Refinance

What Does It Mean to Refinance a Mortgage?

When you took out your mortgage loan, its interest rate and terms were almost certainly the best available to you at the time.

Fellowship Home Loans is here to help. We can evaluate and explain your unique financial situation to help determine whether a refinance might be the right solution for you.

Let’s start at the beginning. Anyone visiting this page presumably knows what a mortgage loan is, but not all borrowers are familiar with loan refinancing. In its simplest terms, refinancing is the process of paying off one loan, in this case, a mortgage, and replacing it with another one. Ideally, the new loan will offer lower interest rates, better terms, or both.

Reasons to Refinance

Fellowship Home Loans may offer the same types of refinancing options as other lenders, but don’t assume that means we treat our borrowers the same way. We look at each of you as a unique individual. Before we make a recommendation, we want to understand your needs, your current lifestyle, and your plans for the future. At that point, we’ll usually recommend one of the following options:

Refinancing to Consolidate Debt

It’s not uncommon for homeowners to refinance to consolidate debt from higher-interest sources. However, we certainly don’t recommend this approach to everyone. If you’ve found yourself in debt and are having trouble paying your bills, the first thing you need to do is evaluate how and why.

Refinancing to consolidate debt can help in the short term, but it will only bring long-term relief if you learn how to exercise financial prudence. We only recommend refinancing your home loan to consolidate debt if you are confident that you’ll be able to resist the temptation to go back to your old spending habits.

Paying for Home Improvements

One of the most common reasons for homeowners to apply for mortgage refinancing is to fund home improvement projects. It only makes sense. Regardless of what your motivation is for making home improvements, they will almost certainly increase your home’s value. Why not pay for them by using mortgage refinancing to access some of the home equity you already have?

Refinancing to Increase Equity

In some cases, refinancing can be a good way to increase the equity in your home. Here’s how it works: you own only a percentage of your home while you’re still making mortgage payments. The greater the percentage of the principal balance you’ve paid off, the more of it you own, and the more equity it represents.

If you want to increase equity, either for the purposes of improving your credit score so that you can open new lines of credit or of increasing your net worth for other reasons, refinancing to a shorter loan term can be a good solution. If you initially took out an FHA loan, you could also increase home equity by refinancing to a conventional loan that does not require a mortgage insurance premium. That way, more of your payments will be going toward the principal instead.

REACH OUT!

Lenders today must look carefully at debt to income ratios when approving loans. It’s crucial that borrowers work closely with a qualified loan professional to make sure they have access to the ideal financing products currently offered. Loan originators may easily approve a specific amount based on debt to income ratio at four percent but, if that ratio increases to five percent, the lender may not approve the same amount of loan. Under this typical scenario, refinancing may not meet the needs of a family looking for ways to save money over the coming years and, perhaps, improve their home at the same time.

What Other Reasons Might Lead People to Consider Refinancing?

In addition to simply wanting a lower interest rate or to fund a remodeling project, homeowners consider refinancing for a variety of reasons. While the reasons may be valid, some lenders tend to want borrowers to fit narrow niches. Their loan products are designed to help people who:

Need to refinance an adjustable rate mortgage that is expected to see a hike in the interest rate. Adjustable rate mortgages, typically, offer a low rate for the first few years, but the rate then tends to rise quite dramatically. Homeowners expecting a rate hike will seek to refinance to a fixed rate mortgage of some type to avoid paying higher rates that would effectively cripple their budgets.
Want to finance a child’s education or some similar need. College costs are rapidly escalating, and refinancing a mortgage often makes more sense than taking out student loans. Every parent wants the ideal for their children, and that includes providing a quality education. It your child is nearing college age, exploring the option of refinancing to pay for that education may make sense.

Want to take advantage of a business opportunity. It’s often difficult to obtain financing to fund a business opportunity. Using some equity from a home is often far less expensive than paying exorbitant interest rates some lenders demand from those wanting to go into a new business or expand an existing one.
Are looking for a once-in-a-lifetime experience. While it may seem frivolous to refinance a home to explore another country, many people frequently use the money they’ve worked hard for to finance a special trip or other experience. Missionaries, for example, often use their own money to take advantage of an opportunity to visit another culture and help them to find their way to salvation.

What Types of Refinancing Options Does Fellowship Home Loans Offer?

