Common Questions About Refinancing

As with every loan. There are cost to process a mortgage. Those closing cost can be reduced or eliminated in exchange for a higher interest rate. The simplest explanation is the higher your interest rate, the lower your closing cost and the lower the interest rate, the higher your closing cost.

Yes. You can lock in an interest rate. To explore interest rate lock in options, please visit our interest rate lock in options page. On this page we explain in detail your rate lock in options.

If you have an interest rate locked in, you may will not have an option to re-lock at a lower price unless you have selected our interest rate lock in with float down option. Our rate lock option page explains all lock in options in detail and answers common questions about locking in an interest rate.

A number of factors can impact how long it will take for your loan to close. On average it can take 30 to 45 days. Please keep in mind that is an average number of days. Your cooperation is essential to helping us serve you quickly.

If you have 20% equity in your home, an escrow account for taxes and insurance is typically optional. The terms you receive may be slightly worse if you do not escrow for taxes and insurance.

In some cases you will not be required to have an appraisal on your home. In other cases, an appraisal will be required. We will know whether an appraisal is required or not once you have completed your loan application.

In many cases you are able to roll your closing cost into your new mortgage. However, depending on the amount of equity you have, it may be beneficial for you to pay your closing cost if possible.

You do not have to start over on a 30 year term. You can set your new mortgage for the same number of months you have left on your current mortgage or less if you prefer.

Refinancing can benefit you by lowering your overall cost to borrow. Additionally, it may allow you to finances improvements to your home or consolidate debt which can also impact your overall cost to borrow from all sources.

The amount that an interest rate needs to drop to make refinancing worthwhile can vary depending on the amount that you owe and the closing cost you would pay to refinance. We typically advise clients to look at the break even period (how long it takes for any interest savings to offset any closing cost you have). If the break even period makes sense given your long term financial goals refinancing may be beneficial. If not, it could be a clear indication that refinancing may not benefit you.

No. You can typically refinance your loan with any lender and we would be happy to help you explore your options.

Typically there is little to no difference in using a new lender vs. your current lender. As with any loan, terms available from lender to lender may vary.

Generally you do not have to have your mortgage for a certain period of time to refinance. However, some programs may require a “seasoning period”. In those cases, you may be unable to refinance unless you have met the required seasoning period.

Potentially. This is typically dependent on the appraised value of the home.

Potentially. This is typically dependent on the appraised value of the home and the amount of equity you have based on the appraisal.

We would need a completed mortgage application. That can be done with no cost and no obligation by completing our online application.  You can complete our online application by clicking here.

Potentially. The amount you would truly end up saving depends on your current loan terms, the new loan terms and how long you keep the mortgage. If you keep a new loan for a shorter period of time, your actual savings may be significantly lower than what you anticipated.  It is important to consider a number of factors when it comes to refinancing to get the best estimate of what your true savings may really be.

Paying points to buy a lower interest rate may be beneficial if you keep your new mortgage for an extended period of time. If you do not, you may have spent money on points for little to no benefit. Again, you will want to consider the break even point.

The lower the cost, the higher the rate. The lower the rate, the higher the cost. To offset closing cost, many lenders will charge a higher interest rate. You need to carefully consider both interest rate and closing cost.

Potentially.  Depending on the amount of equity in your home this may be an option available to you. However, unless your home equity loan was used to purchase the home you are refinancing you will be subject to the “cash-out” refinance rules (see below).

Potentially. Depending on the amount of equity in your home this may be an option available to you. However, you will be subject to the “cash-out” refinance rules (see below).

A “cash-out” refinance is a refinance mortgage where you will be borrowing more than your current mortgage payoff plus closing cost. Some programs allow for a small amount of cash back to you at closing (typically less than $2,000). In those cases, your refinance loan may not be subject to the cash out refinance rules.

In cases where you will be borrowing more than your current mortgage balance and closing cost, you will typically be subject to “cash-out” refinancing terms. Those terms will typically limit the amount of equity you may borrow and the terms in which you can borrow are worse than loans that are not classified as a “cash-out” refinance.

Absolutely. You are welcome to even pay the loan balance down as part of your refinancing strategy.

While you may “skip” a payment it is important to note that you are not eluding the interest that would have been paid as part of the payment you are “skipping”. There is no interest free period as part of the new mortgage and likely is not any as part of the mortgage you are refinancing.

Yes, you can. However, you will carefully want to review your break even point and make sure that you are not losing equity by refinancing multiple times. The goal of refinancing should be to put you in a better overall financial position. Lenders who solicit clients to repeatedly refinance should be viewed with caution. Serial refinancing may erode your equity and provide little to no overall financial benefits.

Potentially. If you will be paying off higher rate debt as part of your refinance, refinancing with a higher interest rate may potentially put you in a better overall financial position. However, this should be approached with great caution and I recommend that if you proceed with this loan structure you try to do so by shortening your overall loan term if possible.