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Mortgage Refinancing FAQ

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Frequently Asked Questions
  • How do I know if I should refinance?
    If your payment is too high, your interest rate is higher than current rates, you're looking to consolidate debt, or you want to own your home sooner—consider a refinance.
  • How can I access cash to pay off debt?
    Ask for a cash-out refinance. Use your home equity to take money out for paying debt, college loans, even home improvements that will in turn increase your home value.
  • How can I lower my monthly payment?
    Interest rates are near historic lows. If your current rate is 1-1.5% higher than market rates, lower it. There are no upfront fees and you can save hundreds each month.
  • How can I increase my home equity?
    Equity increases naturally as you pay down your mortgage balance. You can also help it grow by completing home improvement projects or renovations.
  • Can I refinance to remove private mortgage insurance (PMI)?
    In many cases, the lender will allow cancellation of mortgage insurance when the loan is paid down to 80% of the original property value. Lender's requirements for this can vary state to state so contact your lender directly to understand your options. In the event you are not eligible to cancel PMI, refinancing to remove it may be an option (so long as you have the 20% equity).
  • Can I refinance if my home value is less than I owe?
    If your home value is less than what you owe, you are considered to be "underwater". That said, be sure to ask about HARP loan benefits and whether or not the program is a good fit for you. HARP is available through December 31, 2018.
  • Do I need an appraisal before refinancing?
    Not always. Most often it depends on your loan program and type of refinance (rate and term vs. cash out). Your salary-based mortgage consultant will be able to further discuss your appraisal options during the refinance process.
  • How long does it take to refinance?
    Time varies based on lender and how quickly you submit documentation. At American Financing, we're proud to offer closings that are faster than the industry average.
  • What documents are needed to refinance?
    Be sure you have pay stubs, bank account statements, tax returns (W2s and/or 1099's), your credit report, and proof of outstanding debts (student loans, car loans, alimony, child support, credit cards, etc.) ready.
  • How often can I refinance?
    There is no limitation to how many times you refinance, though many lenders (and even loan programs) require a certain amount of time between appraisals. This typically applies to cash-out refinances.
  • What's the difference between a VA streamline and a VA cash-out loan?
    The VA cash out is the more flexible of the two options, as it allows for cash back at closing or the ability to refinance a non-VA loan to a VA loan. The VA streamline option is only large enough to pay off your existing loan and closing costs, assuming you currently hold a VA mortgage.
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