Woman sitting on her couch researching refinancing her mortgage on her laptop.

    Mortgage rates are trending down, and many homeowners are considering refinancing their mortgage. Homeowners should reach out to a Mortgage Analyst about refinancing their mortgage if rates have dropped significantly lower and if their home value has increased.

    The Myth of Starting Amortization Over

    Amortization is the process of spreading out a loan amount into a series of fixed payments over the life of the loan. When homeowners refinance their mortgage, they will start the amortization process over again. This is called “reamortization.”

    When homeowners refinance their mortgage, they are signing onto a new loan with a new rate, monthly payment, and amortization timeline. The benefit of refinancing and reamortizing their loan is that it allows them to “save the savings” from their reduced monthly payment and their lower rate.

    Financed Closing Costs

    Homeowners also have the option to finance their closing costs into their loan amount. Homeowners need to increase their loan amount to cover the additional cash needed to close.

    There are two types of closing costs:

    • Non-Recurring Closing Costs: these are “one-time” fees like title insurance, escrow, appraisal fees, etc.
    • Recurring Closing Costs: these are costs that will recur throughout the life of the loan like property taxes, insurance premiums, and interest on the loan.

    JVM Lending offers to pay all of the non-recurring costs on behalf of our clients for almost all of our refinance loans.

    Cash Out Refinance Rules

    Homeowners are also allowed to increase their loan amount to garner some extra cash that they “take out” from their new loan. Cash out refinances are limited to 80% of the loan-to-value ratios in most cases. If homeowners have substantial home improvement needs, tax bills, tuition debt, or consumer debt that they are unable to pay off quickly, a cash out loan always makes sense for homeowners.

    Leveraging the Benefits of Your New Mortgage

    Homeowners who refinance their loan can reap many financial benefits. Refinancing can shorten the life of the loan, reduce monthly payments, and get homeowners locked into a lower mortgage rate.

    Refinancing also gives homeowners extra cash in their pocket to pay off any outstanding consumer debt like credit card debt, car loans, or student loans. The savings homeowners accumulate from refinancing also gives them added liquidity for rainy day events or other needs like medical bills, college expenses, or home improvement projects and repairs.

    Reach Out To JVM Lending

    If you’d like to learn more about the home buying process, mortgage rates, refinances, or other related topics, don’t hesitate to reach out to the experts at JVM Lending today! JVM Lending is a family-owned mortgage company with years of experience delivering mortgage loans to customers in California, Texas, and Arizona at competitive interest rates. Contact us to learn more.

    Jay Voorhees
    Founder/Broker | JVM Lending
    (855) 855-4491 | DRE# 1197176, NMLS# 310167

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