Is Now the Right Time to Refinance?

•      Paying more than 5% 
  •  Rates are ridiculously low right now.  Many clients can enjoy a significantly lower payment or similar payment for a much shorter term.  The average on the 30-year loan has hovered near 4% for several weeks.
• Are you on a 30 year note?
  • For example, a client who owes 27 years left on their original mortgage at 5.5% on a $200,000 loan amount would save $126,992* in interest by moving to a conventional 15 year at 3.5% (3.628% APR)**. What!?!  
• Is your house worth less than you owe?
  • You do need some equity to refinance.  Doesn't have to be 20% equity, but getting an up-front appraisal through a lender for around $400 can help you see if you could save thousands with a refinance.  Appraisers are under strict guidelines but will fairly give a value so that can be compared with the amount owed to come up with a game  plan.  Don't think that the appraisal district values set by your tax office is what your home is worth.  Often times, there are still cash saving options available in low (5-10%) equity situations.
• Do you have a regular source of income?
  • Income is an essential part of qualification.  Standard W2 income is easiest, but self-employed is not impossible.  If you're self-employed, pull together the last 2 years of tax returns for a quick review.  Aso, regular income sources like child support, alimony, social security, and dividends that are planned to be received in the future can often be used.
• Credit score better than 640?
  • If there are collections or a poor payment history, the quality of credit might be an  issue.  U.S. average credit score right now is 736.*** If you haven't had a credit report pulled recently, a lender can help.  Call and ask to be pre-qualified for a refinance and the first step is pulling credit.  Once you have your credit report in hand, you can know more about what power you'll have to go forward with a refinance.
• Planning on keeping the house more than 2 years?
  • If you're planning to move soon and won't be keeping the current property, refinance probably won't be enough of a benefit to outweigh some of the fixed closing closts like attorney & appraisal fees.
• Are you paying high interest cards or loans that might be consolidated into a home equity loan?
  • Texas home equity products still allow the consumer to borrow up to 80% of the appraised value of their home.  Some clients are able to pay off high interest credit cards with the equity from their home.  This allows them to pay off their house faster instead of using the cash they had been using for credit card payments.

Article provided by Amy Cearnal, Loan Officer NMLS #827259 at 4Trst Mortgage, Inc., 4200 S. Hulen St., Ste. 410, Fort Worth, TX 76109

817-782-2001 or acearnal@4trustmtg.com -- "We'd love to help you change your financial future with a refinance!  It's easy to get started...just call or email."

4Trust Mortgage, Inc. does not offer trust or fiduciary services and does not have a fiduciary relationship with its clients.

*Based on remaining term of 324 mo at $1,186.27 pymt for a total due of $384,351.48 compared to 180 mo at $1,429.77 pymt for a total due of $257,358.60 with a difference of $126,992.88.

**15 years simple fixed rate loan with a 20% down payment/equity required on a $250,000 value - effective 12/29/11 - offer may terminate at any time without notice - rate and annual percentage rate (APR) calculated on 360-day year with typical/normal closing gosts - Rates/APRs subject to change with changes in closing costs - properties and applicants must qualify - other restrictions may apply.

***Per Experian.com Vantage Score effective 12/29/11.

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