| TWO: BEST WAY TO REFINANCE

There are many benefits to refinancing your home. How do you get the most value out of refinancing, and is it even the right decision for you? PrimeLending can help you make the best decisions for your needs.

What Is the Best Way to Refinance?

When making the decision to refinance, consider all your options and pick a plan that will best help you meet your financial goals.

What Types of Loans are Available?

  • Fixed Rate: With established and predictable monthly mortgage payments.
  • Adjustable Rate: The rate of an adjustable-rate mortgage is designed to change with the movements of the market index to which it is linked.
  • Cash Out Refinance: While rate-term refinances can change the repayment terms or decrease the interest rate, or both, a cash out refinance provides a higher loan amount than the current mortgage. This excess then can be used to consolidate debt, put toward home improvements, or dedicate to educational funds or other investments.

Which Loan Term is Right for Me?
Repayment schedules can vary greatly. Fifteen to 30 years are the most commonly found repayment schedules, with the 15-year mortgages typically offering lower interest rates than those found with 30-year mortgages. Likewise, you would pay substantially less in total interest if you were to stay with the 15-year mortgage through the life of the loan.

A shorter term is often the best choice if you plan to own the home for the full life of the loan. Although this can set you up with higher monthly payments, it will decrease your interest rate and reduce the amount of interest you pay overall.

If you have plans to own the home for less than seven years, however, you may be best served by going with a longer term of repayment. While this could set you up with a slightly higher interest rate, it could provide you with lower monthly payments since they are spread over a longer period of time.

How to Prepare for a Refinance Closing

How Does Closing a Refinance Work?
As with the closing for your purchase, you’ll have several documents to sign at the closing for your refinance. Your former mortgage will be closed out, and you will begin again under the new loan structure established in your refinance agreement.

How Do You Prepare for Closing?
As your closing date approaches, you’ll want to be sure to stay in good contact with your loan officer. Although you’ve gone through the closing process before, you want to make sure the refinance process goes smoothly as well. Being prepared will always pay off in the end. Here’s what you’ll need:

  • Documents: Verify that you have the documentation needed to move forward into closing.
  • Credit: Review your credit history. To make sure you have good credit standing, refresh yourself on how your credit score is derived and also on ways to keep your credit clean.
  • Insurance: Confirm that your insurance policies provide appropriate coverage for your home’s value and contents. Also, double-check that the policy reflects the name of your refinance lender as the payee for losses.
  • Rate: Consult with your PrimeLending loan officer about locking in your interest rate before you close. Locking a rate before you close will provide protection for you if rates should rise before your closing date.
  • Escrow: Examine your current loan’s escrow account and determine if a surplus or deficiency of funds exists.
  • Closing Costs: Arrange to bring to your closing appointment a cashier’s check made out for the exact amount you’ll need.

PrimeLending strives to make this process smooth for our customers. You should now be able to enjoy all the benefits provided by refinancing your home.

 

  1. SHOULD YOU REFINANCE?
  2. BEST WAY TO REFINANCE?