MORTGAGE Refinance Guide - Cloudinary

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MORTGAGERefinance Guide

ContentsTable of CONTENTSMeet Your Loan Officer4Reasons to Refinance5Types of Refinance6The All In One LoanTM7Mortgage Terms8How Often Can You Refinance9Before You Refinance10The Refinance Process11Meet the Appraiser12Refinance Tips & Tricks13About CMG Financial14

RefinanceReasons to REFINANCEA mortgage refinance can help you lower your monthly mortgage payment, change your loan terms, removemortgage insurance, or withdraw cash for home improvement projects. There will be times during the life ofyour loan when refinancing is a good idea, and there will be other times when it’s not the best option.MEET YOURTHELoan Officer5T O P R E A S O N S HOMEOWNERS CHOOSE TO REFINANCELower Mortgage PaymentIn some cases, switching to a different loan program can help lower your monthly mortgagepayment. Refinancing to lower your payment may extend your mortgage terms, dependingon the type of loan.Our loan officers are here to act as your financial counselor throughout themortgage refinance process. Refinancing your mortgage canhelp set you up for a successful financial future. We want to make thattransaction as smooth as possible.Lower Interest RateYour mortgage interest rate is determined by your financial profile at the time of loanorigination and greater economic influencers like the Federal benchmark interest rate.If interest rates are lower than they were when you originated your original loan, youmay benefit from an interest rate refinance.THE ADVANTAGEWe are able to deliver personalized customer service with the resources ofa local lender. Borrowers prefer working with CMG Financial because of our:Change from Adjustable-Rate to Fixed-RateAn adjustable-rate mortgage will fluctuate but a fixed-rate mortgage will maintain the sameinterest rate throughout the life of the loan. An adjustable-rate mortgage will have a lowerinterest rate initially but may increase over time. Refinancing to a fixed-rate mortgageensures the interest rate will stay the same for the duration of the loan term.%ReliablePrequalifications /PreapprovalsCompetitiveRatesShorten the Term of the LoanRobust Menu ofLoan ProductsTransparentCommunicationDependableOn-Time ClosingsMortgage terms range from traditional 15- and 30-year terms to 10, 7, 3, and even 1-yearoptions. Usually, shorter loan terms carry a lower interest rate, and you’ll pay less interestover time.Refinance to Cash Out Home EquityIf you have at least 20% equity in your home, you can refinance to withdraw home equity.Most financial planners recommend using home equity for something like a home renovationor to responsibly pay down debt. If you have another investment opportunity, consult afinancial planner before moving forward with a cash-out refinance.

RefinanceTypes of REFINANCETHEAll In One LoanTMRate and Term RefinanceThe most common type of refinance is known as a “rate and term refinance” or a refinanceto get a lower interest rate or change the terms of the original loan. Homeowners may alsorefinance into a different type of loan. For example, a first-time home buyer who used an FHALoan might benefit from switching to a conventional mortgage loan after they have had severalyears to build their credit and improve their financial profile.Cash Out RefinanceSome homeowners may choose a cash out refinance to raise the balance of their mortgageloan to pay for other expenses. Not to be confused with a Home Equity Line of Credit(HELOC), a cash out refinance involves originating a new mortgage for a larger value thanthe original loan. In the case of a cash out refinance, the monthly mortgage payment willincrease to cover the cost of the larger loan. For a HELOC, the lender issues an agreedamount of money using the borrower’s equity in the home as collateral.Cash In RefinanceA cash in refinance allows the borrower to lower their loan-to-value amount by making apayment toward the loan principal to potentially lower the monthly mortgage payment. Acash in refinance is a great option for a borrower who has the funds available through abonus, inheritance, or other source.Renovation RefinanceWhen a home is need of repair or remodel, renovation financing may be a better optionthan taking out a personal loan or using a credit card. With home prices on the rise, manyhomeowners are choosing to stay in their home longer and complete repairs or remodelsthrough renovation financing, rather than shopping for a new, more expensive home that fitstheir needs. With a renovation refinance the cost of the renovation is financed into the cost ofthe existing mortgage into one convenient monthly payment.Most Americans finance their home over a period of 30 years. During that time, you spend thousands of dollarson mortgage interest, without making a significant dent in your mortgage debt.Mortgage interest is one of life’s biggest financial obstructions.What if your mortgage could help finance your healthcare needs, send your kids to college, grow your retirementsavings, and help you prepare for unexpected costs?The All In One LoanTM allows you to plan for your financial future.All In One LoanTM Advantages Pay off your mortgage sooner Build equity faster Save thousands on mortgage interest Access funds 24/7Combine banking and borrowing into one account. Apply all deposits toward your mortgage principal first, reducethe cost of mortgage interest, and access your equity whenever you need it.Apply extra funds that would’ve gone to interest on:

