Mortgage Refinance
NY Mortgage Refinancing
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You can apply online for a New York Mortgage Refinancing right now. We also offer FHA Streamline and Cash Out Mortgage Refinancing on New York properties. Apply online now.
Mortgage refinancing in New York is when you apply for a mortgage in order to pay off a different mortgage that is secured against the same asset or property. If the original mortgage was a fixed interest rate mortgage which has now gone down considerably, then you would like to get a new mortgage at a more favorable mortgage rate. NY Mortgage Refinancing will provide you with some information regarding the refinancing of your New York State property if you currently have a mortgage in the state of New York that you would like to consider doing a mortgage refinancing on.
When is a New York Mortgage Refinance a Good Option
Typically home refinancing in New York is done when you have a mortgage on your home and apply for a second loan to pay off the first loan. While taking the decision to apply for the mortgage refinancing option, it is important to determine whether the amount you save in interest due to a lower mortgage rate balances the amount of fees payable during the refinancing of the mortgage.
Also have NY mortgage rates fallen? Or do you expect NY mortgage rates to go up? Has your credit score improved enough now so that you might be eligible for a lower-rate mortgage? Would you like to refinance into a different type of mortgage?
The answers to all of these questions may influence your decision to refinance your mortgage. But before you decide, you need to understand all that NY mortgage refinancing will involve. Your house probably is your most valuable financial asset, so you want to be careful when you choose a lender or mortgage broker and the specific mortgage terms. Remember that, along with the potential benefits to refinancing, there may be some costs.
When you refinance in the state of New York, you will pay off your current mortgage and create a new mortgage. You may even choose to combine both a primary mortgage and a second mortgage into a new loan. Refinancing your current mortgage in New York may remind you of what you went through when obtaining your original mortgage, only more streamlined and simpler, since you may encounter many of the same procedures and similar costs the second time around.
Why Consider NY Mortgage Refinancing?
Lowering your Mortgage Rate
The interest rate on your mortgage is directly related to your mortgage's monthly payment in that lower NY mortgage rates almost invariably mean a lower monthly mortgage payments. You may be able to get a lower mortgage rate now in the state of New York because of changes in the market conditions or because your credit score has improved since the time you first applied for your mortgage. The lower mortgage rate will also allow you to build equity in your home more quickly.
For example, compare the monthly mortgage payments, for both principal and interest, on a 30-year fixed-rate mortgage of $200,000 at 5.5% and 6.0%.
| Monthly payment @ 6.0% | $1,199 |
| Monthly payment @ 5.5% | $1,136 |
| The difference each month is | $63 |
| But over a year's time, the difference adds up to | $756 |
| Over 10 years, you will have saved | $7,560 |
Refinance to adjust the length of your mortgage
Increasing the term of your NY mortgageYou may want to refinance to a mortgage with a longer term to reduce your monthly payment. However, this will also increase the amount of time you will pay on your refinanced mortgage and the total amount that you end up paying toward interest, however, it will probably lower your monthly payment if you are having trouble meeting all of your financial obligations from month to month.
Decrease the term of your NY mortgageRefinancing to a shorter-term mortgage: for example, a 15-year mortgage instead of a 30-year mortgage generally have lower mortgage rates. In addition, you pay off your refinanced mortgage sooner, further reducing the total interest costs on the mortgage. The trade-off is that your monthly payments are greater in most cases because you are paying more of the principal down on your mortgage each month, in addition lenders may also offer lower mortgage rates with the shorter term mortgages.
Lets compare the total interest costs for a fixed-rate loan of $200,000 at 6% for 30 years with a fixed-rate loan at 5.5% for 15 years.
| Mortgage | Monthly payment | Total interest |
| 30-year loan @ 6.0% | $1,199 | $231,640 |
| 15-year loan @ 5.5% | $1,634 | $ 94,120 |
NY Mortgage Refinancing Tip: Mortgage refinancing is not the only way to decrease the term of your mortgage. By paying a little extra on the mortgage principal each month, you will pay off the mortgage sooner and reduce the term of your loan. For example, adding $50 each month to your principal payment on the 30-year loan will reduce the term by 3 years and saves you more than $27,000 in the mortgage interest costs.
Changing from an adjustable-rate mortgage to a fixed-rate mortgage
If you have an adjustable-rate mortgage, otherwise known as an ARM, your monthly mortgage payments will change as the mortgage rate for mortgages change. With this kind of mortgage, your payments will increase or decrease based on market conditions.