In some ways, we’re similar to other lenders. We offer the typical types of refinancing other lenders offer, but we look at each client a little differently, discussing the options with them to make sure we understand their needs, their hopes for the future, and their lifestyles now. Our refinancing options include:

Adjustable Rate Mortgages. There are times when considering an adjustable rate mortgage can provide an ideal solution. Homeowners planning to move in the near future but needing additional funds today may find it advantageous to apply for an adjustable rate loan. While there are certainly disadvantages to this type of loan, an honest lending officer can discuss the pros and cons with a borrower to determine if the option really is in the homeowner’s ideal interest.
Fixed Rate Mortgages. Most borrowers are likely to find a fixed rate home loan is their ideal option. A fixed rate mortgage doesn’t change over the years, meaning borrowers have the security of knowing their principal and interest payments won’t change over the life of the loan. Given today’s low rates, it’s quite possible rates will not be lower for the duration of the loan. Should rates, for some reason, be lower at some point in the future, refinancing again would be an option. Again, working with a Fellowship Home Loan expert will make it easy for homeowners to determine if they should go ahead and refinance now.

FHA Financing. FHA has several types of plans available to borrowers, but two refinancing products are particularly important for those seeking to refinance an existing mortgage. An FHA Cash-Out Refinance makes it possible for homeowners to access their equity while refinancing the remaining debt. Since there are no limitations on what the borrower can use the funds for, it’s a great option for some homeowners needing access to cash. The FHA Streamline Refinance allows homeowners to quickly reduce their existing interest rate. The process is fast and the amount of required paperwork is lower than some other options.
Conventional Refinancing. Depending on the borrower’s needs, a conventional loan may work well. Since the end result is much the same as the FHA option, it simply becomes a matter of determining which type of financing ideal fits the borrower’s current needs. A loan expert will explain the nuances of each option to make sure you understand exactly what the ramifications of a conventional loan are.
HARP Refinancing. This program was initiated to help borrowers with little equity refinance and avoid losing their homes. The program works well for some individuals who have made an honest attempt to keep up with their current mortgage payments but are experiencing financial difficulties. The current program is set to expire at the end of 2018, so those who need access to this type of program should take advantage of the opportunity soon.

Each refinancing option differs from the others in several ways, so it’s always important to explore all the available options to ensure you’re selecting the ideal one to meet your specific objectives.

What Sets Fellowship Home Loans Apart From Other Lenders?

Many of our clients come to us after being rejected by another lender. The majority of lenders look at borrowers and their needs in purely black and white terms. That’s not the way real life is. Life is full of gray areas that should be considered when deciding whether or not a person is qualified to refinance a home. Even when it might appear, under those black and white rules, that a person doesn’t qualify for refinancing, we take a closer look at that person’s history. If a client pays their bills, has a decent income, and has a history of paying their loans, we think that’s important. We believe in helping people whenever we can.

We look at all aspects of our client’s lives to make sure we’re doing the right thing. If it honestly looks like refinancing isn’t the ideal strategy, we’ll say so. On the other hand, we will do everything possible to devise a refinancing plan for our clients when it is logical and is in their ideal interests. We value our clients and view them as friends. That means we’ll always present all the facts, both pro and con, related to any option a borrower is considering.

We treat every client as we’d treat our own family. That’s a big part of our core values, and we believe in always doing what’s right. We’re here to help and will do whatever we can to make sure every client is treated fairly when seeking to refinance their home.

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Nile & Stephanie
Our experience with FHL was exceptional, from our initial meeting to the actual closing. We were kept informed, given the right level of information and received...
Mark & Sharri D
Glad we can have a new mortgage with Biblical principles.Thanks for making this process very simple. :)
Camille M, Upper Marlboro, MD
I heard Fellowship Home on the radio and I wasn’t expecting they would be able to help me lower my rate because my current bank couldn’t do anything. I was shocked when they said they could do the loan AND pay off some of my credit cards as well. I was waiting for something to go wrong with the process because of my past experiences with mortgage companies but they did everything they said they would do. Simply amazing!
John C, (Jersey City, NJ)
I didn’t have great credit and had been getting the run around from banks when I had tried to lower the rate of my mortgage. I had heard Mike and Brian on the radio for years and God was telling me to try with them because they would be straight with me even if I didn’t qualify. Not only did I get a great rate, but I got 2 months off from paying my mortgage and $1,000 back at closing. I will never forget what they did for me.
Adelle W, (Trenton,NJ)
My sister had refinanced with Mike and Brian so I gave them a call when I was looking to purchase my first home. I was very unfamiliar with the process of course and very nervous of course. They held my hand and walked me through the process and I was a homeowner just a few weeks later. They truly helped me achieve the American dream of home ownership!

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Refinance

What Does It Mean to Refinance a Mortgage?

Reasons to Refinance

Refinancing to Consolidate Debt

Paying for Home Improvements

Refinancing to Increase Equity

Loan Purpose

How did you hear about us?

Opt In for SMS

What Other Reasons Might Lead People to Consider Refinancing?

What Types of Refinancing Options Does Fellowship Home Loans Offer?

What Sets Fellowship Home Loans Apart From Other Lenders?

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