When to Purchase or Refinance

Determining whether to buy a house is a major decision. But how do you know if you should buy a home, refinance it, or stick to renting? Below we will discuss some of the key indicators that will help you with your decision. Of course, you can always get in touch with the team at CalSun Mortgage to learn more about your mortgage options. Call us today to learn more.

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How Much Can I Afford?

When you begin taking the first steps in purchasing a new home, it is important to consider how much you can afford. Having enough money for a down payment is imperative, but you may not need as much as you originally thought. You don’t need to have a 20% down payment to buy a home — it is now possible to buy a home with as little as 3% down on a conventional loan, or 3.5% on an FHA loan. Beyond the loan and the property’s price tag, there are a host of other financial and lifestyle considerations to add to your calculations as to whether you can afford to buy a house.

Person pulling a phone out of their pocket that has an approved loan application on the home screen.

How Much Can I Borrow?

When considering how much you can borrow, there are a few considerations that need your attention, like your monthly income (salary) and your monthly obligations (like your credit card debts, car payments, etc.). There are plenty of calculators found online that will shed some light on how much you can viably borrow. The mortgage you qualify for varies according to your present circumstances, and it is a good idea to get in touch with a professional to assess your financial situation.

We can help you compare and calculate monthly payments for different loan programs at interests affordable for you. Our team can also determine the loan amount for which you can qualify and establish the purchase price of your new home. We can pre-approve your loan application and issue a detailed pre-approval letter for your Realtor. Plus, one of our brokers can assist your realtor in order to negotiate the best purchase price by providing a pre-approval letter and estimated market value of the property.

 Person putting a coin into a piggy bank.

Should I Refinance?

Refinancing can allow you to change the terms of your mortgage to secure a lower monthly payment, switch your loan terms, consolidate debt, or even take some cash from your home’s equity to put towards bills or renovations. You may want to refinance if:

  • You want to change your loan term

  • You need cash to pay off debts

  • You want to do home improvements or renovations,

  • You want to allocate more to retirement savings

  • You want to convert an ARM to a fixed-rate mortgage

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What Are the Refinance Types?

There are a handful of refinancing types that may work for you, depending on your situation.

Rate-and-Term Refinance - You replace your original mortgage with a new one with different terms. Your interest rate and monthly payments will change, and you will probably refinance into a new term length.

Cash-Out Refinance - You’ll still replace your old mortgage with a new one that has different terms, but you’ll actually take out a loan larger than you have left to pay on the home so you can receive the surplus in cash.

Cash-In Refinance - You make a larger payment towards your principal to lower your LTV ratio. Cash-in refinances aren’t limited to homeowners who need help qualifying to refinance.

No-Closing-Cost Refinance - You are able to refinance into a new term with a new rate, just like rate-and-term refinance. But, you won’t pay a lump sum at closing.

Streamline Refinance - You can refinance your mortgage without going through an appraisal.

FMERR or HIRO Refinance - Both of these programs let you refinance if you have less than 3% equity in your home. You can even qualify if you’re underwater on your mortgage, meaning that you owe more than your home is worth.

Before you begin the process of refinancing your home, the team at CalSun can pre-approve you to ensure your eligibility for financing, give you a quote for a monthly payment and various loan programs, compare and choose the right loan program for you, estimate the value of your property, and determine the maximum loan amount for which you can qualify. Get in touch with us today to get started!

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