One of the most common questions asked during our Annual Mortgage Review Process, is ” Does it make sense to refinance right now”? The answer to that questions is, it depends…
When does a refinance make sense?
Here's where we start...
It begins with the amount of home equity in the home. If there is more than 20% equity and the current interest rate is above 4.25% or there is currently mortgage insurance on the property, it makes sense to just do a rate and term refinance to remove mortgage insurance and lower the interest rate, effectively, lowering the payment. If it is an FHA loan at a very low interest rate, it may NOT make sense to refinance and consulting a mortgage professional to run the numbers is your best option. Athena Mortgage Group can provide you with a free Property Valuation Report that shows recent sales and other critical factors about the area.
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When considering a cash out refinance to pay off credit card debt, make home improvements or pay for college, it makes sense if the return is worth the higher payment.
When it comes to paying off credit card debt, Athena Mortgage Group will calculate the total savings per month vs. the current monthly mortgage payment. In addition, if family budget allows, we can calculate how much you can accelerate paying off the mortgage, by applying the monthly savings towards the principal balance every month. You might be surprised at how much faster you can pay off a mortgage by just adding a few hundred dollars a month towards principal.
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When taking cash out for home improvements, it is important to keep in mind improved quality of life and increase in home value. Is it worth the investment? Chances are pretty high that major improvements will increase the value of the home.
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When considering a cash out refinance on your home, contact a mortgage professional that can start with a good idea of what the home in Colorado is currently worth through a Property Valuation Report and provide you with all your options and savings over time.
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Property Valuation Reports are based on recent recorded data and are not used in the final determination of the value of the home. When taking cash out of a property, the lender always requires an appraisal by an approved Appraisal Management Company.
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If you want a free Property Valuation Report or just find out more information and what your options are, Contact the Team at Athena Mortgage Group.
and there are more questions to ask...
A Cash Out Refinance is a refinance in which additional cash over and above the payoff of your current loan, is taken out of the property. This can be done for a multitude of reasons such as
1) To pay off outstanding debt that is at a much higher interest rate such as credit cards, personal loans, student loans or vehicle loans.
2) Home improvement
3) Other personal purposes.
Taking cash out to pay off a spouse in a Divorce settlement is not considered cash out. It is considered Rate/Term refinance.
A Rate/term refinance is when a loan is taken only to pay off the current balance of the home mortgage plus closing costs and in most cases to buy out a spouse in a divorce settlement. The terms of the buyout must be stipulated in the Separation Agreement or the Memorandum of Understanding. Excess proceeds from the loan cannot exceed 2% of the loan amount or $2000. Whichever is less.
Book a consultation to get more of your questions answered.
Home Value comes down to recent comparable home sales in your area and any upgrades you may have put into the property. As a starting point, you will want to get a reliable value without having to pay for it. There are a couple ways to obtain a general idea of the value of your home. First, if you have a good relationship with a local Real Estate Agent who is willing to create a property valuation for you, at no cost, this would be the most accurate. The quickest and easiest way is to request a free Property Valuation Report through Athena Mortgage Group. Fill out the form and you will receive your free report within 24-48 hours. Please note: This is only and estimation of value and cannot be used to determine value when processing and closing a loan. It is only a starting point. Book a consultation to get more of your questions answered.
Closing costs are determined by the type of loan you choose for your refinance. Interest rate is determined by several factors: credit score, loan to value, loan type, property type, loan amount, etc… Once you fill out an application online, we can send you a Loan Estimate to break it all down for you. Book a consultation to get more of your questions answered.
The process begins with a loan application over the phone. This will, typically, take about 20 minutes or less. With your permission, we will pull credit and if everything looks good, we will give you a list of documents that are needed to begin the loan process. Once we receive those documents, then our processor will take it from there. The loan will get submitted for an initial loan approval and once it has been underwritten by the lender, we will send you a new list of documents as requested by the underwriter. Once all conditions have been received, we will send them to the lender and wait for the final Clear to Close. If an appraisal is required to complete the transaction, in the beginning, we will request a credit card to pay the Appraisal Management Company (AMC) directly.
Appraisals are taking approximately 7-14 days to complete. With home values increasing in Colorado so much in the last few years, we are finding that an appraisal is not required much of the time. However, it is not guaranteed that you won’t need an appraisal. After the appraisal and value has been signed off by the underwriter, then the Closing Disclosure is ordered. We can now schedule your closing for 3 days after you have opened and reviewed the closing disclosure. With a purchase, the closing, typically, takes place at the title company. With a refinance, you can choose the location and time. We have contracted notary closers to work around your busy schedule.
Book a consultation to get more of your questions answered.