Clearwater Mortgage Blog

If you’ve been thinking about refinancing, but aren’t quite sure if it’s a good idea, read on for some quick tips.

 First of all, there are two types of refinance loans:

• Rate-and-Term Refinance – is used when you want to get a better interest rate or change the length of the loan. For example, if you want a lower rate, or need to remove private mortgage insurance. Or if you want a 15-year mortgage instead of a 30-year. But there’s a caveat - the rate still has to be good. Sometimes this is truly a good deal depending upon what the market place is offering for 15-year rates – you have to check with your loan professional to see if this is a good time. For example, if you have a rate of 4.5% but the market is offering a rate of 3.5% that could really be worth it. The rate 15-year loan rate is a bargain, but sometimes it isn’t. One thing to keep in mind, though, is with a Rate-and-Term refinance­ - you can’t get any cash-out.
• Cash-out Refinance – with this type of loan besides changing the rate and Term, you can also get cash out to consolidate debt, make home improvements, buy another property, or whatever else you’d want. If you’re an investor, getting cash-out from a property with a nice chunk of equity can be a way to come up with a down-payment for a new property. The rate might be a bit higher than a Rate-and-Term, but not always. 

Refinancing is a good idea under some circumstances. Here are a few:

Interest rates are better than what you have, and you plan to stay in your home for a while. If you think you may be moving within the next few years, refinancing might not be worth it because there are fees connected to any loan.

•  You have private mortgage insurance you’d like to get rid of. Some borrowers can save $150+ a month when they get rid of their PMI. 
•  You have credit cards and debts you’d like to consolidate. In some circumstances, it’s a good idea to pay off your high-interest credit cards by rolling the debt into your loan. But, you have to weigh your options because your new loan could be 15 to 30 years long.
•  You have home improvements you’d like to do. Again – you have to weigh the costs of the loan versus the enjoyment of home improvements and increased equity.

At Clearwater Mortgage, we strive to do what is best for the borrower. If refinancing is a good idea, we’ll let you know. If not – we’ll tell you that too. But, no matter what–we’re always happy to hear from our past clients. 

Give us a call today at 727-259-2900 to see if it’s time to refinance.

Some of the most common questions our borrowers ask are around fees and loan estimates, so we thought we’d give you more data about the costs involved in a mortgage loan.

Sample Loan Estimate

Once you’ve found a home and have a signed contract with the seller, let your mortgage lender know right away. They will give you a loan estimate within three days. This document lists all of the “estimated” costs of your loan. Here’s a sample of one.

What’s important to realize is that it’s just an estimate. At Clearwater Mortgage, we try and give the most accurate estimate we can, but there are many fees included that the mortgage broker doesn’t have any control over. We know what our costs will be, but for other vendor fees like title and homeowners insurance, we estimate as accurately as we can. 

Here are some costs other than lender fees that are listed on the loan estimate which other companies and government agencies determine the amounts of: 

Property taxes - (assessed by the County you’re in). Property taxes can vary from one home to the next – especially in Pinellas County or Pasco County. So, if you find a home you’re interested in, ask your realtor what the current taxes are. That will give you an idea of what you’ll have to pay. 

Most buyers have an escrow account, especially if you’re not putting 20% down. With an escrow or impound account, your taxes and insurance are paid along with your mortgage each month. So, when you buy the house, you’ll need to pay for some months of taxes ahead of time to get your account set up. The number of months you pay will vary depending on what month of the year you’re purchasing your new home. 

Title Fees – The owner’s title policy in Pinellas and Pasco Counties is usually paid by the seller. It just depends on what’s in your contract. And in most cases, the title company is chosen by the seller’s realtor. At Clearwater Mortgage, as soon as we get an executed contract, we call the title company and ask for their fees to put into the loan estimate. 

Appraisal – this runs between $350 to $500 depending upon loan and property type. If you’re buying a rental, the cost can run around $800 because there is additional data needed on investment properties. For example, the appraiser may need to find out what rents go for in that neighborhood. The appraisal is paid for at the time of service, so make sure you have that money available even if it’s on a credit card. 

Homeowners Insurance – even if you have an insurance agent you use all the time, it’s a good idea to shop for this to get your best rate. To get your escrow account established, you’ll need to pay for 12 months of insurance and an additional three months. Here’s more data about escrow accounts. 

Flood Insurance – In all of Florida, especially beach areas like Clearwater, flood insurance can be costly. Check the flood zone. If it’s designated “AE,” that’s prone to flooding, and you’ll have to get flood insurance. You can check a specific address on FEMA’s website here.  

Comparing Lenders with Your Loan Estimate

So, if you’re comparing lenders here are the only fees to compare:

• Loan amount
• Interest Rate
• Origination Charges
• Application Fee
• Underwriting Fee
• Credit Fees

Those are the fees the lender has control over. 

Cash to Close

The number to also watch out for is “Cash to Close.” It's on the bottom of the first page of the estimate. Depending upon how much money you want to put down and the sales price, your cash to close will vary. You’ll want to make sure you have enough money when it comes time to close your loan and get the keys to your new home. 

At Clearwater Mortgage, our goal is to make the mortgage process easy to understand. Give us a call at 727-259-2900 or apply online today. 

When you're in the market to buy a new home, you might also be shopping around for a mortgage lender and comparing programs, rates, and closing costs. The trick in comparing mortgages from different lenders is to make sure you are comparing apples to apples. Doing that is easier said than done. Hear me out. 

What Is A Lender Fee Sheet?

A lender fee worksheet is a detailed list and breakdown of closing costs and expenses for a mortgage. It's a way to compare programs if you know what you're looking for.

Lender A gives you an estimate based upon a conversation on the phone with limited or no documentation regarding your finances.

It's not that this is bad. But, it's really just a ball estimate until your financials are in hand, and he can analyze them against various loan programs. Whatever information you told, the loan officer is what he is basing his loan estimate on. 

For Example:

"Well, my credit score on Credit Karma is 740 (credit Karma is not accurate for mortgage lending)". or 

"My income is $7000 a month and my wife makes $1000".

It might be a bit different when we see your tax returns. And, possibly, we may need to structure the loan in a way that your wife's income won't count. For example, if her credit score turned out lower than we wanted. 

We need very accurate data and a full application to get an exact estimate. Until then, we can give a "ballpark" estimate called a fee sheet. 

What is a Loan Estimate?

Later, when you have the exact property picked out, and we have all of your documentation, we can give a very solid estimate. That is called a Loan Estimate. By law, only certain parts of this can change after we give it, and by only specific pre-ordained amounts and under only certain conditions. 

Make sure you are not comparing a Fee Sheet to a Loan Estimate. 

Interest Rates Change Daily

Since interest rates change daily, comparing two loan estimates against each other can be a bit deceiving, especially if the estimates aren't on the same day. It can also be tricky if you are not comparing identical programs.

What if the Lender Can't Perform?

Stay tuned for part two of "Comparing estimates from different lenders," where we will go over some more caveats to consider. 

In the meantime, when you're ready to get pre-approved, give us a call at 727-259-2900.