Seeking the assistance of an expert mortgage broker on home loan refinance options is a good idea for individuals who are considering refinancing their current mortgage.
What Are the Benefits of Home Loan Refinance?
For many people, refinancing is an excellent way to reduce high interest debt and improve monthly cash flow. LoveToKnow Mortgage writer Mary White spoke with Jamie Frampton, a XINNIX Certified expert mortgage broker on home loan refinance options. Jamie and her husband Brian are experienced mortgage loan officers and work together as the Frampton Team through Mortgage Team 1. They serve customers throughout Alabama, Florida, and Mississippi.
Jamie Frampton says that refinancing can be beneficial to homeowners in many circumstances. To illustrate, she says, "I was recently able to do a refinance for one of my friends that enabled her to pay off $25,000 of credit card debt and reduce her monthly payments by $50 per month. Additionally, all of the closing costs were rolled into the new home loan, so she incurred no out of pocket expense."
What Are the Options for Mortgage Home Loan Refinance?
Frampton explains that there are two primary types of refinances: (1) cash out and (2) rate and term.
Cash Out Refinance
Frampton explains, "With a cash out refinance, the homeowner pulls some of his or her equity out of the home in cash." According to Frampton, cash out refinances are a great way for homeowners to leverage the equity in their home to get rid of high interest debt. She says, "Refinancing is a great way to consolidate junk debt. Individuals with equity in their homes can access that equity via a home loan refinance, and use it to pay off credit cards and other high interest rate financial obligations."
Frampton says that many of her cash out refinance clients are able to eliminate most or all of their high interest rate debt and greatly reduce their monthly cash outflow. She points out that many people also enjoy tax benefits associated with a home loan refinance. She advises, "When considering a home loan refinance you should consult your tax adviser to learn about how you may benefit."
In addition to using cash out refinance proceeds to pay off debt, homeowners often use the money to fund home improvement projects. Frampton says, "When looking at using money obtained from the equity in your home for home improvements, consider how they will affect your home's value. Many structural improvements will have a dollar for dollar impact on the value of your home." She continues, "Any time you are improving your home or updating your home I believe that you are benefiting as long as you are not over improving for the area."
Rate and Term Refinance
"With a rate and term refinance, the homeowner's intent is to reduce their monthly mortgage payment or change the term of the loan," according to Frampton. She says that the length of time a homeowner plans to stay in the home is a determining factor in whether or not this type of refinance is advisable.
Frampton elaborates, "When a client expresses an interest in a rate and term refinance, the first thing I do is ask how long her or she plans to stay in the home. With this information, I can perform a calculation that will let the homeowner know how long it will take to break even or save money as the result of the new loan."
What are the Out of Pocket Expenses for Refinancing?
Out of pocket expenses may vary significantly from one loan program to another. Frampton explains, "There are loan programs that require no closing costs, but they often have higher interest rates than those that do." A homeowner who is looking for the best interest rate may find it in his or her best interest to accept a loan with closing costs, which may or may not require out of pocket payments. Frampton says, "In most common refinances, the closing costs are rolled into the refinance and absorbed by the equity in your home."
Is Refinancing Difficult?
Frampton says, "It is extremely easy to refinance your home. All you need to do is find a trusted mortgage consultant and apply. An application usually takes 20 to 25 minutes to complete, depending on the questions you may have."
What Pitfalls May Be Associated with Refinancing?
Beware of Predatory Lenders
Frampton advises homeowner to beware of predatory lenders when shopping for a home loan refinance. She explains, "predatory lenders can be banks, mortgage brokers and even mortgage lenders. You need to make sure that you are dealing with a professional and not a fly-by-night open today, gone tomorrow mortgage organization."
Seek Referrals from Trusted Contacts
When searching for an expert mortgage broker on home loan refinance options, it's a good idea to ask your friend and families to recommend trusted professionals. Frampton advises individuals in the market for a mortgage to look for referrals from friends or family who may have had good experiences. She says, "Referrals are the best place to start."
Work with Trained, Credentialed Professionals
Frampton cautions consumers, "In many states it is not required for a loan officer to have any formal training. You could have a loan officer like my husband and I who are highly trained or someone who did landscaping yesterday and decided to be a loan officer today."
When considering home loan refinance, working with a trusted expert mortgage professional is essential. Frampton says, "The mortgage industry changes every day. Brian and I maintain continuing education every year to ensure that we are on top of all the latest guidelines and programs. They can change every day, so ongoing professional development is extremely important."
Frampton recommends verifying the credentials of loan officers and even suggests contacting credentialing organizations for referrals. She says, "My husband and I received our professional training from XINNIX, the Mortgage Academy for Excellence. You could even call them for a referral to one of their trained professionals if you are in a state we are not licensed in."
Final Words of Advice from Jamie Frampton, Expert Mortgage Broker on Home Loan Refinance Options
"Refinancing is only in your best interest when it results in a benefit," says Frampton. She advises, "Keep in mind that there are some situations when a home loan refinance is a good idea, and other situations where it is not advisable. By working with a reputable, professional mortgage broker, you can find out if refinancing is a good option for you."
LoveToKnow would like to thank Jamie and Brian Frampton for taking the time for this interview and wish them continued success.