Whether you want a lower rate, a shorter term, to remove mortgage insurance, or to take cash out, I’ll show you the numbers before you decide: the rate, the total costs, and how long it takes to break even.
How the Refinance Process Works
First step to refinance your home mortgage: Gather documentation. As a correspondent lender with broad wholesale access, I will tell you what items to collect and go over all of your documentation with you before we submit it to underwriters. I will analyze these materials, shop around for the loan that is the right fit for your situation, and then submit your materials.
150 Lenders
I have access to over 150 lenders who have a variety of loan products. This gives me a lot of latitude for finding the right fit, the right rate for your situation, and the loan you are most likely to qualify for.
Lending Relationships
Because I have relationships with some lenders that go back for decades, I can move loans more quickly up the chain of command in underwriting than a newbie might.
My underwriters also collaborate with me to address any issues with documentation or data and find solutions that will enable your loan to be approved.
By contrast, institutional lenders employ a relatively faceless, impersonal assembly-line process.
Refinance Appraisals
Depending on the program, the property, and your equity, many refinances can be completed without a full appraisal. The lender’s automated valuation may support the value I enter, which allows a no-appraisal refinance.
Complicated Loan Situations
Is your situation COMPLICATED? I am very good at and love the challenge of working my way through complicated deals!
Read my blog post on Tough Loan Cases for an example of the challenges we can overcome. Even well qualified borrowers can be declined by banks. We found a great solution for this borrower who had been declined at least twice by other lenders.
No Application Fee, No Commitment
There is no application fee with me, nor any monetary commitment. This part of the process is simply a no-cost opportunity to be in line to capture the rate you need when you’re timing your loan with an eye to rate fluctuations.
Best Time to Refinance Your Home Mortgage
Mortgage rates can move within a single day, so it helps to have your application in process before your target rate shows up. That lets us lock quickly when the numbers make sense. There’s no application fee and no obligation.
When Refinancing Makes Sense
I help my clients identify at what rate it would make sense to refinance. Then we get your loan application set up so we can lock your rate when it reaches the target we set together.
What if I just started my loan payments within the last 6 months?
I would like to help you figure out whether now is the right time to change that loan, or if you will have better options at the end of your initial 6-month period. It might be the case that changing your loan right away is the recommended option. Let’s talk!
It may be that with the range of different loan options I have available to me, I can help create a more beneficial financial picture for you than what you have now with your current loan. I am happy to go over your situation with you and figure out the wisest course of action.
Call to Schedule a Free Consultation 510-655-2868
Why Refinance Your Home Loan Now?
So, let’s talk about what makes refinancing attractive right now. You might be asking:
Rates are dropping, should I refinance my loan now?
There are many aspects to this question, as you can imagine!
Fed Rate Cuts
If it was a recent Fed rate cut that brought you here, I have an important clarification:
Mortgage loan rates are not tied to the Fed.
One does not automatically or directly affect the other in a clear way.
And furthermore: There is no uniform reaction by the mortgage lending market in the short term when the Fed cuts or increases its rate. Over the years, Fed rate cuts have sometimes meant that mortgage rates dropped, and at other times, that rates were not affected.
Prime Rate
Fed rate cuts do not directly affect mortgage rates. They are an indication of what the Fed is doing to help stimulate the economy, but the Fed Funds rate directly affects only one consumer interest rate, which is the Prime rate.
The Prime Rate is not tied to the vast majority of mortgage products. It only affects revolving lines of credit like credit cards and Home Equity Lines of Credit, HELOCs.
Consumers who follow the media on Fed rate cuts and think that mortgage rates will fall when the Fed cuts its target rate are not seeing the true nature of mortgage rates. The media doesn’t explain the lack of correlation between the Fed rate cuts and mortgage rates. It is true that many times when the Fed is cutting its target rate, mortgage rates also fall.
Falling mortgage rates have much more to do with how traders are moving money into the bond market as a result of the reasons that the Fed is cutting its target rate to begin with, not because of the Fed rate cut, itself.
