FAQs - Home Refinance

What's the difference between New and Refinance?

When you refinance your mortgage, you're actually replacing it with a brand new mortgage loan. In doing this, expect to go through a mortgage application process very similar to that of your original mortgage. Refinancing is often a sound financial choice that can allow you to meet a variety of needs, such as lowering your monthly payments; change from adjustable to fixed rate loan; take cash out of your current home equity; or eliminate private mortgage insurance, to name a few.

Should I refinance?

A good rule of thumb is to first review your current interest rate. It's usually not worth refinancing your current mortgage unless your new interest rate is ½% to 58% lower than your current interest rate. If, however, you want to minimize your closing costs as much as possible, the current rate should be at least 1% lower. One of the key differences between the mortgage refinancing process and the initial home buying process is your experience. Since you've been through the mortgage process at least once, you know how to get organized and what to expect. Give us a call to see if rates are favorable for your refinance!

Why do people refinance?

The most common reasons why people wish to refinance may include: to lower their monthly payments; change from adjustable to fixed rate loan; take cash out of their current home equity; eliminate private mortgage insurance.

What's the difference between Home Equity Loans and Refinance Loans?

Using your home's equity to get tax-deductible* borrowing power for big-ticket expenses such as college tuition or home improvements is an option many homeowners choose. Both cash-out refinance and home equity loans are usually tax deductible*, but the similarity ends there. Comparing the features of each loan will help you reach the best decision.

Cash-Out Refinance Home Equity Financing
One loan and one monthly payment Choose between a one-time loan advance or a revolving line of credit.
Your existing mortgage is refinanced for a higher overall amount using some of the accumulated equity in your home You can borrow all or part of your home's equity.
Get immediate cash and spread the payments out over a longer timeframe Flexibility of a shorter term to help build equity faster OR reduced monthly payments by spreading the cost over a longer term.
Usually a lower interest rate than home equity financing You can borrow more money - sometimes up to 90% of the value of your home. With a line of credit, interest is paid only on the money you actually use, and you can access it whenever you want without having to reapply.


*always check with your tax advisor.

How much can I save if I refinance?

Call LBS Financial and we'll compare your current loan to today's interest rate, show you your potential monthly savings, and present various loan options.

How much cash can I get out of my home equity?

Call LBS Financial and we'll compare your current loan to today's rate and present potential cash-out opportunities.

Can I use that cash to consolidate my debts?

Yes! Credit cards, car loans, student loans, revolving credit and other debts can be consolidated. An LBS Financial loan specialist will present the potential options for debt consolidation.

Can I consolidate my first and second mortgages?

Yes! Provide our LBS Financial loan specialist with the details of your first and second mortgages, and we will present the potential options for consolidating your mortgages. Or apply online now!

What are the costs associated with refinancing a First Mortgage?

Below is a chart showing all of the potential closing costs associated with a home loan and which fees may be charged by LBS Financial, depending on your loan type:

Customary Fees & Charges LBS Financial
Loan origination fees If applicable
Loan discount points If applicable
Application/processing/underwriting fees If applicable
Document preparation fees If applicable
Appraisal fees If applicable
Credit report fees If applicable
Mortgage insurance If applicable
Tax service If applicable
Flood determination fee If applicable
Escrow fees Yes
Attorney fees No
Abstract or title fee If applicable
Title insurance Yes
Recording fee and transfer taxes Yes
Notary fee If applicable
Survey fee No


During a refinance, you may have costs for adjustments or prorations. These are called pre-paid costs, such as property taxes, prepaid interest, and homeowner hazard insurance.

How can I lower my interest rate and/or monthly payments?

You can usually lower the rate by paying more points. Points are fees paid to the lender at closing. Each point is equal to 1% of the loan amount. For a $100,000 loan, a point equals $1,000. Two points would be $2,000. If you have the cash, it's a good way to save money on interest over the life of your loan.

What is the APR and how does it affect my refinance?

Home loans are more than interest rates and points. They also involve other costs, fees and expenses. The APR expresses the annual cost of a loan as a percentage, factoring in not only its rate, but also the points and other costs, fees and charges over the life of the loan. This is why most people call it the "true rate" of the loan. To make an accurate comparison, compare loans with the same terms, interest rates and points. Then look at the APR. The loan with the lower APR is the less expensive loan.

