Refinance

Refinancing is essentially paying off your existing mortgage and taking out a new one. This section discusses the basics of refinancing, such as the reasons for refinancing and the steps involved. It also discusses your financing options. After you understand these basics, we can help you get the refinancing process started either online, over the phone or in person.

Should you refinance your home mortgage? That's a question many homeowners are asking, given the lower mortgage rates that are currently available. But, how do you decide if refinancing makes sense in your particular case? The answer depends on many factors, including your tax bracket, the length of time you plan to stay in your home, and the additional costs and charges you must pay for the refinancing.

To help determine if you're ready to refinance, ask yourself these questions:

• How long do I plan to remain in my home?
• How many years remain on my existing mortgage?
• Can I afford the costs involved?
• Will I save money over the life of my loan?

These questions are good starting points to determine your personal eligibility but by no means cover all the concerns, questions or considerations you may have individually before you consider refinancing your home.

• The advantages we offer you for your refinancing needs are:
• Low Rates
• Easy Online Application
• All Types of Mortgage Programs
• Guidance & Advice from an experienced Loan Professional

After considering the advantages of refinancing and the personal factors regarding your needs, time frame, and any limitations you may have now consider the likely good reasons to refinance. Some of the primary reasons why you may want to refinance are to:

• Get a lower-rate mortgage.
• Convert an adjustable rate mortgage to a fixed rate mortgage.
• Consolidate a first and second mortgage into one lower rate mortgage.
• Get cash for family needs and expenses.
• Eliminate mortgage insurance
• Reduce the length or term of your mortgage

How cash-out refinancing works

A cash-out refinance replaces your current mortgage with a new loan for a higher balance.  Your new mortgage pays off your old one, and you receive the remaining loan amount in cash.  That cash comes out of the equity you've built in your home.

  Because it lets you borrow from your equity, a cash-out refinance is similar to a home equity loan.  The major difference is that a home equity loan doesn't pay off your first mortgage-it gives you just the cash you need, which you repay along with your mortgage.

Benefits of cash-out refinancing

Borrowing against the equity you've built in your home is generally cheaper than other types of financing, and it has tax advantages as well. This equity can represent a substantial part of your savings. By refinancing, you can free up some of this money for other purposes. You might need it for a child's college tuition or to invest in a second home.

Another good reason to take cash out of your home is to pay off debts that have non-deductible interest costs. The interest on home loans is, in most cases, tax-deductible. If you have a sizeable amount of debt in non-deductible loans, such as credit cards and car loans, it can make sense to use some of the equity in your home (provided you have enough) to pay off these debts. That way, the interest you pay on your combined debts is now tax-deductible. (See your tax advisor about your particular situation.)

A cash-out refinance may also reduce your monthly mortgage payments, if the loan term is longer than the remaining term on your existing mortgage.  Depending on the new interest rate and loan balance, you may be able to save money each month by spreading out your payments over a longer period of time. 

 Refinancing with a new interest rate or loan term can be a great way to save money on your mortgage.    

A lower rate means lower payments

If rates have fallen since you took out your current mortgage, refinancing now may get you a lower rate.  That means your monthly payments will go down, assuming the interest rate is all that changes.

Lower payments are great, but will they actually save you money?  That depends on the cost of taking out a new loan, how long you plan to stay in your home, and how much less you will be paying each month. 

Get lower payments with a longer term

Another way to reduce your monthly payments is to lengthen your loan term, which is the length of time you spend repaying it.  With your payments spread out over a longer time period, each one will be smaller.

The drawback to this approach is that because you will repay the mortgage principal more slowly, you may end up paying more interest overall. 

Shorten your loan term to pay less interest

You can reduce the total amount of interest you pay by shortening your loan term.  With fewer monthly payments required to repay the loan, each payment will reduce the balance by a larger amount.  As your balance decreases more rapidly, so will interest charges.

Besides reducing your interest costs, a shorter loan term helps you build equity faster.  That means you'll have a growing source of wealth to draw from when you need it. 

Are you facing a potential rate increase on your adjustable-rate mortgage?  If so, refinancing can help you avoid higher payments. 

