Home Refinance / Purchase FAQs

How can I learn about the overall lending process for mortgages?
A great place to start is the Federal Trade Commission’s online brochure “Looking for the Best Mortgage.”

What type of loan do I need?
If you want to buy a home, you will want a purchase loan. If you own a home and want a better rate on your existing loan or you want to obtain cash from your home’s equity, you will want a refinance loan.

If I am purchasing a home, what are my options?
Most people get a conventional mortgage through a traditional lending source like a bank or credit union. If you are a first time homebuyer, you might qualify for a Federal Housing Administration (FHA) loan. And if you are a veteran, you might qualify for a Veteran’s Administration (VA) loan.

When is it beneficial to refinance my mortgage?
In general, it’s best to consult an advisor to discuss your specific situation. The interest rate is the biggest factor but other parameters come into play such as how much equity you have in your home, how long you plan living in the home, what are the closing costs, and will you get cash out of the refinance.

Should I consult my current lender to refinance my loan?
Your current lender is a great place to start. But don’t stop there. Many lenders might be able to meet or beat your current lender in terms of interest rate, types of loans, and closing costs.

What about working with a broker?
A broker is a middleman between you and the lender. One large benefit of using a broker is that they can shop around to many different lenders in order to get you the best loan and pricing.

Should I refinance if I plan on moving soon?
Typically no. With the costs involved, you will not see any benefit by refinancing because of the upfront costs involved.

How does my credit history affect my loan?
Your credit score greatly affects your loan. In general, the better your credit the better your interest rate will be.

How do I check my credit?
To check your credit reports, you can get them for free. Go to www.annualcreditreport.com. To get your credit score, you will have to pay a fee and are available through many private companies.

Can I get cash from a mortgage refinance?
Yes, if you have enough equity in your home, you typically can receive cash in order to use for any purpose.

Should I get cash out in order to pay off a credit card or auto loan?
It might make sense to pay off other debt with a cash out refinance if you need relief from current payments. You will typically pay a lower interest rate on the home loan than your other debt but this could be negated by the longer term payback. For example, your car loan might be a 5 year loan but if you refinance and pay off your car loan, it now becomes a longer term loan such as 15 or 30 years.

What’s the best way to compare offers from lenders?
Look at the annual percentage rates (APR) from the different lenders. This will let you compare all offers and will include interest rates and costs involved for the refinance. It’s not perfect because lender’s estimate their costs, but it’s the best tool to compare offers.