Re-Financing Center

Home

Why MainStream

Loan Center

Online Application

FREE eBook - The Mortgage Handbook
A helpful guide as you work through your mortgage application process.

Re-Financing Center
Home Re-Financing Center

Welcome to MainStream’s
RE-FINANCING CENTER

Whether you’re looking to lower payments, get cash out, or consolidate debts, we make re-financing easy no matter what your goals are.

In the past, when interest rates were 1-2% lower than what you were currently paying, it would be time to consider re-financing. Now, with zero closing costs as an option, as little as .25% below your current rate may be worthwhile, depending on your loan size. This can mean great savings for you and your family. And, since you are paying no closing costs, this can be done again and again at no cost to you to ensure you always have the lowest rate and the ability to pay your house off more quickly and with less interest.

Replacing your existing mortgage with a new, lower interest loan, changing the term of your loan, or even consolidating all your debts into this new loan will save you money, both monthly and over the life of the loan.

Re-Financing Center Topics

Deciding to Re-finance Re-finance to Get Cash-in-Hand

Trade Your ARM for a Fixed Rate Re-financing with Zero Costs & Tax Benefits

Analyze Your Savings Build Home Equity Faster

DECIDING TO RE-FINANCE
Traditionally, the decision on whether or not to re-finance meant balancing the savings of a lower monthly payment against the costs of re-financing. MainStream has "no cost" and low-cost re-financing packages that minimize or completely eliminate the out-of-pocket expenses of re-financing.

With traditional re-financing, the rule-of-thumb is that the interest rate for your new mortgage should be around 2% below the rate of your current mortgage for re-financing to make sense. However, with low- and no-cost re-financing programs, it can be worth it to re-finance to obtain as little as 0.25% in interest rates.

When you re-finance your mortgage, you're actually replacing it with a brand new loan. In doing this, expect to go through a mortgage application process similar to what you experienced with your original mortgage. Re-financing is often a sound financial choice that can allow you to meet a variety of needs:

Reduce your monthly payments with lower interest rates or extending the repayment period.
Reduce your interest rate risk by switching from an adjustable or balloon mortgage to a fixed-rate loan.
Reduce your interest cost over the life of your mortgage with lower rates or shortening your loan term.
Pay off your mortgage faster (accelerating the build-up of equity) by shortening the term of your loan.
Free up cash for major expenses or to consolidate debts.

RE-FINANCE TO GET CASH-IN-HAND
Another way to make a re-finance work for you is to re-finance for more than the balance on your old mortgage, tapping your home equity, or "cashing out." Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. For example, at 7.5%, the payment on a $200,000, 30-year fixed-rate mortgage is $1,538. But at 6.5%, that same payment lets you borrow nearly $20,000 more. Depending on your goals, you can choose to reduce your rate and monthly payments, or keep the same payment and reduce your loan term.

You can use the extra cash to pay off any higher-rate loans you may have. Say you are carrying a $15,000 car loan at 6% and making minimum payments on a $10,000 credit-card balance at 10%. Your monthly payments on those debts would be $680. Then assume you re-financed your mortgage, taking out an additional $25,000 to pay off your car and credit-card loans. Result: At 6.5%, your additional monthly mortgage payment would total only $175 - you come out $505 ahead ($680-$175=$505).

TRADE YOUR ARM FOR A FIXED RATE
The extra cash can also be use for home improvements. Say you have an adjustable rate mortgage (ARM) that you swap out for a fixed-rate, increasing your mortgage load by $34,000, from $106,000 to $140,000. You could use $20,000 to pay off a 10% home-equity loan, which would cost about $250 a month, and spend the remaining $14,000 for home improvements – all for just another $19 a month.

REFINANCING WITH ZERO COSTS & TAX BENEFITS
You can re-finance for free with MainStreams “no cost” and low-cost re-financing packages that minimize or completely eliminate the out-of-pocket expenses of re-financing.

Also, when rates fall steadily, Re-financing may make sense even if you have done so once already. If you are considering a second Re-financing, don't overlook this potential tax write-off: When you pay points to re-finance, you must deduct the amount over the life of the loan, usually 30 years. But when you re-finance a second time, all of the points that have not yet been deducted from the first re-financing can be written off in a lump sum. Say you re-financed to a 30-year mortgage in 2000 and paid $3,000 in points. By now, you would have written off roughly $500. If you re-finance again this year, you could deduct the remaining $2,500 on your 2005 tax return. For a homeowner in the 28% tax bracket, that works out to a savings of $700 -- enough to offset some or all of your costs this time around. If you pay points up front in cash, they are deductible at that time.

ANALYZE YOUR SAVINGS
Check the market to determine rates and the costs associated with re-financing. These costs can include items such as an appraisal and other fees and points. Then determine what your new payment would be if you re-financed. You can estimate how long it will take to recover the costs of re-financing by dividing your closing costs by the difference between your new and old payments (your monthly savings). The amount you may save depends on many factors, including your total re-financing costs, whether you sell your home in the near future, and the effects of re-financing on your taxes. The rule of thumb used to be that you shouldn't re-finance unless the new interest rate is at least two percentage points lower. However, MainStream offers zero point loans and a low-cost re-financing. Therefore, you may be able to save some money by re-financing even if your rate change is less than one half a percentage point.

BUILD HOME EQUITY FASTER Many borrowers use a re-finance to shorten the term of the mortgage. And brace yourself: Even at low rates, a shorter term means a higher monthly payment. However, the benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.

Consider if you took out a 15-year fixed-rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Your monthly payment would jump by $200, but now you will own your home outright by the time you retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM - and that assumes your adjustable rate would have held steady at its current 8.13%. If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to re-finance for less than 30 years. To do so, ask your MainStream Loan Specialist to customize your new loan's term to match the years that are left on your old loan - if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.

Another alternative is to re-finance to the lower 30-year fixed payment and send additional principle payments each month, or even each year for example, when you get your tax refund.

Subscribe to our free Email Rate Alert, where we monitor interest rates and notify you when they reach a level you are interested in.
Calculate how much you can afford and more in our Calculators.
Learn about the benefits of MainStreams true zero closing cost mortgages.
Complete our MainStream Loan Qualifier for an instant general assessment of your borrowing ability.
Apply on-line using our Secure Easy Application.
Get more information on government sponsored VA loans or FHA loans.
Receive your free eBook, The Mortgage Handbook, to use as a guide as you work through your mortgage application process, including checklists, worksheets and tips.
Access additional Resources and Tools to aid you in the home buying and lending process.

Email us or call us at (877) 355-2152 for rates, free qualifications, general information, or to apply!


MainStream Mortgage Solutions is an equal Opportunity Housing Lender. State Licensed. © 2009 MainStream. All Rights Reserved.	Contact us \| Privacy \| Terms of use