Refinance FAQs

Question: Should I refinance?

To determine whether or not it is a good idea for you to refinance, you should look at your specific situation and your motivation for refinancing. The most common reasons to refinance are to reduce your rate and/or payment, convert from an adjustable to a fixed rate, or pull cash out of your equity to consolidate debt or improve your home. If your objective is to reduce your rate and payment, you should review your current interest rate and see how much you can save with a 0 point loan and then determine if it makes sense to pay points to reduce your rate further. If you are converting your adjustable rate into a fixed rate you’ll get peace of mind knowing your rate will never increase again. If you are using the equity in your home to consolidate debt, your overall loan balance and payment may go up, but you will save monthly because you will eliminate the monthly obligations that you are paying off. Your Mortgage Specialist can help you determine whether or not refinancing makes sense for you.

Question: How much can I save if I refinance?

Every situation is different. It depends on what your current interest is and what your motivation is for refinancing. If your current rate is 1 percent higher than what is available in the market, it probably makes sense to refinance. To get an idea of what you could save by refinancing, check out our calculators and enter numbers specific to your situation or call one of our Mortgage Specialists for some expert advice.

Question: What if I have a second mortgage on my home? Can I still refinance?

Typically, any second mortgages are paid off through the refinance. We will consolidate both loans into one new first mortgage and you will only have one payment each month. If you’d prefer to keep your second mortgage intact, we may be able to ask your second mortgage lender to remain in second position and allow us to refinance the first loan. This process is called subordination and there is typically a fee charged by the second mortgage lender.

Question: What are the costs associated with refinancing?

Fees associated with refinancing vary based on loan amount. If you have enough equity in your home, you can add all fees and pre-paid items into your new loan. Contact a Mortgage Specialist to get a detailed estimate of fees.

Question: What type of documentation do I need for refinance?

Standard documentation collected for a refinance transaction includes information regarding your income such as paystubs covering the most recent 30 days and W-2s for the last two years, asset information such as bank or mutual fund/stock statements covering the last 60 days and current loan information such as your most recent mortgage statement and homeowners insurance declarations page.

Question: Is it true that you should only consider refinancing if you can lower your rate at least .5%?

There is no rule-of-thumb when it comes to refinancing because there are different reasons to refinance. If you are currently in an adjustable rate looking to get into a long-term fixed loan, you will be in a better long-term situation knowing your rate and payment will not change. If you are looking to consolidate debt, your loan amount and mortgage payments may go up but your overall monthly outflow will decrease because you will have eliminated some or all of your credit card bills and other monthly obligations. It is a good idea to go over your specific situation with a Mortgage Specialist to determine whether refinancing makes sense or not.

Question: How long is the refinance process?

Most refinance transactions close in about 30 days from application to closing. As long as you do your part in delivering the documentation that we need in a timely manner, we should be able to close your loan within 30 days.

Question: What happens at the loan closing?

You will meet with your Mortgage Specialist and the closing attorney at a designated settlement location such as a Clear Mountain Bank branch or the attorney’s office. The closing attorney will review and explain the closing documents and once you sign your mortgage process is completed.