Refinancing

Purchasing a home is a significant financial commitment with a small margin for errors. If you have already purchased a home but now want a different mortgage rate, a different lender or even new terms, mortgage refinancing may be right for you. However, a refinance can come with important changes and issues that you may not expect. Here’s a look at what you need to know about refinancing a home to help you prepare for the process.

What Is Home Refinancing?

Most homes are purchased with the assistance of a loan from a bank which is called a mortgage. Home refinancing is the process of replacing the current loan/mortgage on your home for a new one. 

Why to Refinance a Home

Homeowners refinance their mortgages for a variety of reasons. Most commonly, it is done to secure better term opportunities. When you take out the new mortgage, you have a chance to re-select multiple elements of that loan, such as the term, interest rate and mortgage insurance. 

In the past, when interest rates dropped, many homeowners refinanced from a 4% interest loan to a 2.75% interest loan. Others who are interested in paying off a home more quickly will refinance to change the term from 30 years to 15 years. While this option increases the monthly payment, it significantly decreases the amount of interest paid over the life of the loan.

Some homeowners may refinance to change the type of interest rate that is applied to the loan. In order to qualify for a higher amount of a mortgage, some purchasers will take a mortgage with an adjustable rate. Over time, as the rate adjusts according to the agreed upon schedule, their interest rate may continue to increase. By refinancing to a fixed rate mortgage, they know exactly what their interest rate will be going forward.

It is also possible to refinance an existing mortgage to get cash backed by equity in the home for important projects or obligations. This is called a cash-out refinance because you will receive cash from the lender after your refinance application goes through. 

An example would be if your home is worth $250,000 and you have a balance of $100,000 left on your mortgage, you could refinance a $150,000 mortgage.  Of that, $100,000 pays off the first mortgage. The remaining $50,000 is cashed out to you.

You will now have a mortgage of $150,000 versus the previous $100,000. However, you now have $50,000 in cash to fund your project or other obligations. Many people use this option to pay for major home renovations or repairs.

Things to Note When Refinancing

Refinancing can be a powerful tool, but it is important to be aware that some things will change. You need to be prepared for additional expenses when refinancing. These include:

Refinancing closing costs – Similar to the closing costs on your first mortgage, you will need to pay them again when you create another mortgage.

Lenders are not guaranteed – Many people refinance to work with a specific lender or bank. However, buyers have no control over whether their mortgage is sold to another lender. This has become a standard in the mortgage industry.

Title insurance comes again – Lenders require that buyers pay for a lender’s title insurance policy when taking a mortgage. Although you likely paid for this on the first mortgage, it is purchased again for the new mortgage. However, if you also purchased a title insurance policy for yourself (an owner’s policy), you will not need to pay for that again. An owner’s policy stays with you for as long as you own the property.

If you missed the opportunity to acquire title insurance the first time that you took a mortgage loan, the next best time is now, when you are in the process of refinancing. Title insurance can shield you from critical threats, including liens on the property and claims from previously unknown heirs who may take the home from you.

Trust the Pros to Help You Protect Your Investment

If you are considering refinancing your home, it is important to understand how the process works and how it affects your existing policies, including title insurance. The experts at Mathis Title Company can help you navigate the refinancing process and maintain your title insurance or purchase a new policy to protect your home in the future. Contact Mathis Title Company to learn more or to schedule an appointment to get started. 

Mortgage refinancing is often a complex and arduous process for many reasons, especially for homeowners who decide to pursue this option for the first time. Couples in this situation sometimes find themselves unsure about whether they wish to switch to a different type of loan, (i.e. fixed-rate vs. adjustable-rate mortgage) pay lower interest rates or reduce their monthly payments. However, before delving into specific examples of mortgage refinancing – or making any other kinds of changes to a mortgage – it is important to understand exactly what this type of loan is.

What Is A Mortgage?

A mortgage is a loan provided by a bank or other lending institution to help a homeowner purchase a property. Most home mortgages, which can have either fixed or variable interest rates, typically have lengths of anywhere between three and 30 years. For a mortgage, the residence serves as collateral for the loan.

Contact Your Lender Before Making Any Changes To Your Loan

Before making any changes to your mortgage, it is highly advisable to contact your lender. This institution can clearly explain all of the different loan options available to you. Your lender can also help you ensure that any modifications to your loan are made in accordance with state and federal laws.

Ways To Remove Someone From A Mortgage

If you and your spouse are separating, you may be wondering what the most effective way of removing your significant other’s name from your mortgage is. There are four methods of doing this. Here is a close look at each of these methods.

