Refinancing is often used to lower your interest rate. If rates have dropped since you last financed your home, you may want to consider refinancing. Other common reasons to refinance include paying off a balloon payment, converting an adjustable rate loan to a fixed rate loan or to extract cash equity in your home (cash out). A few reasons for cashing out include: home improvement, an education fund, and consolidating debt.
Another way to convert equity in your home to cash is a “home equity” loan. A “home equity” loan is an alternative to refinancing if your home loan has a very low rate compared to current interest rates or if you have a prepayment penalty on your loan.
Just imagine what you could do with an extra $100, $300 or more each and every month. You might decide to apply the savings toward your balance and build equity faster. Or maybe you just might want to put the money in your savings account or portfolio and watch it GROW! The best thing is. you’re in control . You decide what is best for your family!
In order to refinance you will need a current appraisal, analysis and in many cases verification of your income and assets, as well as most of the same paperwork required when you originally financed your home. Adequate property insurance and new title insurance is necessary.
First, you, the borrower, will fill out an application and gather up current pay stubs, W2s, 1040 Tax Forms and Bank Statements. At the same time, Imperial will review your credit to determine, along with all of the other paperwork, what is the best rate for your property and financial situation. Since different loan programs can cause different valuations for a borrower, it is good to connect over the phone or in person and find out about your needs. No rules are carved in stone. Each client is handled on a case-by-case basis. So even if you come up a little short in one area, your stronger point could make up for a weak one. It’s about compensating factors that create balance in the eyes of the lender.
Second, Imperial will select a loan program that fits your needs and lifestyle. This depends on how long you plan to keep the loan/property. If you plan to sell the house in a few years, a shorter term loan like a 3/1, 5/1 or 7/1 ARM might be suitable. If this is a home you plan to live in for the next 15-30 years, a more long-term loan like a 15-year or 30-year fixed might more suitable. Shopping for a loan is very difficult without mortgage experience, as there are so many lenders and programs to choose from, each with different rates, points and hidden fees. That’s why an experienced mortgage broker like Imperial can evaluate your situation and recommend the most suitable mortgage.
Once you submit your paperwork and Imperial has evaluated your needs and financial situation, we get to work and research the different programs and lenders that might be suitable for you. At the same time we order an appraisal and open escrow on your behalf. Once we have an approval, our processing team works on clearing any conditions the lender might have. When conditions are cleared, we make sure documents are sent to the title company and have the escrow officer prepare all the documents for you. When all of the documents have been signed, they go back to the lender for final approval and our team works on any last minute conditions that need to be met. There is a 3-day right of rescission, meaning, if for some reason you choose to not go through with the loan you can do so.
What does it cost? The costs are minimal to the borrower…YOU. To start, there is a credit report fee which usually runs around $17 per borrower (married couples are only $17). There is also an appraisal fee which can run from $250-$900 depending on the size of the property and the type of appraisal needed for the loan. These are the only two costs the borrower will need to pay up front. There are some closing costs, which we account for in escrow, but those are mainly for processing, escrow and title. You can also choose to pay points, or not, but this is something we can discuss in further detail if interested.