If you're considering refinancing your mortgage, the most important question isn't simply “Can I get a lower interest rate?”
The better question is:
“Will refinancing put me in a better financial position?”
Capital Funding Mortgage Associates is an independent mortgage broker located in Newtown, Bucks County, Pennsylvania, serving homeowners throughout Pennsylvania and New Jersey.
Since 1999, we have helped homeowners evaluate refinance opportunities by comparing interest rates, closing costs, loan terms, monthly payments and long-term savings.
Because we work with multiple wholesale mortgage lenders, we can compare available refinance programs and pricing rather than being limited to the products and rates of a single bank.
There is no rule that says mortgage rates need to fall by 1% or 2% before refinancing makes sense.
Every situation is different.
Depending on your current mortgage and financial goals, refinancing may be worth considering if you want to:
The potential benefit depends on your current mortgage balance, existing interest rate, remaining loan term, new interest rate, closing costs and how long you expect to keep the mortgage.
We'll help you compare those numbers before deciding whether refinancing makes sense.
One of the biggest mistakes homeowners make when shopping for a refinance is comparing only the advertised mortgage rate.
A lower rate isn't necessarily the better deal if you have to pay substantial points and closing costs to obtain it.
For example, one lender might offer a slightly lower interest rate but charge thousands of dollars in additional costs. Another option may have a slightly higher rate but require little or no closing costs.
Which is better?
That depends largely on how long it takes to recover those upfront costs through the monthly savings and how long you expect to keep the mortgage.
At Capital Funding, we believe the complete transaction should be evaluated:
Interest Rate + Closing Costs + Monthly Payment + Loan Term + Long-Term Interest Expense
Our goal is to help you understand the numbers so you can choose the refinance structure that makes the most financial sense for you.
Not necessarily.
Depending on current mortgage pricing and your individual circumstances, Capital Funding may be able to structure a zero-closing-cost refinance using a lender credit to cover eligible closing costs.
Instead of automatically paying points and fees to obtain the lowest possible interest rate, we can compare different combinations of interest rate and lender credit.
For some homeowners, paying closing costs in exchange for a lower rate makes sense.
For others, accepting a slightly higher interest rate in exchange for enough lender credit to cover eligible closing costs may provide a better financial result—particularly when the difference in monthly payment is relatively small.
We'll show you the alternatives so you can compare them for yourself.
ASK ABOUT ZERO-CLOSING-COST REFINANCING
For homeowners who can comfortably afford the higher monthly payment, refinancing from a 30-year mortgage into a 15-year fixed-rate mortgage can provide significant long-term benefits.
The advantage isn't only the interest rate.
It's also amortization.
With a 15-year mortgage, a much larger portion of each payment generally goes toward principal during the early years of the loan compared with a 30-year mortgage.
That can allow you to:
A 15-year mortgage isn't appropriate for everyone because the required monthly payment is higher.
That's why we compare the options rather than automatically recommending the shortest available term.
In many situations, we can show you 15-year, 20-year and 30-year refinance options side by side, allowing you to compare the payment, interest rate and long-term amortization of each.
A lower monthly payment can look attractive, but it doesn't always mean you're saving as much money as you think.
Suppose you've already paid your existing 30-year mortgage for several years.
Refinancing the remaining balance into a brand-new 30-year loan may reduce your monthly payment, but it can also extend the amount of time you'll be making mortgage payments.
That's why homeowners should consider:
Sometimes a new 30-year mortgage is absolutely the right choice. Other times, a shorter term may produce a much better long-term result.
We'll help you see the difference.
A refinance break-even analysis estimates how long it takes for the monthly savings from refinancing to recover the costs of obtaining the new mortgage.
For example:
If refinancing costs $3,000 and reduces your mortgage payment by $150 per month, the simple break-even period would be approximately 20 months.
If you expect to sell the home or refinance again before reaching that point, paying those costs may not make sense.
But break-even analysis shouldn't always stop there.
You may also want to consider:
This is also one reason a zero-closing-cost refinance can be attractive in the right situation. When eligible costs are covered through a lender credit, there may be little or no traditional cost-recovery period.
If your home has increased in value since you purchased it, you may now have enough equity to eliminate private mortgage insurance (PMI).
Depending on the type of mortgage you currently have and your individual circumstances, you may be able to remove PMI without refinancing.
In other situations, refinancing may potentially allow you to:
Eliminate PMI + Lower Your Interest Rate + Restructure Your Mortgage
We'll help you evaluate the alternatives before assuming that refinancing is necessary.
If you have substantial equity in your home, a cash-out refinance may allow you to replace your existing mortgage with a larger loan and receive the difference in cash.
Homeowners sometimes use cash-out refinancing for:
However, converting home equity into mortgage debt is an important financial decision.
We'll help you understand the new mortgage balance, monthly payment, interest rate, closing costs and loan term before you decide whether a cash-out refinance is appropriate.
If you currently have an adjustable-rate mortgage (ARM), refinancing into a fixed-rate mortgage can provide greater payment certainty.
This may be worth evaluating as your ARM approaches its first adjustment date or if you simply prefer the stability of a fixed interest rate.
Before refinancing, we'll compare your existing ARM terms—including its current rate, adjustment schedule and remaining fixed period—with available fixed-rate and adjustable-rate alternatives.
We're not limited to one bank's refinance products or pricing. We work with multiple wholesale mortgage lenders and compare available options.
We focus on both the interest rate and what it costs to obtain that rate.
When available and appropriate, we'll show you refinance structures that use lender credits toward eligible closing costs.
Capital Funding Mortgage Associates has been helping homeowners with mortgage financing for more than 25 years.
You'll work directly with an experienced mortgage professional who knows your loan—not a call center.
We'll explain the rate, payment, costs, lender credits, loan term and amortization so you understand the financial tradeoffs before making a decision.
Depending on your qualifications, property and financial objectives, available refinance options may include:
We'll help determine which available programs are appropriate for your particular situation.
Capital Funding Mortgage Associates is located in Newtown, Bucks County, Pennsylvania.
We work with homeowners throughout Newtown, Yardley, Richboro, Langhorne, Doylestown, New Hope, Washington Crossing, Southampton and surrounding Bucks County communities, as well as borrowers throughout Pennsylvania and New Jersey.
Whether you purchased your home recently or have owned it for many years, we're happy to review your current mortgage and explain whether refinancing could provide a meaningful financial benefit.
You don't need to refinance simply because a lower mortgage rate is available.
The numbers should make sense.
Let us compare your existing mortgage with currently available refinance options and show you the differences in:
Interest Rate • Monthly Payment • Closing Costs • Loan Term • Principal Reduction • Long-Term Interest Expense
Then you can decide whether refinancing is worthwhile.
Written & Reviewed by John Madden
Owner, Capital Funding Mortgage Associates
Mortgage professional since 1999 | NMLS #960139
Based in Newtown, Bucks County, PA
Independent Mortgage Broker — Newtown, Bucks County, PA
Serving Pennsylvania & New Jersey Since 1999
NMLS #960139
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