MortgageMortgage TERMSMy Mortgage PaymentClosing CostsYour monthly mortgage payment is made up of severalcomponents. This housing expense is commonly referredto as P.I.T.I. or Principal, Interest, Taxes and Insurance.Mortgage Insurance, Flood Insurance, and HomeownersAssociation fees may also be a portion of your totalpayment.Below is an overview of the types of closing costs you mayincur. When you apply for your loan, you will receive aLoan Estimate and a booklet that will explain these costs indetail. At loan closing, you will receive a Closing Disclosuresummarizing your actual loan costs and fees.Principal – The portion of your payment that is applied topay down your mortgage.Interest – A charge for the use, or loan, of money. Theinterest is calculated on unpaid principal balance.Taxes – The county assessor charges property tax basedon the valuation of your home. For example, in California,there are two tax installments due each year; one inNovember, the second in April.Insurance – This pays for losses from certain hazards,including fire. This standard insurance pays for replacementcosts based on actual cash value.Homeowners Association (HOA) Dues – Fees paidby homeowners within a community of homes, condos,townhouses, or planned unit developments (P.U.D.). HOAdues are collected to cover the cost and maintenance ofcommunal areas to the property.Mortgage Insurance (MI) – Depending on your loanprogram or the amount of your down payment, you maybe required to have MI. Anything less than 20% down - ahigher note of default - requires MI. Because loans withsmall down payments involve substantially more risk forthe lender, they require insurance as a hedge againstborrower default. The cost of MI varies according to yourloan type, down payment, and credit score. FHA Loanscharge a fee for life-of-loan mortgage insurance, calledMortgage Insurance Premium (MIP). VA Loans chargean upfront Guaranty Fee in lieu of a monthly mortgageinsurance fee.Appraisal Fee – Conducted by an independent appraisalcompany, this pays for a statement of property value for thelender. You will receive your own copy.Credit Report Fee – This covers the cost of the creditreport that is run by an independent credit-reportingagency and is used to prequalify you for a loan and tounderwrite your completed loan application.Impound Account – If you choose to have an impoundaccount, have a government funded FHA or VA Loan, orif your down payment is less than 20%, the lender mayrequire you to establish an account held in trust for youby the lender to pay the costs of your property taxesand insurance. Your monthly payment will include the loanPrincipal, Interest, Taxes, and Insurance (collectively, P.I.T.I.).Loan Discount – Often called discount points, a loandiscount is a one-time charge used to buy down yourspecific transaction’s interest rate. One point is equal to 1%of the loan amount.Loan Origination – This fee covers the lender’s costsfor originating your loan.Title Charges and Document Preparation – Thetitle company may charge one-time fees for a title searchand examination, document preparation, notary fees,recording fees, courier fees, and a settlement or closing fee.There are two title policies with a one-time fee: a lender’stitle policy, which protects the lender against losses due todefects on title, and a buyers title policy, which protects theborrower against defects on the title.Prepaid Interest – Amount accrued on a daily basisfrom the date of loan closing to the due date of your firstloan payment.Taxes and Hazard Insurance – You will be expectedto pay for property taxes upfront, including the entireyears’ hazard insurance premium. In addition, you may berequired to allocate property taxes and property insurance(may include homeowners, flood) into a reserve account,called an impound account, held by the lender.IT’S NOT HOW LONG YOU STAY IN YOUR HOME,It’s how long you stay in your loan.A mortgage refinance is the right option in many cases. Refinancing your mortgage loan can helpshorten the loan terms, lower your monthly payment, remove mortgage insurance, and more.HOW OFTEN CAN YOUREFINANCE YOUR MORTGAGE?Depending on the loan program, a mortgage loanwill require a seasoning period before you refinance.In most cases, the borrower must have made at leastsix consecutive monthly mortgage payments on theloan being financed, and the refinance can occur noearlier than 210 days after the first payment is due.Check with your mortgage loan officer to learn moreabout your specific loan program.SCENARIO:Brady and Melissa refinanced their home twice in oneyear – how does that work and how did they benefit?“We originally refinanced our 30-year fixed-ratemortgage to get a lower interest rate and removePrivate Mortgage Insurance. When we bought ourhome, we were first-time home buyers and put downless than 20%. With our first refinance, we wereable to lower our interest rate from 6.25% to 5.0%.We refinanced again to a 15-year fixed-rate loan,to secure an interest rate of 4.25%. Our paymentsare higher, but we will be paying less interest in thelong-term. We were also able to secure a ‘fee-freerefinance’ by accepting a higher interest rate, thelender paid for closing costs.”Source: NerdWallet

