Reasons Why Homeowners Refinance Their Mortgage Loans
This Article Is About The Reasons Why Homeowners Refinance Their Mortgage Loans
In today’s falling interest rate environment, we have seen a flood in refinance transactions. Despite the coronavirus economic recession in the nation, the housing market is booming. Home prices are skyrocketing to record levels. Due to rising home prices, the Federal Housing Finance Agency increased conforming loan limits for the fifth year in a row. Conforming loan limits for 2021 is now at $548,250. HUD, the parent of FHA, is expected to follow in the FHFA’s lead and announcement of the loan limit increase on FHA loans in the coming days. With historic low mortgage rates, many homeowners can take advantage of the various refinance loan programs available. With many homeowners with high equity in their homes, borrowers can take advantage of cash-out refinance loans.
- There are many different reasons why Americans choose to refinance their homes
- In this blog, We will detail the refinance process, go reasons why people refinance and explain what net tangible benefit means
- Gustan Cho Associates Mortgage Group have many refinance loan options available without LENDER OVERLAYS
Ways And The Reasons Why Homeowners Refinance Their Mortgage Loans
There are many different ways to refinance your home.
- We offer Conventional, FHA, VA, USDA, and NON-QM refinance mortgages
- With all these programs available, how do you know which one is best for you?
- The answer is simple
- Your loan officer will determine which loan product will best suit your refinance goals
Based on your credit score and equity position, your loan officer will put you in the best fitting refinance loan product.
Reasons Why Homeowners Refinance And How Does The Process Work
How does the refinance process work?
It is very similar to a purchase transaction but with less stress. You already own your home, there is no moving involved, so the strict time frame requirements are not there. When you are buying a home, there are more moving parts. The refinance process begins when you complete an online application. From there you will send your loan officer the proper documentation.
- Driver’s License
- Last 30 Days of Pay Stubs
- Last Two Years Tax Returns
- Last Two Years W2 or 1099s
- Mortgage Statement
- Homeowners Insurance Policy
Steps After Completing Mortgage Application
Once your loan officer has your application, they will be able to verify your credit report.
- Your loan officer will qualify you with the credit report and the documentation above
- Once you and your loan officer agree on which mortgage product is best for you, the loan package will be disclosed to you
- Just like a purchase transaction, you will electronically sign the loan package
- There may be a few additional documents that require your ink signature
- Once these documents are received, the lender will order your appraisal
The appraisal value is incredibly important for refinance transactions.
Importance Of The Home Appraisal
The appraised value will give the lender the baseline for structuring your loan.
- During the appraisal process, your file will go through underwriting
- The underwriter will let us know what additional documents, if any, are needed to close on the refinance
- At least three days before closing you will be sent a CLOSING DISCLOSURE
- The Closing Disclosure or CD will detail the final figures for your refinance transaction
- Three days after signing that document, you can then legally close you refinance
- The majority of refinance transactions are closed in the comfort of your own home or with a mobile notary
- If this is a primary residence, there is a three day RIGHT TO RESCISSION waiting period before your loan will fund
If this is a second home or an investment property, your loan will fund without this three day right to rescission period. That’s it!! We are experts in this process and are here to help you!
The Top Reasons Why Homeowners Refinance Their Mortgage Loans
There are many reasons why Americans refinance their properties.
- The majority of the time, they are either taking cash out of their property or getting a lower interest rate on their mortgage
- A CASH-OUT REFINANCE mortgage can be used for paying off high-interest Consumer Debt, Home Improvements, or investment opportunities
- A RATE AND TERM REFINANCE simply gives you a lower interest rate or a shorter-term to pay off your mortgage, saving you money
- Other examples include removing a co-borrower or non-occupying co-borrower from the mortgage
- Usually, this happens when the person who co-signed on your mortgage needs to buy a home for themselves
- The only way to accomplish this is with a true refinance
- Other circumstances include divorce or family separation
If you are interested in refinancing your property, call Gustan Cho Associates directly at 262-716-8151 or text us for a faster response. Or email us at [email protected]
Meeting The Net Tangible Benefit Test
Stricter regulations were put on refinance transactions during the real estate crash of 2008. Now you must pass a net tangible benefit to refinance your mortgage. Meaning there has to be a benefit to complete the transaction. before these regulations were put in place Americans were refinancing their homes like crazy. the net tangible benefit guarantees that you will recoup the cost associated with the refinance transaction in a reasonable amount of time. A few examples of net tangible benefits are:
- Obtaining a lower interest rate
- Obtaining a lower monthly payment, including principal, interest, taxes, and insurance
- Obtaining a shorter mortgage term (EXAMPLE: refinancing from a 30 year to a 15 year)
- Refinancing from an adjustable-rate mortgage to a fixed-rate mortgage
- Eliminating a balloon payment
- Eliminating a negative amortization feature
- Receiving cash out
- Eliminating mortgage insurance
The list goes on and on, but you can see there are many different ways to pass the net tangible benefit requirement. These laws were put in place to protect the American people.
Qualifying For A Mortgage With A Direct Lender With No Overlays
If you feel like a refinance will benefit you and your family, please give us a call directly. Gustan Cho Associates is a mortgage company licensed in multiple states without any lender overlays on government and conventional loans. If you have been turned down by another lender, don’t be shy contacting us. Most lenders do not offer the loan products that we do. NON-QM refinance loans are more popular than ever! call us today for a one-on-one consultation and receive custom refinance options. We look forward to hearing from you. Feel free to contact us at 262-716-8151 or text us for a faster response seven days a week. Or email us at [email protected]