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Best Reasons to Refinance
 
Refinance from an ARM to a fixed-rate
Refinance from a fixed-rate mortgage to an ARM
Lower your monthly mortgage payment
Getting cash from your home
Consolidating high-interest credit card debt
Refinance checklist
 
 
   

 

Refinance from an Adjustable Rate Mortgage (ARM) to a fixed-rate
It's important to consider what mortgage rates are doing. Since mid-2004, the Federal Reserve has raised interest rates several times and is expected to keep raising rates in the near future. This means that if you have an adjustable rate mortgage (ARM), it may adjust to a rate that's higher than a fixed-rate mortgage . Now might be a good time to consider refinancing to a fixed-rate loan. However, you must also consider the amount of time you plan on being in your home. If you're only going to be in your home for a few more years, it may make sense not to refinance out of your ARM. If you're going to be in your home longer than seven years, it might be a smart move to refinance to a fixed-rate mortgage.

Again, you need to consider how long you plan on being in your home. Many people move within nine years so it may not make sense to pay a higher interest rate for a 30-year fixed-rate mortgage when you're not going to be in the home that long. Doing so may be costing you money. Consider refinancing to an ARM instead you'll get a lower rate and lower your monthly mortgage payment.

A drop of just one half to three quarters of a percentage point in interest can lower your monthly payment. If you don't refinance, you may be paying too much every month for your loan, and that's never a good financial move. There are a few different ways you can lower your monthly mortgage payment. First, you can simply refinance to a lower interest rate. A lower rate generally means a lower monthly payment.

Second, you can change the term of your mortgage. For instance, if you have a 15-year mortgage, you can lengthen the term to 30 years. Since the balance of your mortgage is spread out over a longer period of time, your payment is lower. However, if you have a 30-year mortgage and one of your financial goals is long-term savings, you may want to consider shortening your term to 20 or even 15 years. Your payment will be higher, but you will pay much less in interest over the life of the loan, saving you thousands of dollars in the long run.

The third way to lower your payment is to refinance to an interest-only loan. Basically, with an interest-only loan, the minimum amount you are required to pay is the amount of interest for a certain period of time, though you can pay as much principal as you like. But you get the flexibility to pay less if you need or want to divert your money elsewhere, such as contributing to your 401k or saving for your child's college tuition.

Use our refinance calculator at
Quickerlend to see how you could lower your monthly mortgage payment.

Getting cash from your home
The equity you have in your home can act like a savings account that you could access through a home equity loan or a cash-out refinance. This is usually done when you want to finance an important home improvement, pay for college or pay off high-interest credit card debt. Whatever your reason, this may be the right option for you.

The difference between credit card debt and a mortgage can, financially speaking, mean thousands of dollars. Why? Because unlike your mortgage, the interest you pay on a credit card is not tax-deductible and you pay a higher rate than you would on your mortgage. Because of this, credit card debt is often referred to as "bad debt" whereas your mortgage is considered "good debt." Using your home equity to pay off your high-interest credit card debt can save you money in the long run. Using your home equity, rather than your credit cards, to finance expensive purchases can also be a smart move. Be sure to consult with our tax advisors at Quickerlend. Deciding on when to refinance your mortgage will depend on the circumstances of your situation: how long you'll be in the home, what your financial goals are, whether interest rates are dropping, etc. It's up to you to decide if it's right for you.

Completing a loan application is the first thing you'll do when refinancing your mortgage. You may also need to provide a variety of documentation to help your mortgage lender approve you for a home loan. The documentation will vary depending on the lender you choose, your loan program, and your personal financial situation. The following is a list of documents generally required during the refinance application process. You may or may not need everything on our refinance checklist, but for a fast and easy loan process, have these items available when you're ready to complete your mortgage application.

  • Proof of income: Typically, you'll need to show original pay stubs for the last 30 days.


  • Copy of homeowners insurance : Verifies that you have current and sufficient coverage on your home.


  • Copies of your W-2 forms: Required for each loan applicant and helps your lender verify past employment and income history.


  • Copies of asset information: Including accounts holding money for closing costs, statements for savings, checking and 401K accounts and investment records for mutual funds or stocks.


  • Copy of title insurance : Helps your mortgage lender verify the taxes, names on the title and legal description of the property.
Once you've begun the refinance process, your refinance expert will tell you which documents you'll need to get approved. They may vary depending on where you live and which loan program you've selected. But keep in mind the more information you have ready before you apply, the less time it will take to get approved and close your loan. You can contact our experts at
Quickerlend for more information.

 
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