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What How do I refinance my existing loan?
To refinance your loan in order to obtain a lower interest rate and start saving on your monthly payments, fixedmortgage.com can offer you the following loan products with the security of fixed-rate payments:
15-Year Fixed-Rate Refinance
Choose this if:
- You want a shorter loan life and lower rates
- Low monthly payments are not a priority
- You're planning to stay in your house for more than 10 years - especially if you're planning to completely pay off your loan
30-Year Fixed-Rate Refinance
Choose this if:
- You want low monthly payments that do not change
- You want a loan that's generally easier to qualify for
- You're planning to remain in your house less than 10 years
- You want the maximum tax advantage (please consult your tax adviser)
How much can I borrow and why?
Income, debt, and mortgage payments are the primary factors that affect whether you qualify for a loan. If you do qualify for a loan, you can apply and ditech.com will move to the next step of checking to see if you can be approved.
To determine your qualification, the first thing ditech.com will do is divide the monthly payment of your proposed loan by your gross monthly income. This provides your housing-to-income ratio.
If the resulting percentage falls within a certain range, the next step is to divide your total monthly debt by your gross monthly income. This provides your debt-to-income ratio. Again, if the ratio falls within prescribed limits, you are qualified for the loan.
The limits within which your housing and debt ratios must fall are determined primarily by the size of the loan, the value of the property, and the ratio between the two (known as the loan-to-value ratio, or LTV). This loan-to-value ratio is one of the most important factors in determining a home loan.
Should I roll in my fees?
The choice basically comes down to "pay now" or "pay later." If you have the funds now, it makes sense to cover the expenses out-of-pocket and save through lower loan payments and interest costs on a smaller loan. On the other hand, if your budget is currently tight, rolling in the costs with your loan amount makes sense because it allows you to get the loan without immediate expense.
How do I calculate the value of my property?
Since a mortgage is a loan secured by a piece of real property, a crucial factor is in the correct value of the property in question.
Property value can be determined in a number of ways:
- The Market Value of the property: that is, what a buyer will pay for it, and what other comparable properties (comps) in the neighborhood have recently sold for.
- The Appraised Value of the property - that is, what a trained and licensed professional deems the property to be worth based on an inspection, comps, and a thorough analysis of the property and its neighborhood.
Additionally, the appraiser estimates the replacement value of the property, that is, the cost to build a house of similar size and construction in a vacant lot. The appraiser reduces this cost by an age factor to take into account deterioration and depreciation.
Can I make extra principal payments so I can pay off the loan more quickly?
Depending on the loan, and what your state permits, it is feasible for you to make extra payments on the loan. Extra payments will have an effect on the amortization schedule over the remaining term of your loan.
What is a cash-out option?
If your equity in your property qualifies, you can refinance with a loan amount greater than your current mortgage - and keep the difference! Use it for home improvement, debt consolidation, or whatever you desire.
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