When to Refinance Your Mortgage

A mortgage is the largest debt many of us will ever have. How do you know when to refinance that debt to save money - without going deeper in debt? And what about those who have tried to refinance in the past few years, but haven’t been able to due to their home’s value. What options do they have? Joining me in this interview to share his expert insights is Joe Kelly from YouCanRefi.com.

Here is an edited excerpt from this interview. You can also listen to the interview or download the podcast below.

Gerri: Let's start with the idea of home values, they are rising in many parts of the country, certainly here in Sarasota Florida where I air live from as well as other communities around the country. What's the good news, bad news in that situation?

Joe: To try and make it quick on it Gerri, you’re correct. It does get a little confusing.  The overall good news is that most areas of the country, and you’re right, definitely down in Sarasota, I was doing some research just a few minutes ago, has seen significant increases in the average home price over the last year. It looks like most areas bottomed out about middle of  2011, and we’re seeing values getting back to levels where they were in many areas back to where they were in 2008, 2009. I don’t think we’re going to see them go back to where they were in 2006 before the whole thing collapsed, but that’s a significant jump.

It means a lot for homeowners who may have not been able to take advantage of the historical  low rates because their values have gone down...I would encourage anybody who had not taken advantage of being able to refinance because of their value going down. They should check with a recommended lender - they can talk to us at youcanrefi.com, we operate down in Florida and all over the country - to take a look at what their current value is and whether that can help them refinance.

Gerri: Okay. Let's get very specific here. One of the programs that you and I talked about when it came out last year, and then it had some is some good news, bad news associated with it, was the HARP 2 program designed to help more homeowners who are underwater refinance their home. What's the status? What's happening now with HARP 2?

Joe: Exactly. HARP 2, you’re right, came out last year. HARP stands for the Home Affordable Refinance Program. It’s a government program, to help people whose values have gone down. To be eligible for that program, your loan must be owned by either Fannie Mae or Freddie Mac, and we can help people check that or you check it out yourself, and they had to have last financed before May 31, 2009. But it’s a remarkable program because it lets people refinance without getting an appraisal, it lets them have expanded guidelines/ qualifying ratios if their income is not quite high enough... they can still refinance to very close current market rates.

Last year when that program came out, there ended up being bumps in the road and many homeowners experienced delays of four to six months when they made applications with their lenders and ended up giving up. I’m happy to say that at least with us, with the lenders that I work for, that those timelines have gotten back to three days or less which is what it should be. And that program is now back, very strong for people who qualify for it.

So for those who may have been frustrated with it, I’d encourage them to take another shot. We can help. We can help find out if people are eligible. Again, many people whether it’s HARP or not HARP eligible, they see that their values have gone up and they may now be able to  refinance where they couldn't before.

Gerri: Now, for someone who's not underwater, rising home values means what for refinance, Joe?

Joe: It may mean that they could do a refinance where they couldn’t before. It may mean that if they were looking refinance over the last couple years and the lender was telling them you’re going to require a mortgage insurance because you don’t have 20% equity in your property, now their value may have gone up where they don’t have to have that mortgage insurance or they may have refinanced and gotten that and now they may be able to refinance and drop that which is significant savings.

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I encourage homeowners especially given what our economy has gone through, at this stage every 3 to 6 months, you should be helping manage your mortgage, and that’s what our company specializes in doing, helping people do that. Check in on whether there is a way to improve usually what your largest debt that you have, your mortgage. And that means checking the value, that means checking where rates are, and checking to see if there’s something that might help you reduce that cash flow.

Gerri: Your company and your website youcanrefi.com have been featured in all kinds of national news media because you have special expertise in true no closing cost loans. What does that mean for someone who maybe has a decent rate but is wondering if they can do better?

Joe: I’m glad you asked that. A no closing cost loan means many things to different lenders. To  us, it means that the lender is paying all of the closing cost. You’re not being wrapped up back in the loan. Now, closing costs in Florida are high so it may (not be) no closing cost for everybody but it could be still low closing costs. If you can lower your mortgage payment for little to no cost out of your pocket or out of your, equity you've basically gotten an insurance policy.

You’ve locked in savings and if rates go down again, we can show you how you can then refinance again at no cost and take advantage of that dip. Interest rates are generally trending up...The trend this year and the expectations are that they’re going to continue to creep up so there is some urgency for people..to take action.

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I am proud to have YouCanRefi.com and ArcLoan.com as a sponsor of Talk Credit Radio. Their loan officers are mortgage educators and their unique Automatic Rate Cut Loan has been featured in the national news media and helped homeowners across the country save money. I encourage you to contact them to see if they can help you get a mortgage or refinance today.

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