Refinance Guide
As a homeowner, a common question you will encounter is “Should I refinance?” Depending on your circumstances and long-term financial goals, it’s very possibly refinancing your home is a logical and beneficial step for you to take.When you start to consider refinancing, it’s important to work with a trusted mortgage lender like First Choice Loan Services Inc. From lowering your risk to paying off your loan quicker, we can help you understand the benefits and gain the financial stability and flexibility you’re seeking from a refinance.
Use this helpful guide to better understand the considerations, advantages, options and overall process for refinancing your existing mortgage.
For homeowners, a common question is, “Should I refinance?” The answer that is right for you depends on your circumstances and long-term financial goals. Your trusted Loan Originator at First Choice Loan Services Inc. is here to offer you expert guidance custom fit to meet your needs!
When refinancing, your lender pays off your existing mortgage and then extends a new mortgage to you. Restarting your mortgage may sound like a step backwards, but the benefits of refinancing can outweigh the commitment to a new home loan. When you choose to refinance, you could be able to:
The benefits of refinancing are clear, but when do you know if it’s the right time to refinance your home?
In general, if your mortgage rate is higher than current interest rates, then it’s typically a good idea to refinance. There are other circumstances in which it may be wise to opt for refinancing, such as:
- If your home value has appreciated in value, refinancing can help you to take advantage of your home’s increased equity.
- If mortgage interest rates have fallen 1/2% to 5/8% below your current interest rate, then refinancing can help to shorten the terms of your repayment or lower your monthly payment while maintaining a comparable repayment term.
- If it’s early in the life of your mortgage term and payments are going mostly toward interest, then refinancing can help more compared to later in the life of the mortgage when payments are being directed more toward principal than interest.
There are many factors to consider when choosing whether or not to refinance, including your long-term financial goals and how long you intend to stay in your current home. You’ll want to base your decision to refinance on the bigger picture. Be sure to speak with a First Choice Loan Services Loan Originator to understand the advantages and disadvantages of refinancing.
How to Prepare for Closing
As a homeowner who previously has been through the closing process, you certainly are familiar with the loan closing experience. Still, a few years may have passed since your last closing experience, and you’ll want to be sure to do all you can to have the closing on your refinance go well. Your Loan Originator with First Choice Loan Services Inc. will help you to prepare for the closing on your refinance by ensuring that you have all the information you need to enjoy your new home loan.Some of the best ways to prepare are to:
For whatever reason you’ve decided to refinance, First Choice Loan Services will deliver a boutique-style mortgage experience that will give new life to your home financing and will bring you closer to your long-term financial goals.
The process of closing on a refinance can be just as exciting and anxious as the day you purchased your home. First Choice Loan Services Inc. is here to help make the refinancing process as easy as possible. We want to ensure you have a smooth and pleasant experience from beginning to end. The following covers information on the closing of your refinance including who will be there, what happens, documentation and closing costs.
Who is present?
Depending on the state where your property is located, the property type and more, the people in attendance during your closing process may include your attorney, a lender’s representative or your title company, the closing agent and a public notary.
What can you expect?
The closing process can occur in a number of locations including the office of your title company, your First Choice Loan Services Loan Originator, your real estate attorney or another location. At your closing, you’ll want to:
- Fully review and sign all of your loan documents, ensuring that you completely understand the term layer to which you are agreeing.
- Supply evidence of homeowner’s insurance and inspections (if applicable)
- Present a certified or cashier’s check made out for the amount of your closing costs, prepaid interest, taxes and insurance.
- First Choice Loan Services will distribute the funds of your home loan amount to the closing agent.
- Based on the terms of your loan, you may be asked to set up a new escrow account with First Choice Loan Services to ensure that your property taxes and homeowner’s insurance can be paid along with your monthly mortgage payment.
What documents will you sign?
The purpose of closing is primarily to review and sign documentation that locks you into your refinance. You can expect to sign the following documents during closing:
Closing Disclosure:
This is the itemized list of the final charges for your loan. Each borrower and person who has ownership of the property must receive the Closing Disclosure at least three business days before the scheduled closing in order to have time to review the final figures and compare them to the Loan Estimate.
Deed of Trust or Mortgage:
These documents outline your agreement to a lien on your property, and provide security for repayment of your home mortgage.
The Promissory Note:
The mortgage promissory note is a document that legally binds you to pay your lender according to the agreed terms, including mortgage payment dates and where the payments should be sent.
How do you determine your refinance closing costs?
Within three business days after submitting your loan application, you will receive a Loan Estimate which estimates your loan’s costs. Your closings costs generally can include discounts points, origination fees, notary fees, appraisal costs, recording fees, title insurance and more. Your First Choice Loan Services Loan Originator will be able to explain any noted costs that might be unclear to you.
Each borrower and person who has ownership of the property must receive the Closing Disclosure at least three business days before the scheduled closing in order to have time to review the final figures and compare them to the Loan Estimate. The Closing Disclosure will outline your final closing cost, most of which were already noted on your Loan Estimate. When you sign your final mortgage loan documents for your refinance, you will be asked to pay closing costs that generally total 3% of the total loan amount. The amount of your closing costs depends on the state in which your property is located, the time of year you close and when property taxes are due, and the type of loan you choose. These funds will be due at the closing appointment, you’ll need to bring a certified or cashier’s check for the amount of the closing costs with you unless these costs are financed into your loan amount.
Your First Choice Loan Services Loan Originator will review all of these fees with you to be sure that you have a clear understanding of how your refinance closing costs are calculated.
Let's Refinance Your Home Loan
Your home loan is a big part of your life. So, when your needs in life change, we believe your loan should have the ability to adapt as well. As your trusted advisors, we'll spend time getting to know your current situation and financial goals.