Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
There are many reasons why homeowners opt to refinance their current mortgage—from obtaining a lower interest rate, to shortening the duration of their loan, to switching loan types, to tapping into home equity—just to name a few. The reasons are countless, and make most sense when they are custom-tailored to an individual’s current short-term and long-term financial objectives and considerations.
The common preconceived notion is that when interest rates drop, a person will automatically benefit by refinancing their mortgage. While a lower monthly payment might have the most immediate impact on a homeowner, there are other reasons to refinance, regardless of monthly payment. Similarly, there are many antiquated misconceptions that make this opportunity more confusing that it should be.
Refinancing Misconceptions
Rates need to be 1 percent or even a ½ a percent lower to make refinancing worthwhile.
Rate quotes are all that matter when comparing lenders.
Your current loan servicer will offer the best terms for refinancing.
A lower mortgage rate is the only way to reduce monthly payments.
Reducing monthly payments always makes financial sense.
Refinancing makes sense regardless of how long someone plans to stay in the house.
Not having enough income or equity to qualify.
Assuming that appraisal values are the same everywhere.
Going with a broker or lender purely because they were the lowest advertised rate.
Thinking you will always be able to refinance later.
Refinance Considerations
Reducing the monthly payment
Shortening the loan term
Paying off a home equity line of credit or 2nd lien
Lowering the mortgage rate.
Reducing the remaining interest payments
Extending the loan term
Converting an ARM loan to a fixed rate
Accessing equity for projects, home improvements, debts or investments
Use monthly savings for retirement planning or other benefits
Consolidating outstanding credit card balances
Factoring in future financial or employment considerations
The Approved Advantage
Refinancing is as much about your goals and objectives as it is about interest rate and market conditions. Rather than making sweeping assumptions about whether it makes sense or doesn’t make sense to refinance, it is advisable to closely examine the current specifics of your situation before you can make that determination. Approved Funding offers a variety of proprietary and comprehensive analyses that can easily show you the many variables of consideration so that you can make an accurate decision about all of the benefits of refinancing your mortgage. Call me to find out more.
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