When is the right time to refinance?
We get this question a lot, especially in a market when rates are on their way down. If today's interest rates are lower than your current mortgage rate, you may wonder if it's worth the expense to refinance. If you've got refinancing on your mind, BMC Keystone can help. We would be happy to review your current loan, today's rates, and give you a better picture of how a refinance could benefit you and how much it will cost. As mortgage brokers, we'll help you find the best rates and terms that fit your goals.
Benefits of a Refinance
People refinance for various outcomes. Regardless of your motivation, the process is the same. But depending on your goals, the type of loan we suggest for your new mortgage may vary.
Refinancing into a lower interest rate can save you money over the life of your loan as well as reduce your monthly mortgage payments.
With the right amount of equity in the home, a refinance could mean no more mortgage insurance.
A refinance could be an opportunity to consolidate other outstanding loans into a lower rate - and one monthly payment.
Tap Into Equity
A refinance gives you an opportunity to borrow against the equity you've built in the home, giving you access to cash.
What exactly is a Refinance?
Your lending institution is not like your credit card company...you can't call them up and renegotiate a better rate. You must satisfy one loan and start over. When you refinance, you are paying off your lender for the existing loan. At the same time, you are qualifying for a new loan to replace it, whether or not you stay with the same lender or choose a different one. So, a refinance is a new mortgage, but with a process with highly synchronized timing between old loan and new loan.
The Refinance Process
Refinancing your mortgage is not as complicated as buying a new home, but there are still protocols to follow and documents to submit.
BMC Keystone will work with you all the way. We'll shop the mortgage market for you to find you the best rates and terms. We'll line up a lender who is willing to work with YOU and get you pre-approved.
As part of the refinance process, more than likely, your property will undergo a home appraisal to determine its current value. This home appraisal is an important part of the refinance process for two reasons. It assures your lender that your home is worth at least the amount you plan to borrow. And, it gives an updated picture on the equity you have in your home.
Just like when you initially purchased your home, your refinance will have a settlement. Your title company will conduct final settlement for you to sign new loan documents.
How does a refinance save you money?
You can save money by moving to a loan with a lower interest rate which means lower monthly mortgage payments. If your original mortgage loan has an interest rate of over 3% and the rates have dropped, you could save money.
You can also save money long term by shortening the length of your loan. By moving from a 30 year loan to a 20 year loan, more of your monthly payment will go towards paying off our balance instead of paying down interest.
Has your credit score improved? People with higher credit scores are eligible for the lowest mortgage interest rates. BMC Keystone can check your credit and if your latest scores bump you up to better rates, we'll show you how much you'll save.
Eliminate Mortgage Insurance
If you have an FHA loan and put less than 3.5% down, or a conventional loan with less than 20% down, you could be paying a couple hundred dollars in mortgage insurance every month! When you refinance, you have the opportunity to put more money down, or your appraised value you could put your equity over that required threshold. What would you do with all that extra money?
Consolidate Debt with a Refinance
Perhaps you want to pay off student loans, credit card debt, or both. A refinance loan gives you an opportunity to borrow money to pay off or pay down debt at a MUCH LOWER interest rate. No matter how mortgage interest rates fluctuate, they won't get anywhere near the rates charged by credit card companies which can be up to 25% or more.
Tap into Equity for Renovations
If you're ready to tackle some of the bigger projects around the home like windows or a new roof, don't wipe out your savings account. Considering a move to get more space or that dream kitchen? Don't move, refinance! You can borrow money against the equity you have in your home and use that money for renovations.
Remember as part of your refinance, your home will be appraised. This will help determine your equity.
Appraised Value of home - Balance you still owe = Your Equity
And when you have equity, even if that equity is a result of an increase in appraised value, that equity can be leveraged as collateral for your new new loan.
Does it make sense to refinance?
As with any loan type, calculating if it makes sense to refinance will depend on your original rate, the new rate, and your closing costs. We can determine how much money you would save overall and run down a list of any fees involved. Ideally, you want to save more than you spend!
How much does a refinance cost?
Yes, it costs money to refinance. Your closing costs will depend on your lender and the type of mortgage loan, but broadly speaking, your refinance will involve the following closing costs:
- Loan origination fee
- Appraisal fee, if required
- Lender's title insurance policy*
- Mortgage Recording fees
Note: A new lender title policy will be required since you are closing your current loan and opening a new one, even if you are using the same lender. If you have an owner's title policy from when you initially purchased the home, that policy remains in effect as long as you own the property. You only need to purchase a new lender policy for a refinance.
When you refinance, you're not tied to your current lender.
You're free to shop the market! As a Mortgage Broker, BMC Keystone searches multiple lenders to find loans with the best rates and lowest fees.
Request a Free Refinance Mortgage Consultation
Contact us to schedule a complimentary mortgage consultation to talk about your refinance options.
- Know your credit scores and how they affect your rates
- Know how much you still owe on your current mortgage and what it's costing you
- Review loan options and see if you qualify for any special programs
- Overcome credit issues so that you can get the lowest possible rate
- Know if refinancing makes sense for you
- Get a letter of pre-qualification
Request an appointment online or call our office during regular business hours at (215) 885-4828.
The BMC Keystone Advantage
Online lenders can't match our personalized service. We search the market - even the wholesale market - for the best loans and specialty programs to find our clients the lowest rates, the most favorable terms and the lowest fees.
From free consultations to help resolving credit issues, we are dedicated to finding a mortgage loan that works for YOU!
We fight to find borrowers the best loans with the lowest fees and there is no fee to use our service. When we finalize your loan, the lender pays our fee.
We are local lending experts and have earned a reputation as one of Pennsylvania’s most respected mortgage brokers.
BMC Keystone helps people all over Pennsylvania find the best mortgage loans.
"Your assistance in getting us re-financed into a fabulous lower rate will always be appreciated. You are a true professional and processed everything in a timely manner. Many, many thanks."
"It isn’t often that someone takes the time to go the extra mile, and I appreciate all of your efforts to help me in getting my mortgage loan refinanced. A thousand thanks!"