REFINANCING HOME MORTGAGES

Should I refinance now?

Before you consider refinancing your Florida home mortgage, you'll want answers to some very important questions. That's why the following information is so valuable.

Why should I refinance?

Your first objective is to determine the reason or motivation behind your decision. Lowering your rate to reduce your monthly payment, taking cash-out proceeds to consolidate debt or do renovations, locking-in to a fixed rate mortgage if you currently have an ARM (adjustable rate mortgage) loan, reducing your amortization from 30 years to 15 years, and removing a co-borrower would all be reasons to refinance. Before we give you some tips to consider, let's briefly discuss the types of Florida mortgage refinancing available.

How Should I Refinance?

There are two basic types of mortgage refinancing opportunities. The first type is a no cash-out refinance. This method of mortgage refinancing allows you to include in the new loan the payoff of the existing mortgage, closing costs, and escrow costs.

When refinancing to conventional home mortgages, a maximum of $2000 cash back to the borrower(s) is allowed to remain classified as a no cash-out refinance. When refinancing to FHA or VA loans then the borrower is limited zero cash back at closing. No cash-out re-fi's are typically limited to a maximum loan to value of 95%.

The second type of mortgage refinancing is a cash-out refinance. The cash-out re-fi allows the borrower(s) to include into the new loan the current payoff of the existing mortgage, closing costs, escrow costs, and also receive cash-out proceeds that exceed $2000. Cash-out re-fi's are typically limited to a maximum loan to value of 90%. Interest rates can vary between these two types of refinancing.

Does mortgage refinancing make sense for me?

Okay, we have determined our objective, so now let's look at some numbers. These figures are hypothetical because each loan is subject to your personal situation. If your reason for mortgage refinancing is a lower interest rate and a lower monthly payment, the analysis is very straightforward. Closing costs divided by the monthly payment savings equals the number of months it would take to re-coup the closing costs. Let's assume your closing costs are $2500 and your payment is reduced by $150 per month. The payback period for this loan would be approximately 17 months. If you plan on staying in your home for 17 months or more then it makes sense for you to consider a refinance. If your objective is to pull cash-out of the equity of your home the example above becomes less critical. Paying off debt, updating and renovating your property, and other factors may be more important to this borrower.

Locking-in to a fixed rate if you have an ARM (adjustable rate mortgage) may be advantageous for those who are facing increases or fluctuations in their ARM loan. Monthly payments may not improve for this borrower but peace of mind in knowing that your payment will not increase for the life of the loan may reduce some stress.

Reducing the amortization from a 30-year loan to a shorter period of time may make sense to individuals who would like to be mortgage free. This amortization reduction may also be wise for those that have already paid down the principal balance for several years. If you have 20 years left on a 30-year mortgage you may want to consider a new 20-year mortgage or even a 15-year mortgage.

A final consideration for refinancing home mortgages is to remove a co-borrower from the note. This co-borrower may be an ex-spouse, parent, or someone who was nice enough to co-sign for you in the first place. This borrower may be obligated to the co-borrower to remove them from the liability of the note.

How Do I Get Started?

Call Horizon Home Funding at 407-647-3377 or click here to apply online for Florida mortgage refinancing. Our team of mortgage professionals is standing by to help you make an informed decision. We take the confusion out of refinancing home mortgages.