Refinance Loans in Annapolis, MD
Refinancing a home mortgage can be a big decision for many homeowners. Your situation and needs change over time, so why shouldn't your mortgage? Now might be the right time for you to refinance into a lower rate mortgage.
How You Can Benefit from a Refinance
Refinancing is simply getting one loan to pay off another. At Redwood Mortgage Services, we're ready to find the right refinancing solution for you. Our staff of experienced loan officers will help you evaluate your mortgage needs and draft a refinancing plan that will save you money.
Why Consider Refinancing?
People refinance for a number of reasons. You may want to:
- Consolidate first and second mortgages
- Get a lower interest rate or lower monthly payment
- Switch from an Adjustable to a Fixed-rate Mortgage
- Stop paying Private Mortgage Insurance (PMI)
- Cash out some of your equity for home renovations
- Consolidate high-interest debt like credit cards
When Does Refinancing Make Sense?
If you're planning on staying in your home for more than two years, a refinance mortgage is typically a great option. Because refinancing requires closing costs, homeowners who plan to stay in their home for more than two years will usually make up for those costs with lower monthly payments.
Access Your Home's Equity
For most people, a home is their most important and substantial investment. If your home is now worth more than when you purchased it, you can use a refinance loan to access that extra value and turn it into cash for unexpected bills, college expenses, or to start a business.
The Refinance Process
A typical refinance usually takes between 2 and 4 weeks. Scheduling a home appraisal right away can help expedite the process. Typically, closing costs range between 1% and 2% of the loan amount, but low-cost and no-cost refinancing options are available.
With so many refinancing options available, it's important to refinance the right way. We're happy to show you all of your options so you can make the best decision for your unique situation.
Common Refinance Questions
Determining whether refinancing makes sense depends on your current mortgage, available loan options, home equity, closing costs and financial goals. Here are answers to some common questions homeowners have when considering a refinance.
What is refinancing?
Refinancing replaces your existing mortgage with a new loan. The new loan may have a different interest rate, term, loan type or balance depending on the type of refinance and your financial goals.
What does refinancing cost?
Refinancing typically involves closing costs that may include lender fees, appraisal fees, title and settlement charges, recording fees and other transaction costs. The actual amount varies based on the loan, property and individual transaction. Your Loan Estimate will provide a more specific breakdown of the anticipated costs.
What are mortgage points?
Discount points are optional upfront fees that may be paid in exchange for a lower interest rate. One point equals 1% of the loan amount, but the amount by which a point may reduce the interest rate varies based on market conditions, loan type and pricing at the time of the transaction.
How does APR differ from the interest rate?
The interest rate represents the cost of borrowing the principal balance of the loan. The Annual Percentage Rate (APR) reflects the interest rate plus certain additional costs and fees associated with the loan, expressed as an annual percentage. APR can be useful when comparing the overall cost of different loan options.
What is the difference between a fixed-rate and adjustable-rate mortgage?
With a fixed-rate mortgage, the interest rate remains the same for the life of the loan. An adjustable-rate mortgage (ARM) generally has an interest rate that is fixed for an initial period and may then adjust at specified intervals according to the terms of the loan.
Should I modify my mortgage or refinance?
A loan modification changes certain terms of an existing mortgage, while refinancing replaces the existing mortgage with a new loan. Loan modifications are generally handled through the current mortgage servicer and may be available in certain circumstances. Refinancing requires qualification for a new mortgage. The appropriate option depends on the homeowner's circumstances and goals.
How much does my interest rate need to drop for refinancing to make sense?
There is no universal percentage by which your interest rate must decrease for refinancing to be worthwhile. A smaller rate reduction may make sense in some situations, while a larger reduction may not make sense in others. Consider the new loan's closing costs, monthly payment, loan term, how long you expect to keep the mortgage and your overall financial goals when evaluating a refinance.
What is PMI?
Private Mortgage Insurance (PMI) is generally required on certain conventional loans when the borrower has less than 20% equity or makes a down payment of less than 20%. PMI protects the lender rather than the borrower. Requirements for removing or canceling PMI depend on the loan and applicable guidelines.
Will I need an appraisal when I refinance?
An appraisal may be required when refinancing, but not every refinance requires one. Depending on the loan program, property and transaction, an appraisal waiver or other valuation option may be available.
Can I refinance if my credit isn't perfect?
Credit is one of several factors considered when qualifying for a refinance. Requirements vary by loan program and lender, and factors such as income, debt, home equity, loan-to-value ratio and overall financial profile may also affect eligibility and available loan terms.
Do I need equity in my home to refinance?
Equity requirements vary depending on the refinance program, property type and purpose of the refinance. Some programs may permit higher loan-to-value ratios than others, so homeowners should review the requirements for the specific loan program they are considering.
Can I get cash from a refinance?
A cash-out refinance may allow eligible homeowners to replace their existing mortgage with a larger loan and receive a portion of their available home equity in cash. The amount available depends on factors such as the property's value, existing mortgage balance, loan program and borrower qualifications.
