Refinance Center: Refinance Rates, Tools and Help

For some loans it is possible to get a loan for more than the total refinance. However, this is a decision between you and your lender. Some lenders may not allow you to refinance for more than what is still owed on the property.

In most cases, yes. Lenders typically require you to have a 90% loan-to-value ratio if you want to refinance. They also want to see that your home has increased in value. Most lenders will not refinance your home if it is significantly losing money.

Refinancing a loan means that you are essentially paying off your mortgage with a new loan. Refinancing is often used to change your loan from an adjustable to a fixed rate and can be a way to lower your monthly payments or take cash out of your home\'s equity. The process of refinancing is very similar to getting your original mortgage

If you want to get a lower interest rate, you want to make sure rates are low at the time. If you are refinancing for other reasons, such as getting money out, consolidating debt, or simply replacing an adjustable rate mortgage with a fixed loan, it all depends on your specific situation. Shop around and consult lenders for details, but be sure to let them know the reason why you want to refinance. It will help them help you make the right decision.

No. You can refinance your loan with any lender who will give you a loan. However, your original lender might be able to work out a better rate just to keep your business. It also eliminates the need for a new property appraisal, title search, etc.

In mortgage terminology, amortization is making installment payments on a loan, where a portion of the payment goes to the principal balance and a portion goes to the interest. Fixed-rate loans are usually amortized so that the monthly payment is the same throughout the life of the loan. Adjusted rate mortgages are re-amortized each time the interest adjusts.

In mortgage terminology, APR is the cost of credit to the borrower, expressed as a yearly rate. The APR includes the interest rate, points, broker fees, and mortgage insurance that the borrower is required to pay. However, APR doesn't necessarily include all of the fees and costs of a mortgage loan. For example, an appraisal fee or a loan application fee are not usually included in the APR. Because of the extra costs included, the APR is a higher interest rate than the simple interest rate the borrower is quoted on the mortgage. Use the APR to compare loans, but make sure to include other costs you are quoted, too.

In mortgage terminology, application fees are fees the lender charges the borrower when the borrower applies for the loan. These fees may include charges for property appraisal and a credit report. Application fees can often rolled into the loan,  paid when the loan closes. Be wary of a lender that requires you to pay an application fee up-front.

Fee charged by a professional appraiser to estimate the current fair-market value of a property.

a type of mortgage refinancing where the borrower receives a loan that exceeds the total amount necessary to repay the existing first mortgage, closing costs, points, etc. so that the borrower may receive additional cash for other purposes.

When refinancing, taking a loan for more than you owe on your existing mortgage. Your existing mortgage is paid off and you receive an additional payment for the balance of the new loan. You might do this if you want to make home improvements or pay for a child's education. Cash-out refinancing removes some of the equity you have built up in your home.

Fees paid when you close (or settle) on a loan. These fees may include application fees; title examination, abstract of title, title insurance, and property survey fees; fees for preparing deeds, mortgages, and settlement documents; attorneys' fees; recording fees; estimated costs of taxes and insurance; and notary, appraisal, and credit report fees. Under the Real Estate Settlement Procedures Act (RESPA), the borrower receives a "good faith estimate" of closing costs within three days of application. The good faith estimate lists each expected cost as an amount or a range.

Regarding a home or property, equity is the difference between the fair market value of the home or property and the outstanding balance(s) on your mortgage(s). Regarding  your vehicle, equity is the difference between the trade-in or market value of your vehicle and the loan payoff amount.

Escrow is when funds are held by a neutral third party. When it comes to mortgages, escrow is used in more than one way. First, escrow is used in relation the funds that are received from the lender that are disbursed by the title company/escrow agent, paying off all lien holders on the property, as specified by the mortgage lender's funding agent. A second use of the term escrow refers to monies that a lender collects from a borrower that are to be sent to a third party.  A lender can require a borrower to include homeowner's insurance and property taxes  in the mortgage payment. These monies are deposited into an escrow account, assuring that the insurance and taxes will be paid. Keeping these funds in escrow protects the lender's interests, which would be jeopardized if the insurance or taxes went unpaid.

Your GFE gives you a detailed breakdown of your estimated costs on your mortgage loan. The Real Estate Settlement Procedures Act (RESPA) requires your mortgage lender to give you a written good faith estimate that shows your closing costs within 3 business days of submitting your application for a loan, whether you are purchasing or refinancing a property. Your actual expenses at closing may be somewhat different from the GFE, but the GFE is your guideline to compare the estimate and actual costs. At closing, fees that different substantially or new fees not included in the estimate should be satisfactorily explained.

In mortgage terminology, interest is a fee the lender charges the borrower. Interest is the cost to the borrower for borrowing money, separate from any distinct fees the lender charges, that is paid back in addition to the principal borrowed.

The price paid for borrowing money, aside from any distinct fees the lender charges. Interest rates are usually stated in percentages of the principal amount borrowed and as an annual rate.

A written agreement between the borrower and the mortgage lender that guarantees the borrower a specified interest rate and fixed costs on certain lender fees. Loan lock agreements specify a time, such as 30 or 60 days, where the rate will not change, regardless of interest rate changes that take place in the general market.

Fees charged by the lender for processing a loan; often expressed as a percentage of the loan amount.

A contract, signed by a borrower when a home loan is made, that gives the lender the right to take possession of the property if the borrower fails to pay off, or defaults on, the loan.

A negative amortization loan is a type of mortgage loan where the required monthly payment can be smaller than the interest that is due. The shortfall in the interest payment is added on the principal balance, so the loan balance goes up instead of coming down.

A limit on the amount that your monthly mortgage payment on a loan may change, usually a percentage of the loan. The limit can be applied each time the payment changes or during the life of the mortgage. Payment caps may lead to negative amortization because they do not limit the amount of interest the lender is earning.

Private Mortgage Insurance (PMI) is insurance provided by nongovernment insurers that protects a lender against loss, if the borrower defaults. PMI is required on non-government-backed loans that exceed 80% of the value of the property.

One point is equal to 1 percent of the principal amount of a mortgage loan. For example, if a mortgage is $200,000, one point equals $2,000. Lenders frequently charge points in both fixed-rate and adjustable-rate mortgages to cover loan origination costs or to provide additional compensation to the lender or broker. In some cases, the money needed to pay points can be borrowed, but doing so will increase the loan amount and the total costs. Discount points (sometimes called discount fees) are points that the borrower voluntarily chooses to pay in return for a lower interest rate.

Prepayment penalties only apply to borrowers whose loan contained a prepayment penalty clause and who pay off the loan early. Loans are paid off when the borrower refinances a loan, sells the home, or uses a lump sum. The length of time that the prepayment penalty stays in force is specified in the loan documents. Prepayment penalties are usually limited to the first few years of the loan’s term.

The amount of money borrowed or the amount still owed on a loan.

The process of paying off an existing mortgage by taking out a new mortgage.

A faster, simpler, lower-cost home refinance or home equity loan. These loans are usually offered by your current lender in order to keep your business.

The period from the time that a loan is made until it is fully paid.