When to put\u00a0cash into your refinance?<\/strong><\/span><\/p>\n 1.\u00a0 You can lower your mortgage rate significantly: <\/strong><\/span>You know that you can qualify for the rock-bottom interest rates \u2014 as long as your loan balance is below a certain loan to value. Are you close to that cutoff and have plenty of cash to spare? Then bring enough funds to the table to push your mortgage balance below that threshold.<\/p>\n 2. Do you have a jumbo loan over $417k?<\/strong><\/span>\u00a0 but are extremely close to the cutoff for a conforming loan (less than $417k)?.\u00a0 Pay down the loan to under $417k\u00a0 so you can get a much lower rate, as the average fixed rate on a 30-year jumbo is\u00a0almost .5% higher than\u00a0rates on a conforming loan.<\/p>\n 3. You can avoid mortgage insurance “PMI”.<\/strong><\/span> If your loan-to-value ratio is at a certain level that demands mortgage insurance. But you could avoid having to pay mortgage insurance by putting enough cash into the loan.<\/p>\n 4. You want to pay off your mortgage faster:<\/strong><\/span> Some homeowners are putting cash in so that they can afford the payments when they refinance a 30-year loan into a 20, 15, or even a 10-year mortgage, Even with the extra cash, your monthly payments will be higher on a shorter loan. But over the life of the mortgage, the total interest savings can be huge.<\/p>\n How a “Cash in” refinance works<\/strong><\/span><\/p>\n Let\u2019s take a look at\u00a0an example in the chart\u00a0below. These are the figures from a loan we funded for a family last week. They had a $300k loan and they qualified for a 3.75% on a 30 year fixed,\u00a0or 3.49% on a 20 year fixed, but the payments on the 20 year loan were\u00a0 too high as they did not want their monthly payment to be over $1,600.<\/p>\n So they paid down their loan balance by $25k from $300k to $275k, so they could afford the payments on the 20 year loan, as the new payment was $1,593 a month. *Over the life of the loan the 20 year loan\u00a0will save them $92,730 in interest over the 30 year\u00a0loan, all for putting in an investment of $25k.<\/strong> Most people would agree that $92,730 is a great return on an initial investment of $25k.<\/p>\n![\"\"](\"http:\/\/www.michaeladeery.com\/blog\/wp-content\/uploads\/2012\/06\/tips-for-buyers42.gif\" "\\"tips")
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