RefinanceBefore You REFINANCERefinanceThe Refinance PROCESSOnce you’ve decided you’re ready to refinance and have met with a loan officer to determine the type ofrefinance you will need, you’re ready to get started!Before you make the decision to refinance your mortgage, complete the important checklist below.Define Refinance GoalDo you want to shorten your loan term? Lower your interest rate or monthly mortgagepayment? Withdraw cash for a home renovation project? Defining your refinance goal willdetermine what type of loan refinance you will need.Locate Relevant DocumentsA mortgage refinance is a new loan origination, and just like when you financed your originalpurchase you are going to need all of your important documents. Get your bank statements,W2s, pay stubs, government-issued identification, and other documents together ahead oftime to streamline the process.Compare the AlternativesFor example, if you are interested in a cash-out refinance to pay down other debt, explorealternative options and like payment plans with your credit cards or a student loan refinanceand weigh your options before settling on a cash-out mortgage refinance.1234Calculate the Cost to SwitchSince a mortgage refinance is a new loan origination, you will typically have to pay lender fees andclosing costs. Meeting with a loan officer ahead of time can help you estimate how much thosecosts will add up and help you determine if you can afford a mortgage refinance at this time.Calculate the “Break Even” PointOne of the most common reasons to refinance is to lower the monthly mortgage paymentor overall cost of the loan. Since a refinance will be a new loan origination, make sure tocalculate the “break even” point and determine how long it will take to start saving money withyour mortgage refinance.567Complete the Refinance ApplicationJust like when you purchased your home, you will need to complete a mortgage application withinformation about yourself and the home. This can be completed through the CMG Home App,over the phone, or in person.Consent to ProceedA Notice of Intent to Proceed with Loan Application (NIPLA) is a letter signed by you to grantthe lender permission to proceed with your application.Submit DocumentsPaperwork please! You’ll need signed disclosures, bank statements, W2s, tax returns, andmore. Getting these documents together ahead of time will help speed this up.Get a Loan EstimateLenders are required to provide a Loan Estimate (LE) within 3 days of receiving your loanapplication. The LE estimates the fees and closing costs that will be associated with yourmortgage refinance and will summarize your new loan terms and monthly payment.Get a Home AppraisalEven though you had a home appraisal when you bought your home, the value might havechanged. The refinance appraisal will account for any upgrades you’ve made to your home andany home value appreciation that has occurred in your market since your home purchase.Receive a Final DecisionOnce you’ve finished everything above, an underwriter will review your complete application andissue a final decision.Close Your LoanWhen you receive final approval, you’re ready to close. You’ll have to sign all of your paperworkand pay any lender’s fees at this time.

MEET THEAppraiserRefinanceRefinance TIPS AND TRICKSOnce you’ve decided you’re ready to refinance and have met with a loan officer to determine the type ofrefinance you will need, you’re ready to get started!Once you’ve decided you’re ready to refinance and have met with a loan officer todetermine the type of refinance you will need, you’re ready to get started!Buying a new home or refinancing your current mortgage will typically require a homeappraisal to determine its fair market value. The appraiser operates independently tomake an unbiased decision.An appraisal differs from a home inspection in that an appraiser determines the value ofthe house and the inspector determines what repairs are needed and what they will cost.The appraiser will compare the price of the home for sale with the value of other homesin the area and give the buyer, seller, and lender a detailed report on how the value wascalculated.Appraisal fees generally range from 450 to 750, depending on the market. In mostcases, the homeowner will be responsible for the cost of the appraisal. The final appraisalreport is based on the size and condition of the home, the number of permanent fixtureslike lights and faucets, details about any renovations you’ve completed, notes about thechanges in the value of surrounding properties, maps and photographs as needed, andthe detailed market analysis based on comparable homes.A low appraisal might prevent the refinance transaction from moving forward. Otheroptions apply based on the loan program, and the homeowner should consult a realestate professional for further information.1234Be PreparedGather important documents ahead of time. Meet with a loan officer and review what type ofrefinance will help you achieve your goals.Keep up with Your Credit ScoreA refinance is a new mortgage origination. Be proactive about maintaining a good creditscore, be responsible about paying down debt, and avoid opening new lines of credit.Use Rising Home Prices to Your AdvantageIn most cases, your home’s value has appreciated since you purchased it.Consider Paying MoreThe terms of your loan will influence how much interest you pay over time. A shorter loanterm will cost less in mortgage interest over time, but you’ll have a higher monthly payment.Depending on your budget, the higher monthly payment may be worth the lower interest rate.

2018 CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender withcorporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending ActNo. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed MortgageCompany #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department ofBanking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of FinancialServices; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; andLicensed by the Virginia State Corporation Commission #MC-5521. Also licensed in AL, AR, CT, DE, FL, HI, ID, IN, IA, KY, LA, ME, MD, MI, MN, MO, MT, NE, NV, NM, NC, ND, OK, PA, SC, SD, TN, TX, UT, VT, WA, WV, WI,WY and Washington DC. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/licensing.php and NMLS Consumer Access (www.nmlsconsumeraccess.org).

ensures the interest rate will stay the same for the duration of the loan term. Refinance to Cash Out Home Equity If you have at least 20% equity in your home, you can refinance to withdraw home equity. Most financial planners recommend using home equity for something like a home renovation or to responsibly pay down debt.

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