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Connecticut Home Loan Refinancing

Posted on September 12, 2014 · Posted in Connecticut Mortgage Refinance, Mortgage Refinance

CT Home refinancing

 

There are a few things to keep in mind when you re-finance your home.  You will want to make sure the refinancing makes sense financially.  Take a look at the mortgage you have now.  What is the interest rate? How long is the loan for (term) on the mortgage? How much are you paying in private mortgage insurance (if anything)? How much equity do you have in your home?

 

After you have 20% equity in your home you no longer are required to have mortgage insurance.  However if your original loan was an FHA or similar product you will be paying PMI indefinitely; FHA, CHFA, USDA all carry a lifetime PMI.  The PMI is expensive in comparison to a conventional mortgage product.  Therefore if you can re-finance your mortgage and drop the PMI payment you will be better off in the long run.

 

Take a look at the terms.  Let’s not forget that the house is not an ATM machine.  The goal here is to pay off the mortgage at some point.  If you have had a mortgage for 10 years and you refinance back into a 30 year loan you just added 10 more years to the mortgage.  The best option is to refinance into a 20 year loan or even better a 15 year loan.  30 years is the norm and most banks are going to just put you in a 30 year product without thought.  You can save yourself tens of thousands of dollars going to a loan with a shorter term.

 

Take a look at the interest rate.  You will want to get into a loan with a cheaper interest rate.  Again another great way to save money in the long term is go with a shorter term on the loan and the rate will be less expensive.  A 15 year mortgage carries a lower interest rate vs. a 30 year mortgage.  Your FICO score is the biggest factor that will drive the cost of your loan.  Make sure your FICO score is in good shape and the information on your credit report is correct.  If you have brought your FICO score up since you obtained your first mortgage perhaps it is time to take a look and see what kind of rate you can get.  With an increased FICO score your rate and the cost of PMI will go down.

 

The Appraisal process is important to consider.  The appraisal will cost you about $450 – $650.  If you do not have much equity in your home the process might end up being a waste of time.  For an FHA refinance you will need at least 3.5% in equity in your home.  Take a look at what has sold recently in your neighborhood and take an educated guess as to weather or not it is worth spending the money on the appraisal.  If the appraisal comes back less than you thought it will put an end to the possibility of refinancing.

 

Please call me with any questions or for a free consultation.

 

Thank you,

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Michael Meyer
Senior Vice President of Northeast Financial
NMLS#117875
Mike@northeast-mortgage.com
860-876-0572
210 S. Main St Middletown, CT 06457

Company NMLS#117273 

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FHA Disclosure

NMLS# 117273, Northeast Financial, 860-788-7237

The principal and interest payment on a 203,500 30 year FHA fixed rate loan at 3.25% on 96.5% loan to value is 1,025.99 with 0 points due at closing.  The APR is 4.491%.  Payments include a one time upfront mortgage insurance premium (MIP) at 1.75% of the base loan amount and monthly MIP is calculated at .85% of the base loan amount.  The .85% monthly MIP is required for a specific period of time regardless of your down payment or equity in your home.  The principal, mortgage insurance, and interest payment does not include property taxes or home owner’s insurance premiums, which will result in a higher actual monthly payment.  Rates current as of 6/26/17