Remember: refinancing starts homeowners back to the beginning of the payment process and off with a new mortgage entirely and the benefits may be worth it if homeowners are able to:

• Switch their loan from a balloon or an adjustable-rate mortgage to a fixed-rate mortgage, lowering the risk of a changing interest rate
• By lengthening the repayment term or changing to a lower interest rate, decrease their monthly mortgage payments
• Shorten the term of the loan and pay off the loan sooner
• Take advantage of the lower mortgage interest rates, allowing homeowners to decrease the interest costs over the life of the loan

In order to help you feel confident and assured in your decision to purchase a home, we’ve created this useful guide that will serve as your roadmap!

To make the most prudent decision for you and your financial situation, you’ll want to consider how long you plan to stay in your home and how going through the refinance process will help achieve your long-term financial goals. Once all contributing factors are considered, it may be a good time to refinance if one or more of the following applies to you:

1. The value of your home has appreciated. You can take advantage of your home’s increased equity.
2. Falling mortgage interest rates. It could be a healthy scenario to refinance if market rates drop ½ % to ⅝% below your current interest rate. There are 2 potential benefits that could help lower your overall loan amount. Especially in a market where interest rates are falling. Make the same or comparable payment amounts while shortening the terms of your repayment; Keep the same or comparable repayment term while lowering your monthly payments
3. It’s early in your mortgage term and at this point since payments are mostly geared towards interest, it’s more beneficial than later in the life of the mortgage. Especially considering, payments are then going more toward principal.

Making the decision to refinance may be difficult, but make sure to consider all your options and select a plan that will help you attain your financial goals

Types of Loans

• Fixed Rate: established and predictable monthly mortgage payments
• Adjustable Rate: designed to change with the movements of the market index to which it is linked
• Cash out Refinance: provides a higher loan amount than the current mortgage.

The most common repayment schedules are fifteen to thirty years with the 15-year mortgages generally offering lower interest rates than those found with 30-year mortgages. You would also pay substantially less in total interest if you stuck with the 15-year mortgage through the life of the loan.

If you plan on owning the home for the full life of the loan, a shorter term is the best choice. Keep in mind that this may set you up with higher monthly payments, but will decrease your interest rate and reduce the amount of interest you pay over time. However, if you plan to own the home for less than 7 years, it may be in your best interest to go with a longer term of repayment. This could provide lower monthly payments, but will set you up with a slightly higher interest rate.

Similar to the closing for your purchase, you’ll have several documents to sign when closing your refinance. You will start over under the new loan program outlined in your refinance agreement and your former mortgage will be closed out.

Upon your closing date, you’ll want to remain in touch with your loan office. You want to make sure the refinance process runs as smoothly as possible. To ensure this, you’ll need the following:

• Documents: in order to move forward, verify that you have the documentation needed
• Credit: review your credit history to make sure you’re in good standing
• Insurance: make sure your insurance policies provide coverage for your home’s contents and value. You’ll also want to double-check that the name of your refinance lender as the payee for losses is reflected in the policy
• Rate: before you close, consult with your loan office about locking in that interest rate! Locking a rate before close will protect you should rates rise before your closing date
• Escrow: study your current loan’s escrow account and determine the state of your existing funds
• Closing Costs: Bring a cashier’s check for the exact amount to your closing appointment