Refinance The Loan In Your Name Only

This is an excellent way of removing your ex-spouse from your mortgage, although it can be strenuous. You will only be able to refinance if you possess enough credit and equity, however. Most lenders will require you to prove this by submitting documents that show your debts, income, and credit history. You can provide documentation such as bank statements, pay stubs and W-2 forms. Then, it’s simply a matter of patiently waiting for these documents to be processed.

Sell The House

One of the most evident ways to remove someone from a mortgage is to sell your home and share the proceeds evenly with your ex-spouse. If the amount you owe on your loan is higher than the value of your house, however, it may be difficult to sell your property. Be sure not to end up in a situation where you are forced to pay a deficiency. This term refers to the difference between your mortgage balance and the proceeds of the sale after a foreclosure.

Apply For A Loan Assumption

This is one of the easiest ways of removing someone from a mortgage. All you need to do is notify your lender that you will now be the only one listed on the mortgage and that you wish to apply for a loan assumption. This essentially means that you are now the only borrower, although the terms of the loan remain unchanged.

Remember to request a release of liability from your lender. This essentially frees you from the responsibility of repaying the loan should your ex-spouse fail to do so. According to LendingTree, Federal Housing Administration (FHA) lenders may charge up to $900 for a loan assumption.

Get A FHA Or Streamline Refinance

FHA-backed loans are typically among the most secure. If you have this type of mortgage, you can also try streamlining your refinance. This allows you to remove your ex-spouse from the mortgage while simultaneously lowering your monthly payments (if interest rates are low).

In certain cases, you can qualify for a streamline loan without needing to provide income documentation. All you need to prove is that you obtained the FHA loan over six months ago and that you have completed at least six payments by yourself. If you are a veteran, you can apply for a VA streamline refinance.

Work With The Mortgage Refinancing Experts

Speak to the professionals at Mathis Title Company in Fairfax, Virginia, for more information on how to remove someone from a mortgage. We provide refinancing, title insurance, and other real estate settlement services to homeowners throughout Fairfax County. Our legal background provides us with a significant advantage in offering these services.

If you are seeking to remove your ex-spouse from your mortgage, you may be confused about how to begin this process. Fortunately, the experienced attorneys and title agents at Mathis can guide you through this process and recommend multiple refinancing solutions. Mortgage refinancing can be beneficial for several reasons, including lower monthly payments and reducing the length of your loan.

Call Mathis Title Company today at (703) 214-4020 or contact us online to learn more about mortgage refinancing.

If you are seeking to reduce your monthly mortgage payments, or wish to obtain a more favorable interest rate or loan term, then you may have considered refinancing your home. Although this process may initially appear complex, you can successfully refinance your mortgage by seeking qualified help and by conducting thorough research.

Steps To Refinancing

There are several precautions you should take before beginning a home refinance, especially during a period of great economic uncertainty such as this. However, here are five key steps that will help ensure this process is carried out as smoothly as possible.

Check Your Credit Score

A strong FICO® credit score can bring you many great perks. First and foremost, you will likely be offered a low interest rate because your lender will consider you a low-risk borrower. According to personal finance website Bankrate, the benchmark interest rate for a 30-year fixed-rate mortgage on August 11, 2020 was 3.060%. Most lending institutions and credit reporting agencies consider a credit score of 670 or higher to be “good” and a score of 800 or higher to be “exceptional.” You can generally check this score for free.

Determine Your Target Interest Rate

Interest rates for mortgages fluctuate daily and even several times per day. These changes can be especially big during a recession. Therefore, it’s imperative to remain informed about existing market trends. This includes tracking how closing costs vary. Be sure to select a target interest rate that would yield interest savings that are at least equal to your closing costs. If you intend to live in your home longer than you initially planned to, you could potentially end up saving a significant amount of money.

Find A Qualified Lender

As with any process involving money, it’s important to shop around and weigh all of your options. Don’t just settle for the first lender that offers you an enticing deal. After all, the criteria for establishing interest rates often varies by lender. Thus, you should request quotes from at least three or four different lending institutions before making your final decision. You should also know that doing this won’t negatively affect your credit score, as long as you submit all of these applications within a few days of each other (be sure to ask all lenders for more specific information about this stipulation, if necessary).