You may be uncomfortable with the prospect that your monthly mortgage payments may go up. In that case, you may want to consider refinancing the mortgage to a fixed-rate mortgage to give yourself some peace of mind by having a steady mortgage rate and monthly payment. You also might want a fixed-rate mortgage if you think mortgage rates will be increasing in the future, this is especially probable now since mortgage rates are at historic lows currently.
NY Mortgage Refinancing Tip: If your monthly payment on a fixed-rate mortgage includes escrow amounts for taxes and homeowners insurance, your payment each month could change over time due to changes in property taxes, insurance, or community association fees.
Getting an Adjustable Rate Mortgage (ARM) with better terms
If you currently have an Adjustable Rate Mortgage, will the next mortgage rate adjustment increase your monthly payments substantially? You may choose to refinance to get another Adjustable Rate Mortgage with better terms. For example, the new mortgage may start out at a lower mortgage rate. Or the new mortgage may offer smaller mortgage rate adjustments or lower payment caps, which means that the mortgage rate cannot exceed a certain amount.
NY Mortgage Refinancing Tip: If you are refinancing from one adjustable rate mortgage to another, check the initial mortgage rate and the fully-indexed mortgage rate. Also ask your mortgage broker about any rate adjustments you might face over the term of the loan.
Getting cash out from the equity built up in your home
Home equity is the dollar amount difference between the balance you owe on your mortgage and the value of your house. When you refinance your mortgage for an amount greater than what you owe on your home, you can receive the difference as a cash payment (this is called a cash-out refinancing). You might choose to do this, for example, if you need cash to make home improvements or pay for a child’s tuition.
Remember that when you take equity out of your home via a cash out refinance you will end up owning less of your home. It will take time paying on your refinanced mortgage to build your equity back up. That means that if you need to sell your house, you will not have as much money in your pocket after you sell the home.
If you are considering a cash-out refinancing, consider other alternatives as well. You could look for a home equity loan or home equity line of credit instead of a cash-out refinancing. Compare the home equity loan with a cash-out refinancing to see which is a better mortgage for you.
NY Mortgage Refinancing Tip: Many financial advisers may caution against cash-out refinancing to pay down unsecured debt, such as credit card debt, or short-term secured debt, such as a car loan. You may think about talking with a trusted financial adviser before you choose cash-out refinancing your mortgage as a debt consolidation program.
When is mortgage refinancing not a good idea?
You’ve had your mortgage for a long time.
In the later years of your older mortgage, more of your monthly payment goes to principal and helps to build up equity. By doing a mortgage refinancing late in your mortgage, you will restart the amortization process, and most of your monthly payment will be going to paying on mortgage interest again and not towards building up equity.
Your mortgage has a prepayment penalty
A prepayment penalty is a fee that a lender may charge if you pay off your mortgage early, which may include a mortgage refinancing. If you are mortgage refinancing with the same lender, you should ask whether the prepayment penalty can be waived. You should carefully consider the costs of any prepayment penalty against the savings you expect to gain from mortgage refinancing. Paying a prepayment penalty will increase the amount of time it will take to break even on the mortgage refinancing, when you account for the costs of the mortgage refinance and the monthly savings you expect to gain from mortgage refinancing.
You plan to move and get a new mortgage within a few years.
The monthly savings gained from a mortgage refinancing to lower monthly payments may not exceed the costs of the mortgage refinancing, a break-even calculation will help you figure out whether it is worthwhile to do a mortgage refinancing, especially if you are planning to move in the near future, in which case you will need to get a new mortgage.
Are you eligible for mortgage refinancing?
Determining your eligibility for mortgage refinancing is similar to the approval process that you went through with your first mortgage. Your lender will consider your income and assets, credit score, other debts, the current value of the property, and the amount you want to borrow in the mortgage refinancing. If your credit score has improved since your first mortgage application, you may be able to get a mortgage at a lower mortgage rate. On the other hand, if your credit score is lower now than when you got your current mortgage, you may have to pay a higher mortgage rate.
Lenders will look at the amount of the mortgage you request and the value of your house, determined from an appraisal. If the loan-to-value (LTV) ratio does not fall within their lending guidelines, they may not be willing to do the mortgage refinancing, or may offer you a mortgage with less-favorable terms than you already have.
If housing prices fall, your home may not be worth as much as you owe on your current mortgage. Even if home prices stay the same, if you have a mortgage that includes negative amortization (when your monthly payment is less than the interest you owe each month, the unpaid interest is added to the amount you owe resulting in the principal increasing instead of decreasing), you may owe more on your mortgage than you originally borrowed. If this is the case, it could be difficult for you to do a mortgage refinance.
What will mortgage refinancing cost?