Can I lock an interest rate on a refinance loan?
Yes. A refinance interest rate may generally be locked for a specified period once the lender's requirements for a rate lock are met. Rate-lock terms and availability vary by lender and loan program.
Reasons Homeowners Consider Refinancing
Homeowners consider refinancing for many different reasons. The potential benefits depend on your existing mortgage, available loan options, home equity, closing costs and financial goals. Here are some common reasons a homeowner may explore refinancing.
Change Your Monthly Payment or Loan Term
Refinancing may allow you to change the term or structure of your mortgage. Depending on available interest rates and loan terms, this could affect your monthly principal and interest payment. Extending a loan term may reduce the monthly payment but can increase the total interest paid over time, while choosing a shorter term may increase the monthly payment but reduce the length of the loan.
Access Home Equity
A cash-out refinance may allow eligible homeowners to access a portion of their available home equity for purposes such as home improvements, education expenses or other financial needs. Because a cash-out refinance increases the amount borrowed against the home, homeowners should carefully consider the costs and long-term impact before proceeding.
Consolidate Debt
Some homeowners consider a cash-out refinance to consolidate higher-interest debt. This may simplify monthly obligations or change the interest cost of certain debts, but it also converts unsecured debt into debt secured by the home. Closing costs, the new mortgage terms and the total cost of borrowing should be considered before using home equity for debt consolidation.
Address Private Mortgage Insurance
Depending on the type of mortgage, current loan balance, property value and applicable requirements, homeowners may have options for removing mortgage insurance. Refinancing is one possible option in certain situations, although it is not always necessary to refinance to remove PMI.
Move From an Adjustable Rate to a Fixed Rate
Homeowners with an adjustable-rate mortgage may consider refinancing into a fixed-rate mortgage for a more predictable interest rate and principal-and-interest payment. Whether this makes sense depends on the existing loan, available refinance terms, closing costs and how long the homeowner expects to keep the new mortgage.
Refinance Checklist
The documentation needed for a refinance varies depending on the loan program, property and your financial situation. Having commonly requested information available can help make the process more efficient. Your mortgage professional will provide a specific list based on your refinance.
Income & Employment Information
Recent pay stubs, if applicable
W-2s or other income documentation, if applicable
Additional documentation may be requested for self-employed borrowers or borrowers with other sources of income
Assets & Financial Information
Recent bank or investment account statements, when required
Information about your current mortgage and other debts
Documentation for other assets or financial accounts when needed for qualification
Property & Insurance Information
Current mortgage statement
Property information and other documentation requested for the refinance
Not every borrower will need every document listed above, and additional documentation may be required depending on the loan program and individual circumstances.
Mortgage Refinancing in Annapolis and Across Maryland
Homeowners in Annapolis, Anne Arundel County and throughout Maryland may consider refinancing for many different reasons, from changing the structure or term of an existing mortgage to accessing available home equity. The right approach depends on your current loan, available refinance options, home equity, closing costs and financial goals.
Redwood Mortgage Services has been helping homeowners navigate mortgage financing since 1999. We can review your existing mortgage, explain available refinance options and help you compare the potential costs and benefits before deciding whether refinancing makes sense for you.
Redwood Mortgage Services also serves borrowers in Delaware, Virginia, Washington, DC, North Carolina and Florida.
Lower Monthly Payments
Reduce your payment through better rates or extended terms
Cash-Out Equity
Access your home's increased value for major expenses
Drop PMI
Eliminate private mortgage insurance with sufficient equity
Refinancing is simply getting one loan to pay off another. It allows you to replace your current mortgage with a new one, potentially with better terms.
Typically, the closing cost of a refinance is between 1% and 2% of the loan amount, including lender fees. You may choose to pay points to lower your interest rate, or opt for a low- or no-cost refinance.
Yes. The general rule is that you need to have a 90% loan-to-value ratio before you can refinance. This means your home should be worth about 10% more than your current loan balance.
Yes. Depending on the type of refinance loan you choose, you can take out cash to use for bills, home repairs, or whatever you might need it for.
A typical refinance usually takes between 2 and 4 weeks. Getting your home appraised is usually where most delays occur, so scheduling an appraisal quickly can help expedite the process.
Not exactly. While better credit scores result in better interest rates, you can still qualify for a refinance with less-than-perfect credit. You'll want to ensure the rate reduction makes refinancing worthwhile.
It is an upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., "2 points" means a charge equal to 2% of the loan balance.
Disclaimer: These materials are not from HUD, VA or FHA and were not approved by HUD or a government agency. In some cases a refinance loan might result in higher total finance charges over the life of the loan.
Looking for a Refinance Loan?
Refinancing allows you to redefine your mortgage loan to better fit your current needs. Whether you're looking to reduce payments, consolidate debt, or access your home's equity, getting a lower monthly rate and paying less over the life of your loan just makes sense. Our experienced loan officers are ready to help you determine if refinancing is right for you.