How to Decide: Is Refinancing the Right Decision for You?

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI

 

How to Decide:

Is Refinancing the Right Decision for You?

 

 

Because of ongoing events and the current low-interest rates being seen, many homeowners are contacting me and asking ... 

 

 

"Would a Refinance of my present mortgage be a smart move?"

 

My answer to them is typically, "Well, it depends."

It's easy to see why most callers think my response should be a quick and simple yes or no.  

Most articles I've run across do tend to portray it in that manner ... as "right or wrong" or in stark black and white terms, with an answer solely based on dollars and cents alone.  

And that can be true in some cases.  Interest rates have remained low (but volatile) for quite a while, and for some mortgage holders, an answer can be fairly obvious.  

 

Some clients:

  • May be able to save on monthly mortgage payments  
  • Years may be able to be shaved off of an original loan term  


However ... (there always that however or but, isn't there?)

I've found that the answer to this timely and important question, while certainly entwined with financial considerations, is often based on events occurring in the life of the individual mortgage holder(s) at the time they are asking the question.  And the answer, when found, is personal only to them.  

Simply, there's typically "more to the story".  And because of that fact, the answer received and actions taken by one client can never be a template for another's. 

Each inquiring borrower has their own life with a differing set of circumstances and differing financial scenarios.  Each has differing needs, different goals,  and different outcomes that are called for.

Here are a few examples of the different scenarios that have driven decisions for past clients:

  • Clients have changed jobs.  (As a result, methods and frequency of salary/pay have changed)  
  • Client has inherited a large sum of money
  • Clients wanted to consolidate mortgages
  • Clients wanted to change loan types/products  
  • Clients divorced (Buy-out partner/spouse)
  • College costs have loomed for children
  • Remodeling was needed 
  • A Family member added (or removed) on the loan 
  • HELOC came due, terms changed, etc.
  • Reduce 30-year loan to a 20 year or 15-year term
  • More ...


Often the real driving force behind their inquiry and refinancing is "life" itself ...

But no matter "the why" behind the question, there is one simple truth.  All Lenders should require that basic information be assessed for their client prior to making an assessment of viability for refinancing.  

So, what info should you have available for your Lender when you contact them regarding a Refinance?  That info includes:

  • Current mortgage interest rate held
  • Current loan balance to be paid
  • Current Mortgage Escrow(s) balance
  • Equity held in the home
  • Current Credit Scores (or allow Lender to Pull Credit)
  • Remaining term of Mortgage held (or the Original Loan Term)
  • Current Mortgage Payment (Does it include PMI?)
  • Current outstanding Debt (DTI/Debt-To-Income)
  • More ...


Other information that must be considered, as with any mortgage, is that Closing Costs will be incurred.  Those costs will typically include:

  • An Appraisal Fee
  • Title Insurance costs
  • Taxes (if Escrowed and a part of the payment)
  • Homeowner's Insurance (same as above w/ taxes)
  • Loan Origination Fee
  • Any costs specific to the individual Borrower (For example: If a borrower decides to pay points to obtain a lower rate)


Closing Costs incurred while refinancing can be paid in varying ways.  Payment can be made at the time of Closing.  It's also possible to "roll payment into" the new refinance loan itself.  All these factors, plus all financing options available, will then be thoroughly analyzed.  

Here's a simple method of analyzation I've found that often proves helpful to my clients when considering a Refinance:

 

  1. Projected Future Savings @ Proposed Interest Rate  =  $_____/Month  
  2. Projected Savings if PMI is dropped   $_____
  3. Savings realized/year after Refinancing = $____
  4. How many years it takes to recoup the cost of the loan/ Refinance   =  X
  5. Answers above = Your Answer

 

The fact of the matter is, a reliable sound answer can only be found after an analysis of this type is conducted with your mortgage lender
 
As I said above, much is based on the "rest of the story".  YOUR personal needs and financial scenario.
 
So if you're wondering if a Refinance of your present mortgage would be a smart move?  Contact me.  Together we'll analyze and discover the best answer for you ...
 
I'm easily found at:
 
 
Gene Mundt
 
Mortgage Originator  -  NMLS #216987  -  IL Lic. 031.0006220  -  WI License #216987
 
 
American Portfolio Mortgage Corp.
NMLS #175656
 
 
 
Direct: 815.524.2280
Cell: 708.921.6331
eFax: 815.524.2281
 
 

 

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

Comments (14)

Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

Great post and valuable information to read. Thanks for sharing. I hope you have a great afternoon.

Mar 31, 2020 02:18 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Thanks so much for the thumbs up, Pat Champion ... take care of yourself and stay safe ...


Gene

Mar 31, 2020 02:29 PM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Gene- your posts are always so informative and they explain things so that all of us can understand the mortgage industry. Anyone considering refinancing or obtaining a mortgage should contact you because of your thorough knowledge. 

Mar 31, 2020 07:27 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

You're so kind, Kathy Streib ... thank you.  You made my day ...


Gene

Apr 01, 2020 08:41 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Gene congratulations to the Featured Post, I always tell Diane our goal is to pay it off as fast and sooner than what we agreed to... so when we saw our accountant a few weeks ago he asked did we Refi? I said no we were just making headway:)Endre

Mar 31, 2020 11:07 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

The analysis of whether it's a smart move or not is so paramount to action with refinancing, Endre Barath, Jr. ... and that is what needs to be remembered above all.   Do the analysis and find the personal answer you need.  Glad you did that ...


