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1. What Can You Afford >>
Quick Guide through the CT Mortgage Puzzle
CONNECTICUT MORTGAGE REFINANCING
In the past few years, Connecticut mortgage refinancing has become extremely popular. Refinancing a current Connecticut home loan when interest rates are low can reduce monthly payments and save thousands of dollars for a homeowner over the life of the loan. A homeowner can refinance at any time and some people often refinance more than once.
There are three ways to refinance a Connecticut mortgage. The first is a Rate and Term refinance, meaning the homeowner is just refinancing her current Connecticut home loan to a lower rate or a different Connecticut home loan program. Financing up to 95% LTV is allowed for a Rate and Term refinance. (Some lenders offer up to 100% LTV).
The second is a Limited Cash-Out Connecticut mortgage refinance. Fannie Mae's current guidelines state that a limited cash-out Connecticut mortgage refinance would include only those Connecticut home loans that met the following criteria:
Involve paying off the outstanding Connecticut home loan and any existing subordinate Connecticut home loan that was used in whole to acquire the subject property.
Financing of closing costs (including prepaid expenses) along with paying off the existing Connecticut mortgage.
Cash back to the borrower in an amount no more than the lesser of 2% of the balance of the new refinance mortgage or $2,000.
The biggest difference in these new guidelines that took effect 9/02 is that those Connecticut mortgage refinances that involve the Connecticut mortgage refinance of subordinate mortgages that were not used in whole to purchase the subject property will be considered cash-out refinances.
The third is a Cash-Out refinance. Homeowners can reduce the interest rate on their current Connecticut home loan by securing a new Connecticut home loan with more attractive terms. It also allows homeowners to borrower money on the equity of their home for a variety of reasons and include the money borrowed in their new loan.
According to the new Fannie Mae guidelines, a cash-out Connecticut mortgage refinance over 70% L TV will cost more. Right now most lenders are charging an additional Y2 point up to 80% L TV and % of a point for Connecticut home loans above an 80%LTV.
RATE AND TERM CONNECTICUT MORTGAGE REFINANCE
The following scenarios can be discussed with anyone considering a Rate and Term refinance.
If a borrower currently has an ARM Connecticut home loan and the fixed rates are near the current ARM interest rate and the borrower plans on being in the home for more than 5 years, Connecticut mortgage refinancing offers a great opportunity to turn an ARM into a 15, 20 or 30-year fixed rate. By doing so, the borrower eliminates the possibility of fluctuations in the interest rate and monthly payments. 01
If a homeowner is mainly concerned with lowering her monthly payment, she can refinance her Connecticut mortgage into a new loan. She may not mind adding additional years onto the end of her existing Connecticut home loan if the monthly savings make sense. Remember that you will always want to explain that most Connecticut mortgage refinances will add additional years to the loan.
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