Refinancing
Achieving Long-term Financial Success
Getting Started
Choosing to refinance your mortgage can help you achieve your long-term financial goals by replacing your current loan with one that has more favorable terms. Whether you want to lower your payment, change your mortgage type or change the duration of the loan, Durand Mortgage Group has options for you.
Here’s a list of items you’ll need to get started:
- A copy of your government issued photo ID
- Two most recent pay stubs
- Two most recent and complete bank statements
- Two most recent and complete tax returns, if self employed
- Two most recent W2s
- Statements for any assets you want considered
- Copy of most recent mortgage statement and homeowners insurance policy
- HOA coupon/statement, if applicable
Four Best Reasons
to Refinance
1. Lower Your Interest Rate
One of the most common reasons to refinance is to take advantage of lower interest rates. If rates have dropped since you first took out your loan, refinancing can reduce your interest rate, leading to lower monthly payments and saving you significant money over the life of your loan.
A lower interest rate can also help you build equity faster. The more of your monthly payment that goes toward your principal balance instead of interest, the quicker you’ll grow your home equity, which could benefit you in the long run.
2. Change Your Loan Term
Refinancing gives you the opportunity to change your loan term, either shortening or lengthening it, depending on your financial goals.
Shorten Your Loan Term:
Refinancing from a 30-year to a 15-year mortgage, for example, allows you to pay off your home faster and save on interest. While this typically results in a higher monthly payment, you’ll own your home outright sooner, freeing up funds for other financial priorities.Lengthen Your Loan Term:
If you need to reduce your monthly payments, refinancing to a longer-term mortgage can help by spreading payments over a longer period. Keep in mind, this means paying more in interest over time, but it could provide immediate financial relief if you’re finding it difficult to make your current payments.
3. Switch Mortgage Type
Another reason to refinance is to switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. While ARMs often start with lower interest rates, they can fluctuate over time, leading to higher and unpredictable payments. Refinancing to a fixed-rate mortgage provides stability, offering consistent payments and peace of mind, especially if you plan to stay in your home long-term.
4. Eliminate Mortgage Insurance
If you’re paying private mortgage insurance (PMI) on a conventional loan or mortgage insurance premium (MIP) on an FHA loan, refinancing can help eliminate those extra costs.
- For Conventional Loans: Once you have at least 20% equity in your home, you can refinance to eliminate PMI.
- For FHA Loans: Refinancing to a conventional loan with sufficient equity can remove MIP, especially if you’ve built up at least 20% equity.
Removing these insurance payments can lower your overall monthly mortgage costs, but be sure to weigh the closing costs of refinancing against the potential long-term savings.
Refinancing your mortgage can offer a range of benefits, whether you’re looking to lower your interest rate, adjust your loan term, switch mortgage types, or eliminate insurance costs. As with any financial decision, it’s important to carefully consider your options, weigh the potential savings, and ensure it aligns with your long-term goals. If you’re thinking about refinancing, feel free to Durand Mortgage Group for expert guidance and personalized solutions.