Stay On Guard For High Lending Fees

Each lender typically requires borrowers pursuing a mortgage refinance to pay a certain amount in loan fees. Take note of these for every lender you approach, and pay particular attention to the ones that require high fees. Examples of fees frequently associated with a mortgage refinance include escrow and title fees, appraisal fees, property taxes, and origination fees. Certain lenders may also add interest rate discount fees (also known as points). Lending institutions generally offer a loan disclosure and an estimate of total closing costs, which can help you compare all of your options more carefully before making your final decision.

Be Patient

As the old adage goes: “Good things come to those who wait.” The mortgage refinancing process is no different. Take as much time as you need to fully understand the terms of your new loan deal and to ask any questions you may have. Additionally, you should remember that many lenders will often let you “lock in” your interest rate for at least 30 days.

Work With The Refinancing Professionals

Speak with the experts at Mathis Title Company in Fairfax, Virginia for more information on the mortgage refinancing process. We provide both real estate settlement services and legal advice to buyers, sellers, and lenders. Robin Mathis is an attorney with more than 35 years of experience and who was sworn into the United States Supreme Court. She has extensive knowledge of the buyer and seller sides of real estate transactions.

At Mathis Title Company, we know that interest rates change constantly and that the economy can suffer major, unexpected losses from one day to the next. Whether you are looking to switch to a fixed-rate mortgage, wish to lower your monthly payments or interest rate, or get rid of private mortgage insurance (PMI), we will always be here to listen to your needs and concerns. Another notable benefit of refinancing is that you can consolidate your home equity line of credit (HELOC) and first mortgage into a single payment. You may even potentially be able to do a cash-out refinance if your home’s value has gradually increased over time.

Call Mathis Title Company today at (703) 214-4020 or contact us online to learn more about our services.

The mortgage refinancing process (the act of replacing your existing mortgage with a new loan) can often be daunting to many people, especially first-time homeowners. Part of the reason for this is the fact that there are different types of ways to refinance a home (varying terms, interest rates, etc.), and the laws on mortgage modifications may also vary by state. However, another question many homeowners who are new to this process may have is, “How long should I wait before refinancing?”

The Timeline For Refinancing A Home

One of the first things you should know is that a home refinance typically takes several months. Additionally, you should keep in mind throughout the process your primary reason for deciding to refinance (reduce your monthly payments, obtain a lower interest rate or other more favorable terms, eliminate private mortgage insurance, etc.). Then develop a clear plan about how to achieve your financial objective(s).

In any case, a home refinance can often save you a significant amount of money, especially when interest rates are at a certain level. According to personal finance website Bankrate, approximately 7.8 million borrowers with a 3.77% interest rate can save money by refinancing.

The Optimal Time is 12 Months

In certain cases, refinancing can be done immediately. Nevertheless, you may have to wait in some situations:

• If your original mortgage was altered so that your payments became more affordable, you may be required to wait up to two years before you have the opportunity to refinance this loan.
• If you intend to complete a cash-out refinance, you may be forced to wait at least six months after your original mortgage closed.
• In the case of a refinance for a Federal Housing Administration (FHA) loan, the waiting period typically lasts 210 days.

The optimal time to wait for a refinance, however, is generally 12 months after your current mortgage closes. Sometimes, applying for a refinance too soon may negatively impact your credit score, so be sure to keep this in mind. Additionally, certain mortgage lenders issue penalties to homeowners who refinance within a given time frame.

Benefits of Refinancing A Home

There are many benefits to refinancing a home. However, here we will focus on two of these advantages: reduced monthly payments and a change in your loan’s interest rate structure.

Lower Monthly Payments

A mortgage refinance can help you save money for debts and other pending expenses that you might have. A reduction in monthly payments can especially relieve a significant amount of anxiety during times of financial hardship (e.g. following a loss of income due to unpaid leave or after becoming unemployed during an economic recession). Of course, if you switch to a mortgage with lower monthly payments, your new loan may have a longer term (e.g. ten years vs. five years).

Change In Interest Rate Structure

When you are looking to refinance, lenders will typically offer you two different choices for loans: a fixed-rate mortgage (FRM) or an adjustable-rate mortgage (ARM). As an ARM’s name indicates, its interest rate varies depending on certain factors (e.g. market interest rates), even though it can often save you money upfront due to the relatively low fixed rate it carries during a given initial period. If your financial situation is unstable for any reason, a fixed-rate mortgage may likely be the more sound option.

Other notable benefits of mortgage refinancing include getting rid of private mortgage insurance (PMI, which is generally required if you put down less than 20% of your loan amount at closing), using your home equity for cash, or consolidating your home equity line of credit (HELOC) and original mortgage into a single payment.