For more discussion of how changes to the Fed rate influences mortgage lending, follow my blog posts tracking the bond market, consumer debt, and other interest rates.
My blog post Refinancing Goes Nuts! gives a historical example from September 2019.
Refinance Success Stories
Expiring HOA Insurance Loan Threat Resolved
Difficult Deals, Home Refinance
Refinance Equity Buys Second Home
Difficult Deals, Home Refinance, Low Income Home Loan, Real Estate Investors
Refinance Resolves Balloon Payment Threat
Difficult Deals, Home Refinance, Low Income Home Loan, Self-Employed Home Loan
Cash Out — HELOC vs. Refinance
Is a home equity line of credit (HELOC) or a refinance of your principal mortgage the better option for you when you want to take cash out?
Call me to discuss your situation! We may decide to do a “rate and term” refinance for you. This means we are simply reducing the interest rate and not taking any cash out of the property’s equity. In that case, we have a good chance of avoiding an appraisal, if that is one of your goals.
In addition to reducing the rate, many borrowers will want to take advantage of a low rate environment to take cash out of their equity.
Uses for a Cash Out Refinance
A cash-out refi may be used to
- fund home improvement projects
- pay off debts
- fund your portfolio, including your retirement
- pay for kids’ college tuition
Uses for Home Equity Line of Credit
If you simply want to access your equity when you need it, without an immediate need for cash, a HELOC with a credit limit you can borrow against can be a good solution.
When we are not in a moment of a rate drop, many borrowers who want to access the equity in their homes are more inclined to take out a Home Equity Line of Credit (HELOC), in the second position behind their existing first mortgage.
Differences Between HELOC & Cash Out Refinance
There are a few major differences with using a HELOC to access equity versus doing the first mortgage, cash-out refinance:
- The interest rate on a HELOC is adjustable and can go up and down with the Prime Rate.
- Interest on a HELOC may or may not be tax-deductible, depending on how you use the funds. Please check with your tax advisor; mortgage lenders, like myself, are not licensed to give tax advice.
- Interest on a first mortgage may be tax-deductible, subject to IRS limits. For cash-out proceeds, deductibility generally depends on how you use the funds.
- The monthly interest owed on a HELOC is paid on any HELOC balance each month, like a credit card.
- As the balance goes up and down, the amount of interest owed also fluctuates.
Qualifying
Another difference is that it’s harder to qualify for a HELOC in the second position to an existing first mortgage than a cash-out refinance in the first position. Investors and lenders perceive the HELOC in the second position to be of higher risk. In a foreclosure situation, the lender in the first position is safer, because they get paid first when the property is sold.
Effect of Falling Fixed Rates
When fixed mortgage rates fall enough relative to your current loan, taking cash out through a first-mortgage refinance may be more attractive than adding a variable-rate HELOC. The right comparison depends on current pricing, your existing rate, total costs, payment, loan term, and how long you expect to keep the financing.
Zero-Closing-Cost Refinances
Straight Deal Mortgage funds loans on its own warehouse lines as a correspondent lender. That gives me flexibility to set my compensation loan by loan and use the value the loan generates to offset eligible closing costs. When the pricing supports it, I can deliver a zero-closing-cost refinance instead of adding those costs to your balance. This typically means a slightly higher rate than a loan where you pay the costs yourself, and prepaid interest and escrow deposits are separate, so I’ll show you both options side by side.
This also supports a “lock now, refinance free later” strategy: if today’s refinance meaningfully improves your position and rates fall again, a later zero-closing-cost refinance may let you capture the next improvement without paying another round of closing costs. Every scenario is different, so I will show you the rate, total closing costs, and cash needed at closing before you decide.
See how I get paid and how loan pricing works.
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Contact Me to Refinance Your Home Mortgage
Get current, personalized advice on your home refinance situation! I’m happy to sort through the variables to help you decide which route is recommended when you’re choosing a HELOC or refinance of your principal mortgage. I have the pulse on changing rates and conditions, and I love helping my clients make informed choices that will benefit them in this market.