Refinancing with NewRateSM

Refinance your mortgage with NewRateSM and lock in a lower interest rate to save thousands of dollars over the life of your home loan. Whether your goal is to reduce your monthly mortgage payment, cash out some of your equity, or shorten the term of your mortgage loan, we’ll take care of your needs.

Refinancing may be the right choice for your financial situation depending on your current rate and term. Consider the following advantages of refinancing to a lower interest rate:

  • Increase your cash flow
  • Opportunity to switch to a different loan type
  • Convert your adjustable-rate (ARM) or a balloon mortgage to a fixed rate loan
  • Reduce your term by switching to a shorter term mortgage
  • Roll a current 2nd mortgage into a new loan
  • Access some of your home’s equity

Learn more about refinancing

How to Decide

What are the estimated costs?

Typical costs when you refinance:

  • An origination charge which may include fees such as application or processing.
  • Discount points to lower your interest rate further. (May be tax deductible. Consult your tax advisor regarding deductibility).
  • Other settlement charges such as appraisal, credit report, title search, and title insurance fees.
Note: You may be eligible for a reduced reissue or refinance rate on your title insurance if the property’s current policy was issued recently. Ask your title or closing agent if you qualify.

Does my loan have prepayment penalties?

  • If there’s a prepayment penalty for early payment of your current loan, this will add to the refinance cost.

How long will I stay in my home?

  • If you plan on staying in your current home for an extended period of time, and the interest rates are 1/2% to 5/8% lower than your current rate, refinancing may likely be the right option for you.

How can I determine the break-even point?

  • NewRate will compare your existing loan with a new loan. Your break-even point is when your savings from your new loan equals the cost of getting the new loan.

Financing Basics

If you obtain a loan to lower your monthly payment you will repay more than the principal amount you borrowed. Here are the components you need to know:

  • Interest Rate – The interest rate is the percentage of the loan amount charged to borrow money. Interest rates are based on market conditions, your credit score, the amount of down payment, and the type of mortgage. Check today’s mortgage rates
  • Discount Points – One point equals 1% of your mortgage loan amount. You may be able to pay one or more points to lower your interest rate. A lower interest rate means lower monthly mortgage payments. You may be able to finance points as part of your mortgage amount. Points are usually tax deductible. (Consult a tax advisor)
  • Origination Charge – This includes all charges (other than discount points) that the loan originators (lenders and brokers) will receive for originating the loan. This charge covers items including fees, document preparation, underwriting costs and other expenses. You may be able to finance the origination charge as part of your mortgage amount.
  • Loan Term – his is the amount of time you have to pay off your mortgage balance. Shorter loan terms typically mean higher monthly mortgage payments, but typically have lower interest rates. If you pay off your mortgage balance within a shorter term, you will typically pay less in total interest than with a longer-term mortgage.

The total cost of a mortgage includes: the interest rate, discount points, and origination charges. This total cost is known as the annual percentage rate (APR), which is typically higher than the interest rate. The APR enables you to compare mortgages of the same dollar amount by taking into account the total annual cost of the mortgage.

P rincipal
I nterest
T axes
I nsurance

What is “PITI”?

Your monthly mortgage payment is typically made up of four parts:

  • Principal is the amount of money borrowed.
  • Interest is the cost of borrowing money.
  • Taxes are the property taxes charged by your local government. Lenders may collect a portion of these taxes in every mortgage payment and hold the funds in an escrow account on your behalf for tax payments made as they become due.
  • Insurance refers to homeowners insurance that provides protection against property damage due to wind, fire or other risks. Like taxes, lenders may collect and pay your insurance costs from an escrow account.
Other annual expenses you may incur relating to your property include expenses such as mortgage insurance, flood insurance, and homeowners association fees.

Lowering Your Payment

When interest rates drop, it’s likely you can refinance your current loan to one with lower monthly payments. For example when you refinance, you can:

Eliminate private mortgage insurance (PMI)

  • If your original loan had a down payment that was below 20%, you’re likely paying PMI. If you have made loan payments for a period of time, you may now have enough equity to eliminate PMI which could lower your monthly mortgage payments.

Refinance to a longer-term loan

  • If you need to lower your monthly payments, a longer-term loan can usually help you achieve this, but will increase the total interest you’ll pay over the life of the loan.

Pay discount points to reduce your interest rate

  • If you are likely going to be staying in your home for an extended period of time, it probably makes sense to pay discount points to reduce your interest rate. One discount point (which equals 1% of your loan amount) reduces your interest rate approximately 0.25%, reduces monthly payments and interest over the life of a fixed-rate loan, and may be tax deductible. (Consult your tax advisor)

Plan for an interest rate change in an adjustable-rate mortgage (ARM)

  • Adjustable rate mortgages have interest rates and payments that will change (increase or decrease) over time, based on the term and market rates at the time of adjustment.

Loan Application Criteria

When your loan application is complete, NewRate will review the following four components:

Income:

  • Do you have a steady source of income to make monthly payments?
  • Income can come from your primary job, a second job, and part-time jobs. It can also come from overtime, bonuses, and commissions.
  • Other sources of income may also be considered – including retirement, veteran’s benefits, disability payments, alimony, child support, rental income or investment income – provided they can be verified as reliable and likely to continue for at least three years.

Current debts and credit history:

  • Lenders examine your payment history before deciding to loan you money.
  • For example, do you pay your bills, loans, credit cards, and other debts on time?
  • A borrower’s credit history and credit score are also examined prior to a loan decision being made by your lender. It’s a good idea to check your credit history and correct any problems before applying. A NewRate representative can assist you in doing so.

Available Funds and Assets:

  • Do you have enough funds to pay closing costs?
  • You may use funds from a savings account, certificate of deposit (CD), investments, and from a retirement account.
  • You may also be able to use a gift from a relative, friend, employer, or not-for profit organization.
  • You will also likely have to demonstrate that you have additional funds in your accounts to cover several months of mortgage, tax, and insurance payments.

The Property:

  • What is the market value of your property?
  • NewRate will order a property appraisal to make sure your property’s value meets our underwriting requirements.