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The Ultimate Guide To Refinancing (Everything You Need To Know)

By July 24, 2019November 26th, 2019Blog, Financial Planning
guide to refinancing a home

Refinancing a Home can be a nightmare. When you first consider it, a home refinance may seem like the solution to your problems. However, this is a big decision and not one you should go into lightly.

Here’s how to determine whether or not you should refinance, and how to go about refinancing a home if you decide it’s the best option.

Refinancing Considerations

Whether a homeowner or a real estate investor deciding to refinance is a big decision.

For homeowners, or house flippers, if your current home loan isn’t working for you, here are the things you need to know before you refinance.

  • Current Loan Terms: Whether a mortgage, hard money loan, knowing all of the terms can help you find the best option. Look at interest rates, payment options and the length of your term.  Find out if your loan has a penalty for early repayment. If it does, consider switching to a loan that doesn’t have that restriction before you refinance.
  • Equity: For real estate investors looking to refinance, or get a bridge loan, equity is a must-have. Homeowners should have at least 20% equity in the home; otherwise, you’ll have to purchase private mortgage insurance. That additional charge can counteract the amount you’re saving in payments each month by refinancing. For investors, they should also have equity in a property, as hard money lenders use the equity for the value of the loan. Read more about how to calculate your arv here.
  • Financial Goals: For real estate investors, knowing your future goals is key to the loans you pick. Bridge loans offer investors opportunities to fund investments and get ahold of payments. Homeowners looking to solve budget problems can use mortgage calculators to find their post-refinance payments. If you have a short-term loan, your payments will be higher, which may not actually be helpful for your budget.
  • Other Considerations: You should always check the current mortgages rates today. Homeowners with second mortgages, a home refinance can be more complex. You could combine both mortgages into a larger loan, or pay off the first mortgage. How long you plan to move in the future refinance your loan might not be worth it. Your credit score affects your mortgage options as well, if it is too low, you may not be able to refinance.

Steps to Refinancing For Homeowners

You’ve weighed the pros and cons, and you’ve decided that you do want to move forward with a refinance. Here’s how to do it.

  • Set Goals: Know why is it that you’re refinancing?  Set to maintain the loan term you have now, but at a lower interest rate. Even better is if you can shorten the loan term.
  • Credit Score: Get copies of your credit scores, and know what your credit score is. Any mistakes could be impacting your score, and you’ll want to get them cleared up before moving forward. The higher the credit score, the better your refinance terms will be. Learn how to improve your credit score here.
  • Home Value: Now it’s time to do a bit of research regarding your home’s value. Check out other similar homes in your neighborhood that have recently sold. Real estate investors should know what the value, and after repair value of their homes should be.
  • Shop Around: Compare refinancing rates online. In order to limit how much the loan applications impact your credit score, pick a one or two week window to submit all of your applications.

Applying For Refinancing

Once you found a good rate, and know your goals for refinancing, it is time to apply! Make sure you know the costs and paperwork involved in your refinance.

  • Figure Out Cost: Know the fees to refinance. These include application, origination and appraisal fees, plus charges for processing documents, underwriting, requesting your credit reports, researching titles and insurance, and tax transfers (just to name a few!). This may sound overwhelming, but quality lenders should give you a fair estimate of all the fees you can expect.
  • Collect Your Paperwork: Refinancing requires a lot of paperwork. You’ll want to compile pay stubs, bank statements and any other documentation the loan requires.
  • Lock the Rate: When you lock in the refinance rate with your lender, the rate you’re being offered isn’t allowed to change. This is a big decision, and you’ll have to determine the best time to do this. Rates change regularly, so keep an eye out for major changes.

When you’re considering refinancing your home, think about alternative lending options, like hard money loans. While you don’t want to drag your feet on a decision like this, it is helpful to go about everything methodically so that you get the right outcome.

Bridge Loans: How Investors Refinance

Simply put a ‘bride loan’ is designed to be the short-term loan you use to ‘bridge’ the gap on a property until it can be refinanced to a mortgage or sold.

Here in Phoenix, bridge loans are used to close deals fast, fund repair projects, fund house flips or even rescue homes from being foreclosed.

Bridge Loans are different from standard home loans or title loans because they are based on the asset property value, not on credit scores, which makes us a great option for people looking for a break on their credit, or who can’t get a traditional loan

Bridge loans are also extremely fast to be funding, with some being approved within 24 hours of applying, which make them a great option for someone looking to pounce on a great deal in the fast-moving real estate market.

How Do Bridge Loans Help?

Bridge loans offer fast approvals that are based on asset values. For anyone looking for non-traditional loans that fill funding gaps, bridges loans can help.

Those in tough situations such as foreclosures, those looking to make a quick purchase, can use bridge loans.

As long as properties have good value, you can get approved for a bridge loan in less than 24 hours. Which means that no matter your credit history, you can qualify for a bridge loan as long as the property has good value!

When real estate investors face foreclosure, they can save their property by working with a bridge loan lender like Prime Plus Mortgages.

Last thing you want to happen to your home or property is the bank to sell it from under you. If you are in danger of foreclosure, getting a bridge loan can save your property from someone taking it from under your nose.

If you are in danger of foreclosure, contact Prime Plus Mortgages.

Where Can I Get A Bridge Loan?

Prime Plus Mortgages Specializes in bridge loans. As a bridge loan lender, we can get you the financing you need to pay off your foreclosure, provided there is sufficient value in the property.

Our short term, bridge loans work for you, not other lenders, and are based on the asset not your credit, so while retail banks turn you away, hard money lenders like Prime Plus Mortgages is there.

We provide options to help you get a property out of foreclosure, and give you options for the property once things get back on track.

Whether you are a real estate investor or homeowner who needs fast approval for an asset-based loan, Prime Plus Mortgages has your back. We’ll get you the cash you need today.

To learn more about Bridge Loans, or to apply, click here!


Prime Plus Mortgages

Prime Plus Mortgages is a licensed hard money lender. We specialize in hard money loans, bridge loans, fix and flip loans, home rehab loans, for developers, property flippers and buy-and-hold strategists. HML programs make private money available for small to medium scale projects.