When should you consider refinancing your mortgage(s)? Among the reasons that people choose to refinance ["refi" as it's called in the mortgage business] are to lower the interest rate, reduce the number of years remaining to payoff, convert "home equity" to cash for use elsewhere, consolidate other debts such as credit cards and loans, convert the loan from a variable rate to a fixed rate, eliminate PMI premiums from the payment, and so on.

What is refinance? It is a new loan that replaces your existing 1st mortgage. It is not simply a loan modification. Because the refi is a new loan, lenders will treat the transaction as such, and will require most, if not all, of the same documentation that is needed for a purchase mortgage. This means that you must provide the income, credit, asset verifications outlined on the "loan documentation" page located elsewhere on this web site.

Additionally, the lender will want either a new or updated appraisal, credit report, title search, title insurance, survey, flood certificate, etc. As a result of these requirements, you will incur closing costs. These costs can be handled in one of three methods: 1) paid in cash; 2) added to the loan balance; or, 3)financed into the interest rate. How the costs are handled and quite frankly, whether or not you should refinance, is typically a function of how long you expect to keep the loan and property. I will be happy to help you with this analysis.

Also, since a refi is new loan, you will be required to re-set the insurance and tax escrow account at the closing. However, once the old loan is paid off, you will receive a refund of the escrow account from the old lender. The new escrow amount needed at closing should be equal to the amount in your existing escrow account.

Finally, at the closing, you will pay, or have financed, the interest-only portion of the next payment that is due. For example, if you have a payment of $850 due on March 1st, you will pay about $650 of interest at a February closing. You then skip the March payment, and begin payments on the new loan on April 1st.

To Find out if refinancing is a good idea for you, please complete the On-Line Application, or call Rob Hickerson with LouisvilleMortgage.com & Mortgage Professionals, Inc. at (502) 553-3212 or (877) 993-2328.


Rob Hickerson of LouisvilleMortgage.com & Mortgage Professionals, Inc.
(502) 553-3212 or (877) 993-2328

NOTE: Rates and APR quotes are based on a 20% down payment for conventional mortgages and minimum down payment for FHA/VA. These are sample rates, APR and closing costs that have been recently available. Your individual rate will depend on the loan program chosen, down payment and your credit history. Rates and pricing are subject to change and may not be available to you at closing.

Disclaimer: These numbers and calculations are for informational purposes only, and are not subject to Reg. Z disclosure requirements. Every real estate transaction is unique, and the costs and estimates provided may vary significantly from the actual final transaction numbers. For example, the property tax/insurance numbers are "average" estimates. The location of the property determines the actual amount of tax/insurance. Additionally, lenders may require PMI or other documents, such as surveys that may result in higher costs. When you file a signed application Rob Hickerson with LouisvilleMortgage.com & Mortgage Professionals, Inc. will provide you with a written estimate of the payment and costs as required by RESPA.