the time of year and how soon taxes are due.

Long story short, instead of letting you pay your taxes and insurance on your own the lender prefers that you have an account set up to do it for you.  That way those expenses are more likely to be paid.

Why again?

Opportunity Knocks as The Housing Market Picks Up.

What the heck is an escrow account?

What is an escrow account?


#1 Call and tell your lender to get rid of your mortgage insurance!! 
Even if your down payment was less than 20% when you purchased the home, you may now have the equity needed to remove the insurance. You can call your mortgage servicer an in less than 30 minutes to find out just what is needed to remove your mortgage insurance!\

Cut your monthly expenses!

#2 Pay down your principal
Tax returns, yearly bonuses or inheritances are great ways to reduce your mortgage payment. Although it won’t affect the payment itself (other than reducing your mortgage insurance payment, as described above), the smaller your loan to value (LTV), the sooner you can shake your mortgage insurance completely. It may take a couple of years of turning your tax refunds over to the mortgage company, but it’ll save you a big chunk each month to be free of mortgage insurance.

Be aware that this only really works with Conventional loans, if you have an FHA loan you can refinance into a Conventional loan product once you’ve reached the right LTV. On a Conventional loan, you can drop your mortgage insurance entirely when you reach 80 percent LTV. Even if you don’t quite have 20% equity in the home your mortgage insurance can be reduced based on what you owe versus value of the home.

#3 Refinance your mortgage 
Most homeowners do not know that sometimes even a .25% drop in interest rate can save them hundreds or even thousands of dollars per year. According to Bankrate.com more than 40% of all existing mortgages could be refinanced to a lower interest rate to reduce the monthly payment. The good news is you may not have to start your mortgage again either. You can choose from 10, 15, 20 and even 30 year loan terms.

#4 Shop your home owners insurance

The easiest way is to go out and get new quotes from different insurance companies — this is pretty straight-forward. Buy the policy with the best price and comparable coverage and drop your old one (but don’t forget to tell your lender, who your new insurance company is!)

Searching for a mortgage can be tricky. Call me and we find the best loan for you!



Economists are hopeful that housing market activity — and prices — will continue to perk up generally in 2017, due to a number of factors. The most important catalyst for housing would be an improving economy and employment landscape. As Americans feel more confident about the economy and more secure in their jobs, they will be more likely to take the big step of home ownership.

#1 Where will Interest Rates Go?

The federal reserve decided to raise the overnight rate in December of 2015. This means that it just became a bit more expensive for the banks to lend you money. With that in mind, one would expect rates to have increased since this decision. In fact, the opposite is true. Due to the struggling stock market and oil prices rates have actually gone down. As of today (2/1/2016) rates are at about a 3.85% (4.0% APY) on a 30 year fixed mortgage. Compared to the historical average interest rate of 8.51%, we are very spoiled right now. We are hoping they stay under 4.5% for the rest of the year.

#2 What about home prices?

Every January Fannie Mae puts out a large housing forecast power point that we lenders use to get an estimate on the upcoming trends. According to this year’s report they estimate median home values to increase by 5%. That is great news for home sellers, but not necessarily for buyers. The good news is, if you sell your home for more and then buy your next home for more, it should all come out in the wash.

#3 Boomerang Buyers

One interesting group that may drive the market are the “boomerang buyers” — homeowners who lost their homes during the recession and are ready to jump back into the market. Some 7.3 million Americans lost their homes to foreclosures or short sales — two events that can stay on your credit report for up to seven years — from 2007 to 2014, according to real estate data company RealtyTrac. If they have no other major credit issues lingering, those first foreclosed owners are now coming out of the financial doghouse and qualify for a mortgage. RealtyTrac projects that 250,000 to 500,000 boomerang-ers will come back into the market this year, with another million or so more in the next few years.

#4 Millennials finally entering the market

To be sure, many millennials remain cautious about making big investments. As is the case with other groups, they were chastened by the declines of the Great Recession.However, this group also represents untapped potential. The millennial home-buying momentum should pick up. Expect millennials to make up a greater share of buyers and to boost the home-buying market.

The consensus among experts has been that millennials would stimulate the housing sector. A majority of those born roughly 30 years ago are starting to realize their financial aspirations, and simultaneously entering their peak home buyer age.

There is much more to a housing market than these items, but the Southern Utah Real Estate community generally agrees that this year we can look forward to a slight increase in prices and historically low interest rates.More than seven years after one of the worst recessions in our history, the U.S. housing market appears to be on firm ground again. Despite some recent hiccups, it is likely that it will carry the momentum it gained this year into next.





  • Pro – The two big reasons to take out a mortgage even if you can afford to pay cash are maintaining liquidity and maximizing returns. Paying all cash, while commendable, isn’t a good idea if it means committing too much of your savings to an asset that is inherently illiquid. You don’t want to get into a situation where you are forced to sell the house or other investments at the worst time possible.


  • Con – On paper, getting a mortgage and using your cash to invest may seem like a better deal. What that equation doesn’t account for is the enormous sense of satisfaction that comes with owning your home outright. No one can put a price on peace of mind. Odds are that you will make more over the long run investing those funds, but what you save on interest over the life of the loan – tens of thousands, if not hundreds of thousands of dollars – isn’t vulnerable to market ups and downs.


  • Pro – Using your mortgage as a tax strategy. We often see clients that could pay cash for a home and have plenty to spare. What we are finding is that a lot of those buyers are acting under the advice of their accountants. Accountants know that you can use mortgage interest to help reduce your annual tax liability.


  • Con – Cash empowers you to make a better deal. When making an offer on a home, cash talks. If you are able to close quickly without the need for financing, you are often a sellers’ first choice when they have multiple offers.

When it comes to finances there is no right or wrong answer that fits everyone’s financial situation. Go with your gut, speak with a trusted accountant or financial advisor. Remember, you can always go for the middle ground, and for many buyers this may be the best option of all. Take out a mortgage and lock in today’s historically-low rates, but make more than the minimum payment whenever you can.