Refinancing your mortgage is an important decision that needs the right care and attention from a trusted advisor. At Freedom Lending, we specialize in refinancing mortgages in multiple states and delivering the best product for your current position. Refinancing is a very detailed process and requires the help and guidance of a trusted advisor.

The refinance process can be divided into the following:

• Comprehensive assessment and analysis of needs and wants from new mortgage
• Proper planning of new mortgage, and incorporation into existing financial situation
• Pre-Qualification for mortgage
• Formal application process for mortgage with trusted advisor

The refinance process step-by-step:

1. Collection of all important income and asset documents, and all other documentation requested

2. Execute appraisal

3. Product selection with guidance from trusted advisor

4. Loan processing

5. Loan underwriting

6. Loan decision/approval

7. Closing of loan

Refinancing your mortgage with Freedom Lending can consist of various program types, of which each program type has its own specific purpose and benefit.

You may want to refinance your home to:

1.  Tap into your home’s equity, also known as a ‘cash-out refinance.’

• A cash-out refinance replaces your old mortgage with a new mortgage. Your old mortgage is paid off by the new mortgage, and you receive the remaining amount in cash. That cash comes directly from the equity you have built in your house. The process of a refinance is delicate and important, because you have to make sure your needs and wants are being addressed. Proper planning and product choice are vital with a refinance.
• Because it allows you to borrow from your equity, a cash-out refinance is somewhat similar to a home equity loan. The distinct difference is that the home equity loan does NOT pay off your existing first mortgage; it is simply an additional loan giving you money that you will have to repay along the way, in the form of an additional monthly payment.
• It may be cheaper! That is why cash-out refinances have gained a lot of popularity in the recent years. Borrowing against your equity is often cheaper than other forms of financing. Credit cards and personal loans typically carry much higher interest rates than the loan against one’s equity. Plus, the interest on credit cards and personal loans are not always tax deductible. Additionally, real estate mortgages often carry tax incentives.

2.   Change the repayment terms!

A cash-out refinance may lower your monthly payments by changing the term and length of the repayment period. You may get a lower payment with a longer term.

You may spread the mortgage over a new term, ranging from 10 years to 20 years to 30 years to 40 years, and in some case, even 50 years.

A cash-out refinance may shorten your loan term and allow you to pay less interest. By shortening your loan term, fewer monthly payments will be required to pay the mortgage off. As your balance decreases, so will the interest charges overall.

By changing the length of your mortgage you can either reduce payments while extending the repayment period, or increase payments while reducing the repayment period and overall interest paid over the course of the mortgage.

3.  Refinance your ARM into a fixed-rate mortgage!

If you plan on staying in your home for a long term and do not want to worry about rising rates, you may want to refinance and replace your existing ARM (Adjustable Rate Mortgage) with a fixed-rate mortgage. With an interest rate that never changes, a fixed-rate loan gives you stability and predictable payments.

4.  Refinance with another ARM!

• If you plan on moving or refinancing within the next several years, it may be beneficial to look at a lower interest rate and replacing your existing ARM (Adjustable Rate Mortgage) with another ARM. In most instances, an ARM mortgage initially starts with a lower interest rate than what you would get with a fixed-rate mortgage. An ARM can remain fixed from 3 months to 10 years. Depending on your schedule to move, sell, or simply refinance, you can lock a fixed-term for your ARM.
• A cash-out refinance may also change the components of your mortgage. You can select an interest-only mortgage to reduce monthly payments. You can select a principle and interest mortgage and accelerate home ownership, based on the terms of the loan.

5.  Extract money to fund your retirement!

A cash-out refinance may be properly and carefully utilized to fund your retirement. Whether it be an IRA, SEP account, stocks, or mutual funds, there are so many choices nowadays to fund an account with a rate of return. Freedom Lending Group works closely with clients and financial planners, with proper mortgage planning and asset allocation, to help fund retirement goals!

A cash-out refinance may make sense if you can secure an interest rate lower than the rate of return on any investment. Always check with your financial planner and/or consultant on proper investments. We will be here to help with the mortgage planning side of it!

6.  Fund your child’s college fund!

With rising costs of living, education debts are not to be overlooked. College tuition now ranges anywhere from the thousands up to $40,000 per year. A cash-out refinance may be a smart choice, allowing a child to one day attend college without amassing the debt himself/herself.

7.  Simply be in control of your finances.

During different times of our lives, we come across different situations and circumstances. It is good to know that with the help or a trusted advisor, proper mortgage planning can use a wide variety of loan programs made to fit your current financial situation in life. Maybe the loan from 3 years ago simply does not fit your lifestyle now. Maybe your income has grown, and now is the time to attain loan geared towards faster home ownership, such as a 15 year term. The point is: be in control…and let us help you with the proper planning and strategy. Remember, putting your home on the line can be risky. Putting it in the wrong hands, can be even riskier.