Everything you need to know about refinancing your mortgage

Whether you’re ready to refinance or simply weighing your options, the experts at 1stGhm can help. With 1stGhm, you’ll have direct access to a professional who can help you determine when to refinance, help you choose the best type of loan, and answer any questions you have about your specific financial situation.

What is refinancing?

Refinancing is the process of getting better terms on your current mortgage by taking out a completely new loan. This new-and-improved mortgage will leverage positive market conditions, and 1stGhm can customize it to your financial goals, helping you to achieve:

• Lower monthly payments
• Shorter loan terms & greater financial stability
• Adjustable to fixed-rate loan conversions
• Consolidated debt
• Home enhancements & renovations
• Removal of Private Mortgage Insurance premiums

Types of refinancing

The two most common forms of refinancing are traditional refinances and cash-out refinances.

Traditional refinance: This straightforward form of refinancing is an effective way to make mortgage payments more affordable by lowering your interest rate. With this type of refinance, you can also shorten your loan term.

Cash-out refinance: If you’ve built equity in your home and would like a lump sum of cash for home improvements, paying off debt, or any number of other reasons, a cash-out refinance may be a good choice. With this lending option, a borrower refinances their home based on the current appraised value. After paying off the current mortgage, other liens, and closing costs, the borrower receives the equity difference in cash to use as they please. Similar to a Home Equity Loan, the interest from the first $100,000 of a cash-out refinance is tax deductible!*

Government refinance loans

1stGhm provides a number of government refinance loans to qualified borrowers. These refinancing options are tied to specific government-insured loan programs and require limited paperwork and less stringent lending qualifications, among other benefits. Three common types of government refinance loans include:

FHA Streamline: This refinance loan is available to you if you financed your home with an FHA loan, meaning that it is insured by the Federal Housing Administration and protects the lender. The advantages of this program include: lowered lending fees, no new appraisal required, reduced processing time, and lowered monthly payments.

Home Affordable Refinance Program (HARP): This federal program allows borrowers to refinance up to 125% of their home’s value. Established in 2009 to help borrowers who are underwater on their mortgage, this program maintains the long-term affordability of your loan. Among other eligibility requirements, HARP is only available to borrowers whose mortgage is guaranteed by Fannie Mae or Freddie Mac.

VA Interest Rate Reduction Refinance Loan (IRRRL): If you financed your mortgage using a VA loan, you may be eligible for the IRRRL program. This loan lowers your interest rate (and therefore your monthly payment), and it requires no appraisal or credit underwriting package. You can also convert an Adjustiable Rate Mortgage (ARM) to a Fixed-Rate mortgage with this form of refinancing.

Costs associated with a refinance

While the costs that accompany a refinance are important to consider when weighing your financing options, your main concern should be the overall savings refinancing will afford you. In order to find out how long it will take before you break even on a refinance, as well as the savings that you will gain afterward, our Refinance Break-Even Calculator is your best resource. The costs associated with a refinance will vary depending on the type of loan you are seeking, but you can expect to incur the following fees:

• Loan Setup Fee/Application Fee/Origination Charge: These fees cover the cost of checking your credit report, processing your application, and other administrative tasks associated with funding your loan.
  
• Appraisal Fee: This fee covers the cost for obtaining a current appraisal on your home to determine loan-to-value.
• Closing/Settlement Agent or Attorney Review Fee: The professional who conducts the closing will charge a fee.
• Title Insurance and Search: A new lender’s policy is required to obtain a new loan. Learn more about Title Insurance.
• Additional Situational Expenses: Lesser charges such as flood certification fees, survey costs, pest inspection fees, and courier fees may also be required, depending on your situation.