REFINACE GUIDE

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REFINANCE

REFINANCE GUIDE

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Sprocket Rocket lets you transform your rapid prototype into a beautiful design by adjusting every aspect to fit brand standards.

REFINANCE

" Providing the best future for your best living."

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1 Reasons to Refinance
2 Exploring Your Refinance Options
3 Applying to Refinance
4 Appraisals and Underwriting
5 Closing Your Refinance
6 Managing Your Mortgage Payments

Getting Ready to Refinance

Reasons to Refinance

The first step in deciding whether you should refinance is to establish your goals. The most common reasons for refinancing a mortgage are to take cash out, get a lower payment or shorten your mortgage term.

Take Cash Out

Refinancing your mortgage is a great way to use the equity you have in your home. With a cash-out refinance, you refinance for a higher loan amount than what you owe and pocket the difference. Any proceeds you receive are tax-free.

Many homeowners use cash from their home to pay off high-interest credit card debt and student loan debt. You can also take cash out to finance home improvements, education or whatever you need. Since mortgage interest rates are typically lower than interest rates on other debts, a cash-out refinance can be a great way to consolidate or pay off debt. Additionally, mortgage interest is tax-deductible, but the interest on other debts usually isn't.

You may be able to take cash from your home if you've been paying on the loan long enough to build equity. Additionally, you may be able to do a cash-out refinance if your property value has increased; a higher value on your home means your lender can give you more money to finance it.

Get a Lower Payment

A lower mortgage payment means more room in your budget for other things. There are a few ways you can lower your payment by refinancing.

First, you may be able to refinance with a lower rate. If rates now are lower than they were when you bought your home, it's worth talking to your lender to see what your interest rate could be. Getting a lower rate means lowering the interest portion of your monthly payment – and big interest savings in the long run.

Second, you could refinance to get rid of mortgage insurance – a monthly fee you pay to protect your lender in the event that you default on the loan. Mortgage insurance is usually only required when you put down less than 20%. You could save hundreds of dollars a month by refinancing to stop paying monthly mortgage insurance.

Third, you can get a lower payment by changing your mortgage term. Lengthening your term stretches out your payments over more years, which makes each payment smaller.

There may be other ways you can get a lower payment, so it's always worth checking with your lender to see how they can help you get a payment that fits your current budget.

Shorten Your Mortgage Term

Shortening your mortgage term is a great way to save money on interest. Often, shortening your term means you'll receive a better interest rate. A better interest rate and fewer years of payments mean big interest savings in the long run.

So how does this work? Let's look at an example. Say your loan amount is $200,000. If you got a 30-year loan with a 3.5% interest rate, you would pay approximately $123,000 in interest over the life of the loan. However, if you cut your term in half, you would pay about $57,000 in interest over the life of the loan. That's a difference of $66,000 – and it doesn't even account for the fact that the shorter term would provide you with a lower interest rate (and more savings).

An important thing to know about shortening your term is that it may increase your monthly mortgage payment. However, less of your payment will go toward interest, and more of it will go toward paying down your loan balance. This allows you to build equity and pay off your home faster.

Things You Need to Evaluate Before Refinancing

Once you have a clear goal in mind, you'll want to evaluate your financial situation. There are four keys things to look at: your credit score, your monthly mortgage payment, the value of your home and your debt-to-income ratio (DTI).

Your Credit Score

There are many online resources that make it easy for you to find out your credit score for free. Knowing your credit score will help you understand what mortgage refinance options you could be eligible for.

Your Monthly Mortgage Payment

Knowing how your monthly mortgage payment fits into your budget will help you evaluate your options. If you're taking cash out or shortening your term, for instance, it's a good idea to know how much wiggle room you have in your budget for a higher monthly payment. If your goal is to get a lower monthly payment, it's important to decide how much you need to lower your payment for the refinance to be worthwhile.

The Value of Your Home

Before you refinance, you'll want to do a bit of research to estimate how much your house is worth. Your lender can't lend you more than the home is worth, so an appraisal value that comes back lower than expected can impact your ability to refinance – especially if you're looking to take cash out or remove mortgage insurance.

The best way to estimate your home value is to check the sale prices of similar homes near you. The more recent the sale, the better.

Knowing the value of your home can tell you how much equity you have. To figure this out, just subtract your current mortgage balance from the estimated value of your home.

Your Debt-to-Income Ratio

Another factor to take into consideration is your DTI. DTI is all your monthly debt payments divided by your gross monthly income. DTI is one way lenders measure your ability to repay the money you're borrowing.

If you were paying $1,000 a month for your mortgage and another $500 for the rest of your debts (such as credit card debt, auto loans and student loans), your monthly debts would equal $1,500. If your gross monthly income was $4,500, then your DTI ratio would be 33%.

Most lenders require a DTI of 50% or lower, and the maximum DTI varies by the type of loan you get. A DTI that's too high could impact your ability to refinance or limit your refinance options.

