Refinancing a Mortgage in TN

When should you refinance?

Ever heard the old rule of thumb, you should only refinance if your new interest rate is at least two points lower? That may have been true years ago, but with refinancing dropping in cost over the last few years, and the various and different financial circumstances a homeowner may have, it's never the wrong time to think about a new loan!

We are often asked "What's this going to cost me?", meaning how much money do we have to pay you upfront to refinance. The answer is - nothing. Any closing costs that apply are built into the loan. The question that should be asked is " How will I be benefit from the refinance?" That's where our many years of experience and the many, many lenders that we have gathered over the years comes in. In our initial conversation with you , we will ask you questions concerning your existing mortgage and your other debt. There is nothing we haven't heard, so it is important that you share with us everything about these subjects so that we can design the loan that will benefit you the most. We will find out about your credit anyway when we pull your credit report, so in for us to design the best loan for you, please be honest about your circumstances so there are no surprises later. When you refinance, you might be able to lower your interest rate and monthly payment -- sometimes significantly. You might also be able to "cash out" some of the built-up equity in your home, which you can use to consolidate debt, improve your home, take a vacation -- whatever! With lower rates and balances, you might also be able to build up home equity faster with a shorter-term new mortgage.

There are many factors to consider when refinancing. Remember, our job is to help you use the money you have available in the most efficient way possible to pay off your mortgage as soon as possible. Don't worry - we'll help you figure it out. We'll work with you to determine what program is best for you, considering your existing circumstances, how likely you are to sell your home in the near future, and what effect refinancing might have on your overall financial picture.

Which refinancing option is best for you?

There aren't quite as many loan programs as there are borrowers, but it seems like it sometimes! We'll work with you to qualify you for the best loan program to fit your needs. But there are some general considerations you can have in mind in advance.

Are you refinancing primarily to lower your rate and monthly payments? If you've had your current mortgage for a number of years and/or have a mortgage whose interest rate is higher, you may be able to do this without increasing your monthly payment. Then your best option might be a low fixed-rate loan. Maybe you have a fixed-rate mortgage now with a higher rate, or maybe you have an ARM -- adjustable rate mortgage -- where the interest rate varies. Even if it's low now, unlike your ARM, when you qualify for a fixed-rate mortgage you lock that low rate in for the life of your loan. This is especially a good idea if you don't think you'll be moving within the next five years or so. On the other hand, if you do see yourself moving within the next few years, an ARM with a low initial rate might be the best way to lower your monthly payment.

Are you refinancing primarily to pay for home improvements, pay your child's college tuition bill, take your dream vacation, whatever. Or maybe you want to consolidate other debt? Good idea! If you have the equity in your home to make it work, paying off other debt with higher interest rates than the interest rate on your mortgage -- for example, credit cards, home equity loans, car loans, some student loans -- means you can save possibly hundreds of dollars a month – which can then be used to pay off your mortgage loan.

Do you want to build up home equity more quickly, and pay off your mortgage sooner? Consider refinancing with a shorter-term loan, such as a 15-year mortgage. Your payments will be higher than with a longer-term loan, but in exchange, you will pay substantially less interest and will build up equity more quickly. If you have had your current 30-year mortgage for a number of years and the loan balance is relatively low, you may be able to do this without increasing your monthly payment -- you may even be able to save! For example, let's say years ago you took out a $150,000 30-year mortgage at eight percent. Your payment is about $1,100, exclusive of taxes, insurance and so on. If your balance today is down to $130,000, you might take out a 15-year mortgage at six percent and have an almost identical monthly payment. This is a great option for people whose main goal is not to save money on their monthly payment but rather want to build up equity and pay off their home more quickly.