Tis the Season…. For Refinancing

MABC Refinancing

 By: Colleen Anthony, MABC Mortgage, LLC

It’s that time of year again.  The cold weather is setting in, holiday songs are playing on the radio and the New Year is just around the corner.

For many homeowners, this is the time of year when the budgets are reviewed and set (especially for holiday shopping), college tuition schedules are released for 2015 and year end mortgage interest statements will be arriving in a few short months.

Many homeowners consider refinancing this time of year. Most everyone who considers refinancing asks the following two questions:: What are the costs; and What is the Rate/Term?

From a Broker’s perspective, I ask the following questions Why are you refinancing? and How long do you plan to stay in the home? If you are refinancing to save money or solve a problem, then we proceed to the next question.

For instance, consolidating high interest credit card debt, moving from a construction to permanent loan product or lowering your current rate/term are good reasons to investigate options. Also, lender paid mortgage insurance offers and rates have been discounted and lower than we have seen in quite some time.  Removing borrower-paid monthly mortgage insurance for the same or slightly higher interest rate can be very beneficial.

All of the above are good reasons to review your options. We review the new payment as well as overall interest.  Lowering your monthly payment does not automatically imply savings.  You must look at overall interest and cash flow.

To address the client question regarding costs, the answer is straight forward.  There will be costs involved.  They should not be excessive and should include: Title Insurance and associated fees, Appraisal, Tax/Flood Certificates, Government/Recording and Lender Underwriting fee.

What is Title Insurance and why is it required for a refinance? There are two types of policies – owner and lender, meant to protect owner/lender financial interest in real property against loss due to title defects, liens or other matters. Since there are two separate policies, the owner’s coverage purchased when you bought your home need not be re-purchased when you refinance. However, the lender policy only covers the period while your mortgage exists. When you refinance, you get a new mortgage. Therefore, a new lender title policy is required. In Pennsylvania, premiums are regulated therefore the insurance cost is the same across the board. Also, title insurance rates for refinancing are discounted from purchase rates. Lastly, homebuyers/borrowers can choose their own title company.

Mortgage rates are at a 16 month low.   Refinancing applications jumped 23 percent in October according to Mortgage Bankers Association.  If you are considering a refinance for any reason, you should take the time to investigate options for rates/terms available to you.

A mortgage review is free and takes about 30 minutes of your time to initiate. Start yours today at www.mabcmortgage.com, Apply Now.