FIRST-TIME HOME BUYER
ASSIST PROGRAM,
HOMETOWN HEROES PROGRAM
&
1% GIVEBACK PROGRAM

(FOR NON-FIRST-TIME HOMEBUYERS)

Product Breakdown

First-Time Homebuyer Assist Program

(Conventional Loan Program)*

Borrower(s) must be first-time home buyers (they must not have owned or purchased a home in the last three years)
Borrower(s) minimum credit score (620)
No pricing penalties for lower credit scores ranging from 620 to 740
Conforming/Conventional program
Single-family residences, Condos, Townhouses, Villas, Coach homes, and Plan Unit Development
Maximum Debt to Income Ratio (Front End: 45%; Back End: 45–50% with an Approved Eligible)
The borrower may be eligible for reduced mortgage insurance premiums
Borrower(s) receive $1,250.00 towards closing costs after completing a 30-minute online course. (TAG is not responsible for or obligated for the payment of credits by United Wholesale Mortgage.)
TLG will provide a lender credit at closing for up to 1% of the loan amount towards the borrower's closing costs or any potential rate buy-down
Lender credit will be derived from premium pricing.
Many credits may be restricted by investors' premium programs/pricing
Borrower(s) must qualify for income areas per the TLG map up to 100% of income (Call the loan officer to find out more details.)
Total credits can not exceed 6%
Escrow Waiver (establishing an escrow account for taxes and insurance can be waived and paid annually; a 680 credit score is required.

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First-Time Homebuyer Assist Program

(Veteran Loan Program)*

Veteran program
Certificate of Eligibility and DD-214 Honorable Discharge required
Borrower(s) Must Be First Time Home Buyers (have not owned or purchased a home in the last 3 years)
Borrowers(s) minimum credit score (620)
Single-family residences, Condos, Townhouse, Villa, Coach homes, Plan Unit Development
Debt to Ratio (Front End 45% Back end 50% with an Approved/Eligible)
TLG will give up to 1% towards borrower(s) closing costs or any potential rate buy down
Lender credit will be derived from premium pricing
Many credits may be restricted by investors' premium programs/pricing
Total credits can not exceed 4%
Escrow Waiver (Taxes and Insurance can be waved saving on closing costs and paid annually 680 credit score required)

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First-Time Homebuyer Assist Program

(FHA Loan Program)*

FHA program
Borrower(s) Must Be First Time Home Buyers (have not owned or purchased a home in the last 3 years)
Borrowers(s) minimum credit score (620)
Single-family residences, Condos, Townhouse, Villa, Coach homes, Plan Unit Development
Debt to Ratio (Front End 45% Back end 55% with an Approved/Eligible)
TLG will give up to 1% towards borrower(s) closing costs or any potential rate buy down
Lender credit will be derived from premium pricing
Many credits may be restricted by investors' premium programs/pricing
Total credits can not exceed 6%

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CO-BRAND BROCHURE &
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First-Time Homebuyer Assist Program

(Jumbo Loan Program)*

Jumbo program
Borrower(s) Must Be First Time Home Buyers (have not owned or purchased a home in the last 3 years)
Borrowers(s) minimum credit score (680-740)
Single-family residences, Condos, Townhouse, Villa, Coach homes, Plan Unit Development
Debt to Ratio (Front End 41% Back end 43% with an Approved/Eligible)
TLG will give up to 1% towards borrower(s) closing costs or any potential rate buy down
Lender credit will be derived from premium pricing
Many credits may be restricted by investors' premium programs/pricing
Total credits can not exceed 6%
Loan amounts cannot exceed $3 million and above require 18 months of subject PITI(a) in reserves
Max LTV 89.99%-80%

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1% GIVEBACK PROGRAM

Programs that qualify: Maybe restricted by capacity, capital, collateral, and credit (Conventional, FHA, VA, Jumbo Loan*)
Borrowers(s) minimum credit score (620)
Single-family residences, Condos, Townhouse, Villa, Coach homes, Plan Unit Development
Debt to Ratio (Front End 45% Back end 50% with an Approved/Eligible)
TLG will give up to 1% towards borrower(s) closing costs or any potential rate buy down
Lender credit will be derived from premium pricing
Many credits may be restricted by investors' premium programs/pricing
Total credits can not exceed 4% for VA
Total credits can not exceed 6% for FHA and Conventional

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HOMETOWN HEROES HOUSING PROGRAM

Florida Hometown Heroes allows borrowers to receive up to 5% of the loan amount (capped at $10,000 min- $35,000 max) in down payment and closing cost assistance can be paired with additional assistance programs to maximize the amount of received assistance.
This second mortgage becomes due and payable in full upon the sale of the property, refinancing of the first mortgage, transfer of a deed, or if the homeowner no longer occupies the property as their primary residence.
The Florida Hometown Heroes loan is not forgivable.
The down payment and closing cost assistance can be used to satisfy the following: Borrower’s down payment. Any down payment exceeding the minimum borrower requirement Reasonable and customary closing costs. The down payment and closing cost assistance cannot be used to cover commission for real estate agents, the cost difference between the sales price and the appraised value or to pay off borrower debt.
FHA, USDA, and VA PMI do not impact MI rate
Borrowers must not exceed the maximum income limit requirements for the county in which the property is being purchased.

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TAG REFINANCE

REFINACE GUIDE