SCC Mortgage Co.

    It’s true.  When you refinance there are a number of fees involved.  But whatever you pay, look at it as an investment in a new rate which will result in a lower mortgage payment each and every month.

   That said, you can determine the level of your closing costs.  Yes.  You can do that by choosing the rate you want to refinance at.  Say a typical 30 yr rate is 3.75% today.  You can choose a rate of 3.25% and pay higher closing costs than you would for 3.75%.  But you get the 3.25% rate for 30 years in exchange for your upfront investment in paying the costs.

    What more people choose to do however is pay a slightly higher rate and pay less in costs.  Say you have a 5% rate now.  A 4% rate looks pretty darned good.  And the 4% rate comes with a lower cost level then the 3.75% rate.  Higher rate = lower costs.  If your mortgage amount you’re refinancing is large enough, you  may even pay no costs to refinance.

    Be aware that there are always options.  Talk to your mortgage professional about rate and cost combinations and choose the one that works for you………  WS

   For the most part…….but many are limiting the loan/value ratio or have other stipulations that they’ve added on top of the Federal required minimum qualifications…………The message here is “check around”.  If you’re turned down at one lender, that does not mean you will be at another.

   The Federal HARP program is designed to encourage homeowners to refinance and take advantage of today’s low rates.  It may take a little looking and comparing, but you should be able to do so as well.       ST

   Nothing set by law, but check with lenders  to find out their guidelines.  Many lenders discourage the smaller sized mortgages………and be aware that the best rates offered by most lendrs are for loans of $150,000 or $200,000 and up.

    So generally there is no minimum amount required to refinance….but….there is an effective minimum.  What I mean by that is, on smaller mortgages it’s often not worth the expense to refinance to save even 1% in interest rate.   The reason for this is that most of the closing costs associated with refinancing are fixed.  There is very little difference in $ cost in refinancing a $50,000 mortgage or a $250,000 mortgage. 

    Let’s say refinancing costs are $2500 and you’re considering refinancing to save 1% on your mortgage.  If you owe $250,000 the 1% savings is $2500/yr.  If you owe $50,000, your 1% savings is only $500.  The $2500 is costs is recovered in 1 year with the $250,000 refinance, whereas it will take the $50,000 mortgage applicant five years to recover the costs.

    Check with your lender regarding refinancing feasibility for you.  Reputable, professional lenders will show you your cost of refinancing and your “breakeven point” for recovering those costs……….ST

  Each case is different.  The higher your interest rate now vs. today’s low rates, the more you’ll save of course.  The higher your mortgage balance the more a decrease in interest rate will save you. 

    But keep in mind that savings in interest is not the same as savings in monthly payment.  The low fixed rates on 15 and 10 yr mortgages provide great savings in interest expense, but may actually increase your monthly payment.  Refinancing from a 15 yr to a 30 yr mortgage may save you less in interest expense but could greatly increase your personal monthly cash flow.

    How to tell what your options truly are and what the numbers look like?  Just send in your most recently monthly mortgage statement (fax  913 491-1030 or email wes@sccmortgage.com).  We’ll get back to you with a projection of your new payment and the estimated cost of refinancing.  Ask for a compairon of both a 15 yr and a 30 yr refinance if you’ve been curious about which is best for you.

   Several good options available.  Many borrowers with 15 year mortgages do not want to “go backwards” on their mortgage amortization, and choose a 10 yr mortgage for their refinance.  Often a 10 yr rate is .125%  less than the rate on a new 15 yr as well.

     For those that want to decrease their housing expense and improve their personal cash flow, refinancing from a 15 yr to a new 30 yr is possible.  For these homeowners, decreased monthly outlays is most important, and often they have plans to move to a new home in a few years so quickly paying down the mortgage with a new 10 yr or 15 yr is not as important.

     Finally, cash out refinances are still available up to 80% of appraised value.  For those that have had a 15 yr mortgage for awhile,  some equity in the home has likely been created through the paydown of the mortgage.  It’s possible to “borrow back” some of this equity with a new larger mortgage at today’s low rates.

Yes.  Email or fax me your most recent mortgage statement.  steve@southwoodmortgage.com  Fax 913 671-7185   With that we can work on some options for you and show you real numbers on the benefits (or non-benefits) of a refinance for you.  ST

  Today virtually every lender has very similar pricing and loan products, and service level is difficult to prove until you’re in the middle of your mortgage process.  Over the past few years the tougher underwriting guidelines, loan originator licensing, stricter appraisals, etc. have eliminated some 70% of loan originators in the marketplace.  The remaining people have been vetted and are a very high quality group of professionals.

    So, everybody is competent and has about the same rates and programs.  Consider these criteria when choosing which originator you’re going to work with:

   •  Referrals from friends, co-workers

    •  Seek out an originator that can advise you on what it will take to qualify, when is a good time to lock in your rate, and what is likely the best mortgage program for you

    •  Look for transparency;  a clear estimate of fees and mortgage terms and factors that affect your rate and fees.

   When checking around for rates for a mortgage refinance. don’t call and ask “What is your rate on a 30 yr fixed?”.  Instead, decide on what interest rate you want to make your refinance work for you.  Then check with lenders and find out what fees would be associated with that rate.  “What would be my closing costs for a regular refinance of $150k on a 30 yr fixed rate at 4%?”

   In mortgage finance, rates and costs are completely linked together.  There are rates with no closing costs, rates where you absorb all of the closing costs, and rates in the middle where you pay a portion of the costs.  Rates with no closing costs are higher as the lender pays the costs and builds them into the interest rate.  The lowest rates are when you pay the costs of refinancing and the lender does not build anything into the rate.

   So, say you want a 30 yr fixed rate of 4.0% and you want to keep your investment in closing costs at $1000 or so.    Check around with a couple of lenders you trust and find out their TOTAL fee levels (all fees and not just lender fees) at 4.0%.  If the fees are coming in higher than your $1000 target you can 1) tell the lender what you want and have them contact you when their rate/fee level hits your target, or 2) adjust your sights on the rate.  A rate of 4.125% will carry lower fees than the 4.0% rate.

  Take charge of your refinance process. Research rates that should be available for your situation, select the rate that fits your goals and discuss cost with your lender.

Download the .pdf application below, complete it and email or fax to us.  We’ll contact you to confirm the loan terms you’re interested in and the supporting documents we’ll need.    W.S.