Talk To Mathis Title Company For More Info On How Long To Wait Before Refinancing A Home

Speak to the professionals at Mathis Title Company in Fairfax, Virginia for more information on the amount of time you should wait before beginning a mortgage refinance. We provide personalized real estate settlement services and legal advice to buyers, sellers, lenders, and agents. Our highly experienced team includes Robin Mathis, an attorney who has performed thousands of closings (small commercial and residential) for over 30 years

Regardless of the type of home refinance you are pursuing, Mathis Title’s professionals are here to guide you through every step of the process. We can order title searches, prepare closing documents, and work closely with your mortgage lender. Call Mathis Title Company today at (703) 214-4020 or contact us online to schedule a consultation or to learn more about our real estate services.

The home refinancing process is often intimidating for many people. However, when conducted carefully, refinancing can produce great results. It’s important to know that a home appraisal is a key component of the mortgage refinance process as well as, what does an appraiser look for when refinancing. A home appraisal is a certified or licensed third-party professional’s opinion of a property’s value. Appraisals are generally conducted for tax-related purposes or in order to establish a potential selling price for a home.

According to the Appraisal Institute, there were 78,105 active real estate appraisers in the United States as of Dec. 31, 2018, a figure that marks a 5% decrease compared to 2017.

Top Considerations Appraisers Are Looking At During Refinancing

If your property’s value is below a certain threshold, you likely won’t be able to refinance. Should an appraisal estimate your home equity is less than 20%, you could end up paying for private mortgage insurance (PMI) or be forced into a cash-in refinance. You may also not receive a low interest rate due to your status as a higher-risk borrower.

There are five primary considerations an appraiser will look at during the home refinancing process. Let’s analyze these closely.

Exterior & Interior Condition

One of the first factors appraisers consider when calculating a property’s value is perhaps the most evident one: the overall condition of both the home’s exterior and interior. If your property appears unclean and dilapidated, (e.g. peeling paint, holes and stray marks on walls, surfaces covered in dust, etc.) it will likely give off a highly negative first impression. Therefore, you should always strive to ensure that your home looks as tidy as possible.

Total Room Count

The size of a home is always a factor when estimating its value. This entails that a two-bedroom house and a five-bedroom home will have notably different selling prices. Again, you should verify that every bedroom in your home has been cleaned before your appraiser arrives.

Any Improvements Made

If any improvements have been made to bathrooms and kitchens, your roof, or windows, your appraiser will also take these into account. Updates to your home’s plumbing, heating/cooling, or electrical systems also count as “improvements” that will affect property value.

Condition & Age Of Home Systems

A home whose electrical, plumbing, and heating systems are more than 10 years old and haven’t been updated will not be assigned the same value as a property with more advanced systems that have been regularly improved over the years. Leaks and corroded pipes can be severe issues. Although it may initially seem like a costly investment, keeping these systems in good condition will ultimately lead to significant returns in the form of an increased value for your home.

Unappealing Features

If your property includes any unappealing features, such as exterior or interior structures with clashing patterns or colors, this will also negatively impact its value when the time for an appraisal comes. Even an exterior appearance that is notably different from every other house in your neighborhood can be deemed “unappealing.” A lack of landscaping, for instance, can create a negative impression.

A home is a valuable asset that will one day be inhabited by other people. Therefore, it’s important to treat it with care and not let any part of it become dirty or go to waste.

Contact A Knowledgeable Refinancing Team For More Info On What Does An Appraiser Look For When Refinancing

Speak to the experts at Mathis Title Company in Fairfax, Virginia for more information about considerations a home appraiser looks at during a refinance. We are proud to provide both real estate settlement services and legal advice to homebuyers, sellers, and lenders throughout Fairfax County.

Robin Mathis is an attorney with more than 35 years of experience and who was sworn into the U.S. Supreme Court. She has extensive knowledge of both the buyer and seller sides of real estate transactions and has performed thousands of closings (small commercial and residential).

Mathis Title’s team will always guide you through every step of the homebuying process, through closing in a personalized way. If you are seeking to refinance, we will help you negotiate mortgage contracts and do everything we can in order to ensure that your refinance is successful. Refinancing can be beneficial for several reasons, including lower monthly payments, eliminating PMI, and even potentially reducing the length of your loan. Call Mathis Title Company today at (703) 214-4020 or contact us online to learn more about our refinancing and title insurance services.