Buying and Refinancing Your Home

What are the benefits of homeownership?

There’s no doubt that owning a home is the American dream. As you make your monthly mortgage payments, you increase the equity you have in your home. As you build equity, you can use that money, when needed, for retirement, college tuition, travel, an emergency fund, or investing in your dream opportunity of a lifetime! Owning a home increases your net worth and gives you tax benefits (*consult your tax advisor for tax benefits applicable to your specific situation). As real estate appreciates over time, so does your financial picture. Additional benefits of being a homeowner are community connection, stability, greater privacy and pride of ownership.

What is the difference between fixed rates and adjustable rates?

A fixed-rate mortgage keeps the same rate throughout the life of the loan. The monthly payment you make toward your principal and interest won’t change.

An adjustable-rate mortgage (ARM) has rates that can go up or down. It starts with a set rate for a specified period. Then it gets adjusted periodically, moving forward through the life of the loan.

Although ARM rates may begin with a lower rate than fixed-rate mortgages, there’s always a chance it will reset higher at various times throughout the loan’s term, which can increase your mortgage payments.

What do I need to apply for a mortgage?

What you need depends on if you are a wage earner, how long you’ve been at your current job, if you are self-employed, and/or if you have other non-traditional forms of income. At the very least, you will need the following:


Photo ID to prevent identity theft and mortgage fraud


Verbal or signed authorization for your lender to pull your credit report


Homeowner’s insurance agent’s name and contact information


Proof of income (paystubs, two most recent year’s W-2s, etc.)


Source of down payment and/or closing costs (asset statements)

Additional documents needed, depending on your situation, may include copies of your past two year’s tax returns, business bank statements and tax returns for business owners, written explanations for any large deposits or bounced checks, tax forms showing interest income and capital gains, and supplemental documents showing all unearned income.

Your loan officer will guide you on what specific documents are needed for your loan application.

How are closing costs calculated?

Closing costs are calculated based on purchase price, loan amount, title costs, etc. On many occasions, there is an option to buy the rate down (lower your rate) to reduce your monthly principal and interest payment.

In many cases, your realtor will ask for seller concessions to help offset closing costs from you the buyer. Specific costs should be discussed with your loan consultant.

Should I refinance?

There are several reasons you might want to consider refinancing your current loan:


Lower your interest rate


Shorten the term (time to repay)


Remove monthly mortgage insurance (PMI) from your loan


Consolidate high interest debt


Obtain cash for home improvement, college expense or to take that dream vacation

There are always “general” rules, but we suggest discussing your needs with your loan officer. We will be able to evaluate several scenarios with you and assist you in making the best decision.

What are the different types of refinancing?

There are 3 types of refinancing:

1. Rate-and-Term Refinance

With this refinance, the only things which differ from your original mortgage are your rate, term (length of the loan), or both.

2. Cash-Out Refinance

This type of refinancing may also come with a lower rate and shorter term than the original loan. A cash out loan allows you to use the equity in your home to consolidate debt, make home improvements, acquire extra cash for college expenses, etc. only things which differ from your original mortgage are your rate, term (length of the loan), or both.

3. Cash-In Refinance

This is the opposite of a Cash-Out, as the homeowner brings cash to the closing to pay down the loan balance, resulting in a lower mortgage rate, shorter loan term, or both. The most common reason to do a Cash-In Refinance is to get access to lower rates that are only available at lower loan-to-value ratios.