When Does Refinancing Make Sense?
Refinancing is often associated with falling interest rates, but interest rate is only one reason to replace an existing mortgage.
A homeowner may refinance to reduce the monthly payment, shorten or extend the repayment term, replace an adjustable-rate mortgage, remove mortgage insurance when possible, consolidate existing liens, or restructure financing after a significant change in income, assets or property value.
The correct analysis begins with your existing loan. We review the current balance, interest rate, remaining term and monthly payment and compare those numbers with realistic replacement options.
Look Beyond the New Interest Rate
A refinance has transaction costs. Comparing the old and new interest rates alone can therefore be misleading.
A new mortgage might reduce the monthly payment but require significant closing costs. The relevant question then becomes how long it takes for the accumulated savings to recover those costs and how long you expect to keep the new loan.
In other circumstances, immediate monthly savings may be less important than shortening the loan term or converting an adjustable-rate loan into predictable fixed-rate financing.
We evaluate the transaction according to your objective rather than applying one refinancing rule to every homeowner.
Restructuring the Loan as Your Situation Changes
The mortgage that made sense when you purchased the property may not remain the best structure indefinitely.
Income can increase, property values can change, other debts may be paid off, equity can accumulate and your long-term plans may change.
Refinancing provides an opportunity to reconsider how the property should be financed today rather than simply continuing the structure established years earlier.
Conventional, Jumbo and Alternative Refinance Options
Available refinancing is not limited to conventional mortgages.
Depending on the borrower and property, options may include conventional, jumbo, bank statement, Non-QM, investment-property and other financing.
This is particularly important for self-employed borrowers whose current financial circumstances may not be represented effectively by a traditional tax-return income calculation.
Preparation Before Application
Before submitting a refinance, we determine what the proposed transaction is expected to accomplish and whether available financing reasonably supports that objective.
There is little value in completing an application, appraisal and underwriting process only to discover that the financial benefit is insignificant.
Our objective is to establish the economics first and proceed when the proposed financing makes sense.