Refinancing with a fixed-rate mortgage

If you plan to stay in your home for the long term and never want to worry about rising interest rates, replacing your ARM with a fixed-rate mortgage may be a smart move.  An adjustable rate mortgage is a great way to get into a home with low monthly payments. But the periodic rate adjustments and possibility of rate hikes can be disconcerting, that is why you might want to consider switching to the security of a fixed rate loan. Here again, you have different options for every situation. With an interest rate that never changes, a fixed-rate loan gives you predictable payments throughout the loan term.  If you're planning to be in the home for a long time, consider a fixed rate loan with a term of 15, 20, 25 or 30 years. Just remember, fixed rate loans may have a higher rate than what you're currently paying for your ARM. So you want to carefully consider both how long you plan to stay in your home and how important the security of a fixed rate loan is to you.

Refinancing with another ARM

If you plan to move within the next several years, you may want to consider replacing your current ARM with a new one.  It can be a smart move if you want to save money on your home loan payments for a year or so before moving to another home. By switching from a fixed rate loan to an ARM, you can save substantially in the short term. One option is to get a "no out-of-pocket costs" ARM. This will mean a slightly higher interest rate, but since your goal is to save and conserve cash, closing costs are an expense you don't want. You want savings on your payment now. In most cases an ARM will start off with a lower interest rate than what you'd get on a fixed-rate loan, and that rate can stay fixed for anywhere from three months to 10 years.  Depending on how long you intend to stay in your home

Eliminate mortgage insurance

Did you purchase your home with less than 20% down? Then you probably have a monthly mortgage insurance payment along with your principal and interest. (Check your home loan statement if you're not sure.)

As you build equity in your home, you eventually reach the point where you have more than 20% equity. You may already be there. In fact, in a favorable housing market where home values are increasing at above average rates, your home's worth may have increased to the point where you have 20% equity simply because your home has become more valuable. But you may not be able to cancel your mortgage insurance yet.

Your goal for this kind of refinance should be to get a loan without monthly mortgage insurance that has a rate as low or an even lower than your current loan. The ideal situation would be to reduce your rate by more than just the cost of your monthly mortgage insurance payment alone.

Reduce the length of your mortgage

Reducing the number of years on your existing mortgage often provides a significant reduction in interest costs over the life of the loan. Although this strategy may mean higher monthly payments, you will own your home faster and become free of mortgage debt quicker.

Completing a loan application is the first thing you'll do when refinancing your mortgage. Please review our loan options to see the different loan types available for your refinance request including basic mortgage products such as:

• 30 year fixed rate
• 15 year fixed rate
• 20 year fixed rate
• Jumbo Loan

We also have programs that may be able to help you leave credit problems in the past and make financial security a part of your future with our loans for poor credit solutions that have more flexible credit guidelines. These loan types include:

• FHA
• VA
• Subprime
• Debt Consolidation Loan
• BCD Credit Terms

Refinancing with one of these loans may cost less each month than using a basic fixed-rate mortgage and can often have loans with lower monthly payments:

• One year adjustable
• Option ARM
• 5/1 ARM
• 7/1 ARM
• 10/1 ARM
• Balloon mortgage
• 40 Year Mortgage

If you need financing designed to meet your unique needs, such as an unusual property type, self-employment, or non-traditional credit history, these programs may help.

• No Income Verification Loans
• No Income No Asset Verification
• Stated Income Stated Asset
• No Income No Asset No Employment
• No Doc Loans
• Investment Property Refinance / Non Owner Occupied
• My Community Mortgage
• 80/20, 80/15, 80/10
• 100% Financing
• Home Improvement Loan

Refinancing your current mortgage with Discount Mortgage Lenders can lower your monthly payment, help you stretch your budget, pay off existing debts, or just put a lump sum of cash into your hands.

The money is yours to use any way you like-when you refinance, you can borrow additional cash to plan a dream vacation, upgrade your home, or just keep a cash reserve on hand as a financial buffer against emergencies.

Is it worth your time to refinance? We know refinancing, please call our local office, fill the easy on line application or drop us a visit. We will always provide prompt and courteous service no matter what your needs may be.