What loan choices do I have for refinancing?

At LBS Financial, you'll find a number of home loans for every type of refinance. The goal here is to match the benefits of a specific loan type with your goals. So, let's first look at your goals or needs:

Your Situation Consider the following strategy
Have little cash Equity loan
Need low closing costs First Mortgage under $100,000
You need home improvements 2nd Mortgage or PRIMO Home Equity Line of Credit
Only need less than $625,500 Conforming fixed-rate loan
Need over $625,501 Jumbo fixed-rate loan
Want to lower your rate and payment but plan to stay over 5 years Fixed rate loan
Want to lower your rate and payment and sell within 5 years ARM
Add a room or other improvement Equity cash-out refinance or Primo Home Equity Line of Credit
Want to avoid jumbo interest rates Ensure loan amount does not exceed $625,500
Want to avoid monthly private mortgage insurance Loan-to-value at 80% or less on 1st mortgage
Financing a 2nd home (vacation) 30-year fixed-rate
Want consistent monthly payments Fixed-rate loan


Our LBS Financial loan specialist will be happy to go over the options in more detail. Give us a call or visit a branch today.

What type of loan products do you have?

Click here to visit our Home Loan Refinance page for loan product details.

Is it a good idea to order my credit report before applying?

Wise investors usually order a credit report to review its accuracy. This step gives them a chance to address any errors or mishaps before approaching the lender. As part of the refinance process, LBS Financial will eventually order your credit report, so it's a good idea to address it beforehand so as to avoid delays.

What type of documentation do I need for refinance?

To help speed up a refinance requiring standard processing, here is a list of the information you should collect and have ready when you apply for your loan. Original documentation, when requested, is preferred and will be returned to you promptly.

Category Sub-category Brief Description
Loan Application Loan application form Loan application form signed and dated by all applicants
Income documentation
  • Hourly or salaried employment
  • Original tax returns (if refinancing for a 30-year loan) or
  • W-2's (if refinancing for a 15-year loan) for the past two years
  • Original paycheck stubs covering most recent 30 days
Self-employed Most recent two full years of tax returns (individual, corporation, or partnership)
Retired
  • 1099's
  • original social security award letter or
  • Pension award letter
Other Income Child support, alimony, or separate maintenance
  • Six-month history of receipt with 3 years remaining on the agreement.
  • If applicable, a copy of fully-executed divorce decree
Assets Evidence of sufficient funds when closing
  • Two most recent original statements (all pages) of all checking, savings, or other asset documents
  • If receiving a gift from a family member, a signed gift letter form provided by LBS Financial and signed by the donor
Obligations Evidence of financial obligations (debts) Copy of the fully-executed Divorce Decree indicating amount of child support, alimony, or separate maintenance payments
Property Documentation
  • Current copy of Hazard Insurance policy (and Flood Insurance, if applicable)
  • Copy of current tax bill
  • Copy of Grant Deed

When does my refinance loan actually close?

The closing (or settlement) of the loan is an actual meeting that takes place at the Escrow Office, one of our branches, or the escrow's signer can come to your home or place of employment. At that time, you'll be asked to sign the closing documents and pay any outstanding closing costs you are responsible for.

When do I pay my closing costs?

Prior to the closing, our Residential Lending Department closer will contact you to let you know the amount of funds you must bring to the Closing Meeting. Personal checks are not accepted -- cashier's checks only.

What happens at the closing meeting?

  • The respective closing agent reviews the settlement sheet with you.
  • You sign all loan documents, such as the mortgage or Deed, note and Truth-in-Lending Disclosure, to name a few.
  • You then present a certified or cashier's check to pay closing costs (if applicable).
  • If your monthly payments are to include property taxes and insurance, a new escrow account (or reserve) is opened when the loan is funded.
  • The Right of Rescission period begins. You have 3 business days to decide whether to go forward with the transaction.
  • Unless you decide not to accept the loan, the day after the Right of Rescission period ends, the loan is funded by the Lender. The funds are transferred to the Escrow, who in turn, instructs the Title company to set up recording of the documents. The Deed and any other documents are usually recorded the following day. Once recording is confirmed, the Escrow agent can disburse funds for any payoffs. Remaining funds are sent to you with the HUD Settlement Statement.