Gene

Apr 01, 2020 08:43 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Good morning, Gene... what a great primer on the subject of refinancing... so many people are jumping onto this bandwagon right now... hopefully, those who are have gone through the exercise of determining how and why as you've outlined.

Apr 01, 2020 05:26 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

There are those times when it just does not make sense, Nina Hollander ... it's a step backward in some way.  And that is where a Lender is of great assistance too ... in finding another solution moving forward.  The importance of having that talk .. that analysis performed ... can't be overlooked.


Appreciate the kind words, Nina ...


Gene

Apr 01, 2020 08:45 AM
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Timely post, Gene. I have had clients calling for advice and have directed them to lenders. Now, I'll share your advice too. Thanks. D 

Apr 01, 2020 08:24 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Love hearing that you found it beneficial and "share worthy", Debb Janes EcoBroker and Bernie Stea JD ... makes me feel good.  Thanks!


Gene

Apr 01, 2020 08:47 AM
Anna Banana Kruchten CRS, CRB, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Gene really good discussion whether re-financing or not is a good idea for folks.  We've had number of those calls this past few months or so and most found the most opportune moment to get a low, low rate and reduce their payment significantly. As you said...there are many variables and by looking at the whole picture it will show the best path to take.

Apr 01, 2020 09:13 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

You nailed it, Anna Banana Kruchten Broker, CRB, CRS ... glad to hear that those you assist were able to save ...


Gene

Apr 01, 2020 09:19 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is timely information to share while mortgage interest rates are very attractive.

Apr 01, 2020 09:16 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Definitely, Roy Kelley ... it's good to strike while the iron is hot!


Gene

Apr 01, 2020 09:18 AM
Corey Vandenberg
Success Mortgage Partners - Lafayette, IN
More home mortgage loan options!

Excellent job, I might add two things:
Everyone has a different reason.
Ethical sales in mortgages is rare, you should value that the lender is taking the time, asking The right questions, and making you consider whether it’s the right decision. Plenty of online aps and 1-800#’s would never take the time to make sure it’s the right decision for you!

Apr 01, 2020 05:35 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

True ... case in point, Corey Vandenberg ... I had a client of mine call me yesterday.  She had received a letter from another mortgage provider detailing how they could save her money with a refinance.   The letter was nothing short of fraudulent.  How do they get away with it?  Not sure how those lenders sleep at night, but was so glad that she contacted me immediately for further info and to get the facts.   


Gene

Apr 02, 2020 08:04 AM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Everything depends on the why, doesn't it? However, the why could be as simple as exploring the question and doing some research, couldn't it? I always ask prospects if they're researching the opportunity or if they want to take it? That's when the why is important and whether the expectation could be a reality or simply a notion. Great post.

Apr 01, 2020 05:52 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

I do think that the timing, as well as the intent, have to line up, Kimo Jarrett ... so many times the opportunity to refi is there, but the desire to do it isn't.  I do, however, feel that it never hurts to find out what options exist.  


Gene

Apr 02, 2020 08:09 AM
Brian Emerson
Edge Home Finance - Edina, MN
Residential mortgages

My compliments on a really well done piece. Easy to read and gets to the heart of the matter. I like your questions!

Apr 01, 2020 06:48 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Thank you so much, Brian Emerson ... appreciated even more when it comes from a fellow lender ..


Gene

Apr 02, 2020 08:10 AM
Marc St Martin
United Real Estate Infinity - Cape Coral, FL
Your friend in the business!

Great info. Well presented. Thanks!

Apr 01, 2020 07:12 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Thank you, Marc St Martin 

Apr 02, 2020 08:11 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Gene:

This is excellent information to help homeowners decide if a refi might make sense, and why, and what to expect. Should I refi is not a simple yes or no question as you pointed out. Anyone who is considering refinancing needs to consult a knowledgeable mortgage professional to understand the pros and cons, the financial implications, and get their questions answered.

Jeff

Apr 01, 2020 09:59 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

Getting an analysis done is so vitally important, Jeff Dowler, CRS ... and it costs nothing monetarily to do so.  The benefits reaped can be immense ...


Gene

Apr 02, 2020 08:14 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Gene - life is full of "however" - "but" and "it depends" situations and when it comes to decisions about refinancing(or not) and the bigger issue of mortgage financing, aligning with an experienced, knowledgeable and results-geared professional like yourself makes a difference.  

Apr 03, 2020 07:41 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

The importance of working with an experienced ... and currently active ... real estate professional or lender is vastly understated, Michael Jacobs.  These days, you have to be doing business currently to remain sharp and thoroughly understand the demands of it.  It definitely helps facing those "however", "but", and "it depends" ...


Have a great weekend, Michael ...


Gene 

Apr 03, 2020 08:19 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

At a time of super low interest rates and the many questions revolving around the issues of our day your information about refinancing is excellent. I have bookmarked and plan on referring to as well as sharing this with my clients now and in the future.  Thanks!  

Still planning to get together after this Covid-19 is over and we are free to meet for a cup of coffee. Hope you are well!

Apr 05, 2020 11:50 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

I definitely want to get together too, Diana Dahlberg ... but maybe a FaceTime meeting should suffice until that point?  It's not the perfect answer ... but it will do!  I appreciate that you are bookmarking this piece ... and I'm very happy that it will benefit you and your clients moving forward.  Thank you very much ...


Hope to "see" you soon!!   Let me know what is convenient for you ...


Gene 

Apr 06, 2020 08:02 AM