*ALL CREDIT CONSIDERED!
There are TWO
Refinance options:
1) Cash-Out Refinance, and
2)
NO Cash-Out
Refinance, otherwise known as a “Rate
and Term” Refinance.
You may include all of the Points and closing costs into the loan for both options. For those who want to take "CASH OUT", refinancing is an alternative to a high interest equity loan.
The maximum LTV for a "Cash-Out" refinance is 75% because it is a high risk loan (although we could finance as high as 100% Cash Out).
*Note:
LTV means Loan-to-Value: It
is the Loan amount divided by the Home Value.
An $80,000 Loan divided by a home value of $100,000 is 80% LTV.
The definition of Cash-Out is when you walk away from the closing with more than 2% of the loan amount after the first mortgage, second mortgage (if applicable) is paid off and the closing costs are paid. In addition, if your 2nd mortgage is less than 12 months old and you have intentions to pay that off too, the underwriter will look at the transaction as a "Cash-Out". All 2nd liens must have a 12 month seasoning requirement to be considered a NO Cash-Out.
Paying off Car loan, personal loans, credit cards or taking money to buy a car or take a vacation or pay for college is considered CASH-OUT.
NO CASH OUT is when you refinance to lower your interest rate, loan program or term (i.e. 30 year to a 15 year). In this case, you can finance up to 95% of the home value.
People refinance for a variety
of reasons. Here are a few reasons.
1. Rate decrease,
lowering monthly payments.
2.
Changing from a 30 year
to a 15 year (or visa versa)
3.
Paying off Car loans,
personal loans, credit cards…
4.
Paying for college or
buying a new boat or car and want the tax advantages of using your home.
5.
Need CASH!
It is a good idea to Refinance
at the end of the month, this will reduce the pre-paid interest that you will
have to pay. Pre-paid interest
(interim interest) is the interest charged from the day of closing to the end of
that month. Your first mortgage
payment will be due on the 1st of the next month.
Refinancing
from a 30 year to a 15 year loan can save “tens
of thousands” of dollars. If
you qualify and the mortgage payments are within your budget, you should
consider a 15 year mortgage. Why?
A $100,000 mortgage loan for
30 years at 8% interest equals: $733
per month or a total of $264,155 over 30 years.
A 15 year payment would be $955 ($222 higher per month), but equals
$171,900 over 15 years. A savings of
$92,255.
Is a Refinance in your best
interest?
You can only find the answer by calling me at 1-800-817-8743 and I will complete an analysis for you.
For more information, please call Dan Palumbo @ 800-817-8743 Dan is the published author of the Mortgage Loan Officer Training Manual. You may order one by visiting www.mortgagetrainingmanual.com
Licensed Mortgage Banker - New Jersey Department of Banking and Insurance; Licensed by the Pennsylvania Department of Banking; Virginia Licensed Mortgage Lender