Should Refinance your mortgage

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Refinance Your Mortgage
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Obtaining a mortgage with a lower interest rate
or lower monthly payments can save you thousands
of dollars over the course of the loan.
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What is Refinancing Your Mortgage All About?

• Refinancing is paying off the loan you currently
  have and taking out a new mortgage loan.
• Your current loan gets paid off in the refinance
  when you close on the new loan.
• Its usually easier to refinance than it is to
  acquire a mortgage loan in the first place.

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What is Equity?
Current value of home Minus What you still owe on
it
Equity
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What Does Equity Mean to You?

• Your equity is what gives you all kinds of
  choices in refinancing your home.

Tip Any time your equity is enough so that
youre financing less than 70 of your homes
value, its easier to find lenders that will
compete for your business!
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Cashing Out Your Equity

• When you receive cash along with your refinance.

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Paying off your current debts and then making
your new mortgage payments on time will build
some great credit!
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Pros to Refinancing Your Mortgage

• You can lower your monthly payments.
• You can lower your interest rate.
• You can change from a variable interest rate
  mortgage to a fixed interest rate mortgage.

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Pros to Refinancing Your Mortgage

• You can cash out your equity
• Use the cash to pay off higher interest debts.
• Consolidating your debts in this way means one
  monthly payment instead of many.
• You can pay cash for a major purchase instead of
  taking out a higher interest loan.

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Pros to Refinancing Your Mortgage

• You can raise your credit score.
• You can receive some nice income tax deductions

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Income Tax Deductions

• In the USA, if you itemize your deductions on
  Schedule A, you can deduct interest payments on
  your homes mortgage from your income.
• Credit card interest, however, isn't tax
  deductible.
• Meaning

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Income Tax Deductions

• By using your equity to pay off your credit cards
  and putting that debt into your home mortgage,
  youve lowered the interest you pay on your
  credit card debt while, at the same time, making
  it tax deductible!

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Cons to Refinancing Your Mortgage

• Youre starting over on your mortgage, so it may
  take you longer to pay it off than if you had not
  refinanced.
• Your mortgage debt will be larger than before the
  refinancing, due to closing costs and if you take
  out some cash.

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Cons to Refinancing Your Mortgage

• Your monthly payments may be larger than before
  if you cash out some equity in the refinance.
• With the new mortgage, you may be subject to
  early pay-off penalties if you wish to pay off a
  large portion in the near future.

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How to Get Started

• See a mortgage broker
• to help you find a lender!

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Modifying Your Current Mortgage Loan

• If the value of your home has decreased, consider
  modifying your mortgage loan.
• You may be able to lower the interest rate, your
  monthly payments, or even the principal on the
  loan by modifying it.
• However, trying to get a loan modification can be
  challenging!

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Modifying Your Current Mortgage Loan

1. Contact your lender to apply for a loan
   modification.
2. Keep in regular contact with them by phone and
   fax regarding the status of your loan
   modification request.

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Modifying Your Current Mortgage Loan

• Contact the department heads for the various
  departments you work with as your application
  progresses.
• Send faxes to the specific departments requesting
  regular updates.
• Record your phone calls, if possible.
• Write down the name of anyone you speak with, the
  date, and a summary of each conversation.

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Modifying Your Current Mortgage Loan

• Utilize the internet for information on working
  with your lender!

Tip With good communication and knowledge of how
to help the process go smoothly, your loan
modification can be a success!
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Self-Reflection Questions

• Do I have a fixed or adjustable rate mortgage?
• Is the refinanced rate low enough to justify the
  switch?
• How much equity do I have in my home?
• How long will it take me to pay off the costs
  of refinancing and begin realizing my savings?

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Self-Reflection Questions

• Do I plan on staying in this house for a long
  time or will I be moving in the future?
• Am I looking for lower interest, lower payments,
  or to cash out my equity?
• If I cash out my equity to pay off other debts,
  do I have the discipline to stay out of debt once
  my current debts are paid? What will I do with my
  credit cards?

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Action Tips

• Research the terms of your loan to see if its
  worth shaking up the status quo.
• Estimate your homes current value and determine
  if you have enough equity to give you some
  advantages in refinancing.

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Action Tips

• If youre considering refinancing your mortgage,
  meet with a reputable mortgage broker to discuss
  your situation.
• After meeting with the mortgage broker, write
  down the pros and cons of refinancing your
  mortgage. This will help you make an informed
  decision to refinance or not.

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