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When Do You Know It’s Right to Refinance Your Home?

Refinancing a home mortgage loan is an important decision that can save you thousands of dollars in interest and reduce your monthly expenses. However, it is a significant undertaking and should only be done when the benefits outweigh the costs.

You’ll pay off your current mortgage and take a new one with refinancing. This is not something you should do lightly because it can lead to missed payments, damaging your credit score.
Let’s find when is the right time to refinance the mortgage on your home:

When You Can Obtain a Lower Interest Rate

The amount of time it will take you to recoup the refinancing costs is heavily dependent on the interest rate, so when you see your rates are trending downward or about to fall, that can indicate that it’s time to refinance.

However, the process of refinancing can be a lengthy one, so you should only consider it when rates are going to go down.

When You Need to Reduce Monthly Payments

Your home is the biggest asset you own. It should come as no surprise that refinancing to a loan with a lower rate and/or better terms will reduce your monthly payment.

When refinancing, you can often get a longer-term or a lower rate, or both. If you are interested in lowering your monthly payment, refinancing can benefit you.

When You Want a Better Mortgage

While refinancing can help you reduce your monthly payment, it may not result in a better deal. If the rates and fees associated with your loan are too high for you, refinancing could provide a better option.

When you take out a refinance loan, the total cost will be higher than your current loan. However, the amount you spend on interest and fees should be smaller, resulting in a lower monthly payment and/or a better loan term.

When You Need to Consolidate Debt

Refinancing can be a great way to consolidate debt. You may want to refinance the mortgage if you have other debts, such as credit card debt or an auto loan.

By consolidating all of your debt into one loan, you will save some money since you won’t be paying any fees for multiple accounts. Low-interest rates can be challenging to find, but refinancing can make it happen.

If you use your home to consolidate your debt, you need to be sure that the loan will help you pay off your other debts faster.

If You Want to Take Out or Receive Cash

While refinancing your home is generally not used to take out cash, it can be something that you use to provide some quick cash for a purchase.

If you go through some of your equity when refinancing, you can get the money you need to cover an emergency or another financial need.

Call Pacific Lending Group for the Right Advice!

If you are ready to refinance your property, you must make the right decision. Pacific Lending Group holds extensive experience in refinancing loans and is happy to help you with your decisions.

Call our specialists at 954-227-4727 or visit us online to learn more.

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Private Mortgage Insurance: How Does It Work

Private mortgage insurance (PMI) is a policy that protects the lender in the case of default by the borrower. The lender is assured of being compensated for their loss if you fail to make your monthly mortgage repayments. This is not a policy that protects you.

Why Do You Need PMI?

The role PMI plays in financing is simple: it ensures cash flow. The lender needs to know they will be paid back even if there are some extraordinary circumstances.

Any loan where the borrower has less than a 20% stake in the property must have PMI. If you put down 3.5%, you can obtain a 95% LTV mortgage without premiums, but as soon as that drops below 80%, you will need to get PMI for your security.

The benefits of having PMI are that it allows you to finance more than just 80% of the value of your home.

Remember, you do not need PMI if you pay 20%. The lender will give you a lower interest rate because they’re protected in case something happens.

How Does It Work?

When you receive your first billing statement, the lender will give you an annual percentage rate (APR) that includes PMI. Many people think this is their interest rate for the year; it’s not. It’s simply a way of allowing you to see how much PMI you will be paying each month.

Your mortgage lender will decide your true APY (annual percentage yield) and will depend on your credit score and down payment amount.

When Do You Need PMI?

For conventional loans, the lender must ensure that you have PMI once your LTV (loan to value) drops below 80%, but again, there are exceptions. If you opt for an FHA loan, which means you’re borrowing less than 95% of the home’s worth, then you may not need any premium payments at all.

If the borrower is on the hook for PMI, they’ll see how much of each payment goes to principal, interest, and PMI on each billing statement.

For example, if you made $1,000 in payments over one month, your lender would charge you $200 toward your principal, $300 toward interest, and $100 toward PMI. This gives you a clear understanding of where your money is going each month.

What Happens If You Do Not Have PMI?

If you are not paying for private mortgage insurance, then the riskiest part of the loan is what’s called “uninsurable.” Since the lender will assume no one could pay them back, they will charge you a higher interest rate.

Basically, by not paying for PMI, the lender makes the riskiest part of your loan uninsurable and charges you more than if you had insurance in place. You may then be asked to pay an extra month’s payment each year to compensate the lender for this risk.

Contact Pacific Lending Group for Any Mortgage Insurance-Related Advice

If you have any questions about private mortgage policy, please contact a representative from Pacific Lending Group. We will be glad to answer any of your mortgage questions and help you with your home purchase or refinancing needs. Call 954-227-4727

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Factors That Matter When Refinancing Your Mortgage

Before deciding to refinance the mortgage on your home, you must take into consideration several factors. Failing to do so may result in a higher monthly payment than you want or even lead to paying PMI after refinancing.

The following information will explain what those factors are and how they can affect your refinancing experience.

Choosing the Right Lender

An important factor to consider when refinancing your mortgage is who will process your loan. Many lenders are floating around, but only a few of them will care about their customers and give them loans they can afford.
You should always shop around, compare interest rates and loan terms before going with a specific lender.

Interest Rates

One of the most critical factors when refinancing your home mortgage is the interest rate. This can have an extreme impact on how much you pay back every month. If you choose to refinance your mortgage, it is important to ensure that the interest rate after refinancing is at least half a percent lower than before refinancing. Failing to do so may lead to paying more per month than you originally planned.

Check for Hidden Fees

Before applying for any mortgage, you must check for hidden fees. This will ensure that you are not surprised by any costs or added interest during the time after refinancing your home. Many lenders try to charge customers fees to get them into a loan they cannot afford. Make sure these fees are reasonable before signing any contracts.

Home Equity

The amount of equity you have in your home can also affect how much you pay back per month after refinancing. Lenders will consider the current appraised value of your home when offering a new loan, but they will probably allow for higher payments if there is potential room to increase the price of your house. For example, if your house is worth $100,000 and you owe $80,000 to the bank, they may allow for higher monthly payments than they would if all of that money was already paid off. Also, if a home equity or is too low, refinancing your mortgage will probably be very difficult.

Your Credit Score

Your FICO credit score is the most critical factor when trying to refinance your home. If you have high credit, refinancing will probably be easier for you than poor credit.

Before choosing which lender to go with, your chosen loan officer will check your latest credit report to determine the best loan option for you. If they do not, it may be time to start shopping around for a new lender since your credit score is very important to them.

Choose Pacific Lending Group to Refinance Mortgage in Florida

Looking to refinance your home? Call Pacific Lending Group. They have worked with thousands of customers to help them secure loan options they can afford. If you would like to learn more about their services, including available interest rates for refinancing, feel free to give them a call today at 954-227-4727

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A Refinance Mortgage Can Affect Your Credit Score?

Refinancing may seem like a viable credit financing option in many circumstances. It involves replacing an existing loan with a new loan using the fresh mortgage to pay off the first one. Borrowers often choose loans with lower interest rates to refinance old loans. Also, a refinance mortgage allows borrowers the freedom to channel more savings into their savings account. Read more