What is Mortgage Refinancing, and How Does Lend Me Money Help?
A mortgage refinancing is a secondary mortgage loan that typically has either lower premium rates or smaller payment terms. You can either get a private firm refinance or a bank refinance to suit your needs. Refinancing a mortgage has proven to be a winning strategy for homeowners to either be debt-free faster, pay less, or reduce monthly expenses.
As interest rates are subjected to influence by the financial market, you need to keep an eye on them. Once the market stabilizes and interest rates are coming down, you have the opportunity to move in and apply for a mortgage refinance online.
This is where Lend Me Money comes into the picture. We are a platform that has an affiliation with many low-cost refinance mortgage lenders to help you choose the best one for your needs. Our affiliated lenders showcase their services, rates, offers, terms, and other vital information on our platform. Hence giving applicants the advantage of comparing them side by side and choosing one of the best refinance mortgage lenders for their needs.
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How Does Our Mortgage Refinance Calculator Help?
This mortgage refinance calculator helps you to determine the benefits you get by refinancing your mortgage. Such benefits include:
- Taking advantage of lower-than-normal interest rates. It makes better sense to refinance your mortgage when the interest rates are on a decline.
- Converting your adjustable mortgage to a fixed-rate mortgage. If your current mortgage rate is an adjustable one, you continue to face the risk of higher interest rates. Refinancing your mortgage to the fixed-rate type helps you lock it into a lower rate in anticipation of a probable adverse interest rate change on your ARM.
- Reducing payments by stretching your mortgage term. If you wish to reduce the current amount payable against your monthly mortgage, consider refinancing your mortgage to prolong your current mortgage term. But remember, on a long-term basis, you may have to pay a larger amount in interest on that extended term.
- Shortening your mortgage term. Conversely, some homeowners may even find it preferable to shorten their mortgage term through refinancing. Though that implies an automatic increase in their monthly payments, characteristically, shorter-term mortgages carry lower interest rates. Likewise, they also pay lesser interest over the complete life of their mortgages.
- Debt consolidation or equity encashment. Mortgage refinancing is recurrently used for debt consolidation or the encashment of your home equity. As a homeowner, that is achieved by borrowing over and above what you actually owe on your current mortgage. As your refinancing costs can quickly add up, a refinance cash-out deal may not always be the best option for you. At Lend Me Money, our home refinance experts are available to offer you free advice on what would be your best options.
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The Break-Even Point of Your Mortgage
You can now determine the number of years it would take you to reach a break-even point by calculating your refinancing costs. The break-even point is the date on which you actually start to gain from your new lower payments instead of simply paying for your mortgage refinance loans. To work out the break-even point for your mortgage, follow the method given below:
- To obtain your monthly savings, subtract your new refinanced monthly mortgage payment from your current monthly payment.
- To obtain your after-tax rate, subtract your current tax rate from the above total.
- To obtain your after-tax savings, multiply your monthly savings by your after-tax rate.
- To determine the number of months it will take you to cover the entire cost of your mortgage refinancing, add up the total fees plus the closing costs of your new mortgage refinancing. Then, divide this amount by your monthly after-tax savings. This gives you the break-even point.
For example, if you need to refinance a current $300,000, 20-year, fixed-rate mortgage at, let’s say, 6% with a new revised 4% interest rate, your refinancing will reduce the original monthly mortgage payment from $2,149.29 to $1,817.94, thereby yielding you a monthly saving of $331.35. Assuming that a tax rate of 22% is applicable, the after-tax rate would be 0.78, which would result in an after-tax saving of $258.45 ($331.35 x 0.78 = $258.45).
Finally, if your refinancing costs add up to $9,000, then it will take you about 35 months to balance out the costs of refinancing ($9,000/$258.45 = 34.8).
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Common Refinance Mortgage Questions
“Lend Me Money” stands out as a premium marketplace that hosts some of the best options for mortgage lending. We have a huge array of lender choices for clients to select and compare between. Thanks to LMM, no one will ever be overcharged for mortgage refinancing. From our selection of the best refinance mortgage lenders, you can compare pricing, down payments, installment plans, interest rates, and more. Choose the plan from any service provider feasible for your needs and budget.
Our easy-to-use system and multiple affiliate providers make it simple for clients to refinance their mortgages. The multiple options allow clients to find the right service provider for their needs and budgets. LMM does not lend money but lets you choose from the best lenders available on the market. This helps mortgage clients find the right option for a home refinance, save money, and, sometimes, make more money.
There are no eligibility criteria for using Lend Me Money. However, there will be criteria set by our affiliate lenders or mortgage service providers. The criteria vary from service to service and may typically be related to credit scores, age, and type of mortgage. When you choose one of our affiliate service providers, you can enquire about their criteria on their websites.
To consider factors such as the following:
- Installment plans
- Annual interest rate
- Company reputation
- Reviews from previous clients
- Service fees
- Service process
- Customer service
Luckily for our clients, all these factors are comparable on our platform. You can check these factors side by side to choose your ideal mortgage refinance loan provider.
Besides the basic need of having a previous mortgage to refinance, here are some important requirements listed below:
- The good standing of the current plan
- The current plan may need to be seasoned (Past it’s Waiting Period)
- Sufficient home equity
- A decent credit score
- Low DIT (debt-to-income)
- Enough cast to close
You need the following documents to refinance your mortgage:
- Loan Application
- Proof of Identify
- Proof of income
- Play Slips
- Tax Returns
- W-2 Form
- Proof of Assets
- Home Owners Insurance
The financial refinancing process is simple to understand and easy to leverage:
- Keep your current mortgage in good standing. That means clearing all dues till the refinancing date.
- Keep paying the installments till the waiting period ends.
- Now, find low-cost refinance mortgage lenders to apply for refinancing.
- Once the mortgage is approved, use the loan to completely pay off your previous mortgage early.
- Now, you are left with a new mortgage that offers you lower interest rates.
Mortgage is a service, and you should treat it like one. Lend Me Money allows you to shop around for your mortgage refinance online and compare multiple lenders side by side. If you have a current mortgage, then you can compare their benefits and features with the options we provide on our website. If you find another lender that offers you better rates, then you should definitely switch.
A credit score of 360 is often necessary for applying for a mortgage. However, requirements may vary depending on the service providers. The credit score is a helpful factor for the clients, as lenders often offer lower interest rates to clients who have a higher credit score.
If you don’t have a plan for refinancing, then yes, it will be risky for you. Even when you have lower interest rates, you may have to end the new mortgage in a shorter time, thus larger installments in shorter periods. Therefore, ensure you consult your financial advisor before you apply for a bank refinance.