Most Frequently Asked Questions About Refinancing Your Home

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Many people tend to oversee the fact that when interest rates are low, they have a significant impact on more than just people buying a home.  Low interest rates, in fact, have a HUGE impact on the overall cost on a mortgage so when people refinance their existing properties under lower rates it translates to thousands and thousands of dollars in savings.  Not only that, if these same homeowners who opt to have their homes refinanced also reduce the term on their mortgage, the savings are unprecedented.  

To help explain some of the most widely asked aspects of the refinancing process, here is a list of questions and answers that shed light on the issues that will help you in determining whether refinancing is right for you.


What Are Some Reasons To Have Your Mortgage Refinanced?

The current real estate market today is experiencing all-time low, historic interest rates on mortgages.  For many professionals in the industry, this is the first time they have witnessed rates at this level.  Reasons for obtaining refinancing on a property include reducing interest rates, reducing the overall term on the mortgage i.e. going from a 30-year loan term to a 20-year term and also to be able to leverage equity that is held up in an existing property.

How Does A Term Reduction Look On Paper?

When the number of years of a mortgage loan is reduced, also called a term reduction, payments may or may not remain the same but the time within which the loan must be paid off is significantly less.  For example, a previous mortgage at 6% for a 30-year term can be refinanced at 3.5% payable in 15 years, which adds up to a savings of hundreds of thousands of dollars and reduces many years off the loan repayment schedule.

What Factors Go Into Eligibility For No Closing Costs Refinancing?

Many mortgage companies are now crediting closing costs.  Though this is a facility that is scrutinized based on an applicant’s eligibility, the savings add up. Eligibility is determined based on specific criteria including the applicant’s credit report and credit score, plus whether or not there is a second mortgage.  Credit score expectations are within the low to mid 700 range, with the higher score translating to better concessions.

How Does A Loan Officer Decide On A Refinance Application?

Each borrower’s situation is different.  Mortgage lenders consider what the loan’s value is, the credit scores, home value and how the market is performing such as in a depreciating market. 

What Is PMI And Can I Avoid It In A Refinance?

Private Mortgage Insurance, or PMI, is required by lenders of most homeowners that borrow at least 80% of the home’s value.  It works as a protective measure in case of default. In cases where the current mortgage is owned by Fannie Mae or Freddie Mac, there is a provision for appraisal relief that can result in exemption from PMI.

What Is The Typical Time Frame For A Refinance Process?

Most applications take about 4-6 weeks if it is a straightforward case. If there is a second mortgage it involves another bank and entails coordination and additional time for processing.

Can I Use Refinancing For Leverage In The Market?

Refinancing would unlock any equity in your home, allowing you the leverage to use those funds in a new purchase.  Not only will it boost the sale process on a new home but it could also eliminate the need for PMI if you put at least 20% down.

What Documents Are Required For The Initial Consultation?

In order to initiate the application process, people applying for a refinance should produce the last two paycheck stubs, W2 statements from the previous two years and the previous two months’ bank statements.

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Regardless of if you are selling, refinance should be considered to be able to reduce monthly payments on a home.  This is also a good time for investors to cash in on the opportunity. For a customized assessment, it is advisable to consult with your Realtor.

Top Home Improvement Projects; Understanding How Enhancements Impact Your Bottom Line ROI

 

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Everyone needs to value and protect his or her assets, especially with the current economic situation. One of the best ways to do this is to maintain, manage and make strides toward constant betterment. In a house this can mean any number of things. Whether you choose to enhance an existing bedroom, extend your kitchen, install new flooring in the basement or even replace the garage door – all these and significant others – are excellent ways to strengthen the value of your property. With these home improvement projects, you will enjoy continued returns on the investment that you make in your most cherished asset.

How Does ROI Work?

In real estate it is the formula that is used to compare the cost of remodeling projects with the value those projects will retain at resale. With a little time, energy and effort, you will undoubtedly get back lasting value, increased enjoyment and an enhanced return on your investment. In terms of home improvements, making adjustments to outdated areas of your home, will not only make the space more enjoyable to live in, but it will also increase the resale value of the property. So while it may seem costly to redo the entire kitchen cabinetry and countertops, the chance that you will recover most of the monies spent on the improvement are very high.

Home Improvement Projects Yield Great Returns
Kitchens

Since the kitchen is usually the area in a home that gets the most traffic, it is often one of the first aspects of a home that is judged during evaluation by buyers. Updated, modern and functional kitchens are an important selling feature. If yours is lacking in any of these areas, by embarking on a kitchen remodel project you will could see significant ROI. While the cost of improving a kitchen can be relatively high, the returns of as high as 72% make the initial investment bearable.


Doors and Windows

One of the easiest ways to change the look of a home while increasing its value at the same time is to update the doors and windows. Considering the growing penchant for energy-efficiency in homes, the installation of doors and windows with high-end, energy-efficient sealing and construction will be a welcome addition to any home. When you look at the amount of money saved each year on energy bills, that alone makes the decision to update this aspect of your house an easy one.

Also with the growing security concerns many people are feeling these days, the confidence level of homeowners (and prospective buyers) will soar with the inclusion of solid, quality entry-exit points and windows. While there is a fluctuation based on the type of doors and windows on costs recouped from the initial expense, in general the returns are significant.

A new and improved garage door is a significant change for the better in most homes and one that has seen a ROI of as much as 84%.

Systems Upgrades

In many cases the core systems of a house, like the heating/cooling system or plumbing – tend not to be changed until they break down. When considering ways to improve a property, examine the condition of these systems and, if applicable, maintain or manage them to a level of improved function. If possible, replace parts or entire ensembles. The returns on these investments will be impressive.

Cosmetic Changes

A fresh coat of paint can do more than just spruce up the look of your home. If you are in the market to sell your house, a simple yet highly impacting project like repainting the walls or installing new flooring in your home, can have an immediate impact on prospective buyers. The additional bargaining power you will get from making such adaptations will be more than worth it.

Outdoor Elements

Not surprisingly, many people give great important to the quality and condition of decks and other outdoor spaces in a home. Whether this means your patio and recreation area, the landscaping or even the type and style of boundary fence – an often underestimated aspect of properties is outdoor care. According to Realtor Magazine, a deck addition can yield as much as nearly 73% return on investment.

Structural Enhancements

This is an often overlooked part of a home since it’s not really visible as much as the elements inside the house. As is the case with system-wide functions, the structural aspects are usually tended to when there is a need for major repairs. Prevention is one way to keep a roof, for example, in top condition and ready for any sudden burdens that may arise such as a storm. Siding is also important when determining a home's overall condition and one that cannot be ignored, especially when you plan to put your house on the market. The difference between having quality vinyl siding installed versus a less-than-desired state can be significant. With an ROI of as much as 70-80%, there is an excellent financial incentive to improve these areas as well.

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No matter which area of your home you decide to improve, the results are unmistakable. Not only will the quality of your life be greatly enhanced but also when it does come time to sell, the value of your home will be significantly increased, giving you an exceptional ROI as a result of those home improvements.