It is not unusual to pay 3 percent to 6 percent of your outstanding mortgage principal in refinancing fees. These expenses are in addition to any prepayment penalties or other costs for paying off any mortgages that you may have currently. Mortgage refinancing fees vary from area to area and lender to lender.
NY Mortgage Refinancing Tip: You can ask for a copy of your settlement cost papers (the HUD-1 form) one day in advance of your mortgage closing. This will give you a chance to review the mortgage refinance documents and verify the terms of your new mortgage.
Mortgage application fee. This charge covers the initial costs of processing your mortgage request and checking your credit report. If your mortgage refinance is denied, you still may have to pay this fee. Cost range = $75 to $300
Mortgage origination fee. The fee charged by the lender or broker to evaluate and prepare your mortgage refinance loan. Cost range = 0% to 1.5% of the mortgage principal
Mortgage Points. A point is equal to 1 percent of the amount of your mortgage loan. There are two kinds of points you might pay. The first is mortgage-discount points, a one-time charge paid to reduce the interest rate of your mortgage. Second, some lenders and mortgage brokers also charge points to earn money on the mortgage. The number of points you are charged can be negotiated with the lender or broker. Cost range = 0% to 3% of the mortgage mortgage refinancing principal
NY Mortgage Refinancing Tip: The length of time that you expect to hold onto the mortgage helps you determine whether it is worthwhile to pay points up front to reduce your mortgage rate. Unlike points paid on your current mortgage, points paid for a mortgage refinance may not be fully deductible on your income taxes in the year they are paid. Check with the IRS to find the current rules for deducting mortgage points.
Mortgage Appraisal fee. This fee pays for an appraisal of your home, in order to assure the lenders that the house is worth at least as much as the amount of the mortgage. Some lenders and brokers include the appraisal fee as part of the mortgage application fee. You are entitled to a copy of the appraisal, but you must ask the lender for it. If you are doing a mortgage refinancing and you have had a recent appraisal, you can check to see if the lender will waive the requirement for a new appraisal. Cost range = $300 to $700
Inspection fee. The lender may require a termite inspection and an analysis of the structural condition of the house by a property inspector, engineer, or a consultant. Lenders may require a septic system test and a water test to make sure the well and water system will maintain an adequate supply of water for the home. Your state may require additional, specific inspections, for example, pest inspections in some areas. Cost range = $175 to $350
Attorney review/closing fee. The lender will usually charge you for fees paid to the lawyer or company that conducts the mortgage closing for the lender. Cost range = $500 to $1,000
Homeowner’s insurance. Your lender will require that you have a homeowner’s insurance policy in effect at settlement in the state of New York. The policy protects against physical damage to the house by fire, wind, vandalism, and other causes covered by your policy. This policy insures that the mortgage will be protected even if the house is destroyed. With mortgage refinancing, you may only have to show that you have a policy in effect. Cost range = $300 to $1,000
FHA, RDS, or VA fees or PMI. These fees may be required for mortgages insured by federal government housing programs, such as mortgages insured by the Federal Housing Administration (FHA) or the Rural Development Services (RDS) and mortgages guaranteed by the Department of Veterans Affairs (VA), as well as conventional mortgages insured by private mortgage insurance (PMI). Insured mortgages and guarantee programs generally apply if the amount you are borrowing is more than 80% of the value of the home. Both government and private mortgage insurance cover the lender’s risk that you will not make all the mortgage payments. Cost ranges: FHA = 1.5% plus ½% per year; RDS = 1.75%; VA = 1.25% to 2%; PMI = 0.5% to 1.5%
Title search and title insurance. This fee covers the cost of searching the property’s records to ensure that you are the rightful owner of the house and to check for any liens. Title insurance covers the lender against errors in the results of the title search. If a problem does come up, the insurance covers the lender’s investment in your mortgage refinancing. Cost range = $700 to $900
NY Mortgage Refinancing Tip: Ask the mortgage broker carrying your current title insurance policy what it would cost to reissue the policy for a new mortgage. This may reduce your title insurance cost.
Survey fee. Lenders require a survey, to confirm the location of buildings and improvements on the property in the state of NY. Some lenders require a complete survey to ensure that the home and other structures are legally where you say they are. You may not have to pay this fee if a survey has recently been conducted for your home. Cost range = $150 to $400
Mortgage Prepayment penalty. Some lenders charge a fee if you pay off your existing New York mortgage early. NY Mortgages refinanced, insured, or guaranteed by the federal government generally cannot include a prepayment penalty, and some lenders, such as federal credit unions, cannot include prepayment penalties. Also some states prohibit this mortgage prepayment penalty. Cost range = one to six months' interest payments
