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Refinancing With Your Current Mortgage Lender: Is It a Good Idea?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Should you refinance with your current lender?
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Recently, you hopped online to make your mortgage payment. On the front page of your financial institution’s website, you saw refinancing advertised at a much lower interest rate than the one you currently carry.

Your gut instinct may be to fill out an application for a refi. Who doesn’t want a lower interest rate on their mortgage?

But before you jump at the offer to refinance with your current lender, you should shop around. There may be better deals out there.

Pros And Cons Of Refinancing A Mortgage With Your Current Lender

Pros:

  • They have all of your personal information on hand, which may help the approval process go marginally faster.
  • You may be able to use your continued patronage as a bargaining chip for lowering closing costs and other fees.
  • If you like your current financial institution, there’s nothing wrong with staying with them out of brand loyalty — as long as it’s not costing you money.

Cons:

  • You will still have to provide documentation such as bank statements and W-2s, and your lender will still have to pull your credit report.
  • They may not have the best rates on the market. You’ll need to shop around to find out.
  • They may have more or higher fees than their competitors.
  • If you’re a customer service nightmare, your current institution may offer you higher rates

How to shop for a refi loan

That advertised rate you saw may not be the best option on the market. Even if it is, there’s no guarantee you’ll qualify for it.

Step 1: Compare rates from multiple lenders

Before you fall in love with the benefits of refinancing with your current lender, check to see what you can find elsewhere. A great way to do this is to use a site like LendingTree, which is MagnifyMoney’s parent company and one of the biggest online marketplaces for loans.

Without performing a hard credit pull (which saves you from dinging your score), LendingTree will ask you some basic underwriting questions via an online form. They can then match you with potential lenders who participate in its marketplace. The lenders will contact you via email or phone with quotes, which you can compare.

Of course, you can always work directly with lenders in your area as well.

Armed with this information, you can go back to your current lender to see if they can meet or beat the lowest rate you’ve been offered.

Step 2: Get all quotes the same day

“It is important to get all the quotes at the same time on the same day,” says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage,” “because at that moment, everyone is looking at the same data, and their wholesale cost for that loan is identical.”

That’s because of the way mortgage lenders set their rates. When you take out a mortgage, your financial institution actually owns it for a very short period of time. But not for long. Eventually, they will bundle your loan together with a bunch of other loans and sell it to investors, and they continue to service your loan for a small fee.

They offer standard, wholesale interest rates to investors daily. Your financial institution needs to charge you more than that wholesale interest rate if they want to make a profit on the sale. You should apply to all financial institutions on the same day to ensure they’re all basing your quotes off of the same wholesale rate.

Step 3: Go to your lender to negotiate

When you find the best offer, use it as leverage with another lender. If they’re eager for your business, they may be willing to outdo their competitor. Remember that you’re not just negotiating interest rates but also origination fees, closing costs and appraisal report costs.

After you are offered a quote you are happy with, the lender locks it for a specified period of time before it is rescinded. Better rates merit shorter lock periods, the shortest being 15 days.

What if I find a better deal and they won’t match it?

If your current lender won’t match the outside quote, it likely makes sense to go with the outside lender. You’ll have a limited window in which to lock in your new refi rate, called a rate lock period. Be sure you know how long your rate lock period lasts so you can decide before you lose your rate.

A great rate isn’t all you should look at when comparing the costs of remaining with your lender versus choosing a new lender. Ask about origination fees, balloon payments and prepayment penalties — all of which could potentially make it more expensive to refinance.

After you have applied for the loan, you will be issued a Loan Estimate form, which outlines the proposed terms. At this point, a home appraisal will be performed to determine the value of your home.

Once final approval is issued, you will receive a Closing Disclosure form, which will tell you exactly how much you will need for closing costs. At this point you are still able to walk away from the table. After three days have passed, you’re finally allowed to sign the documentation agreeing to the loan.

How do I know it’s time to refinance my mortgage?

Whether you decide to refinance with your current lender or not, before taking the plunge you want to figure out if doing so will actually save you money.

Fleming says, to make a fair judgment, you need to look at interest and other costs over the same holding period.

“Very few people hold their mortgage until it’s paid off,” he explains. “Comparing the two for a period longer than [a few years] makes no sense, since your savings on the proposed loan will stop once you sell the house or refinance.”

For example, let’s say you currently have a mortgage with a balance of $284,020 with a 5% interest rate. You are considering refinancing to a 4% interest rate. In order to refinance you’d have to pay $4,100 in fees, including closing costs and origination fees.

Let’s look at how each of these options would pan out over an 84-month holding period:

Your current mortgage

Potential refi

Rate: 5%

Rate: 4%

Fees and closing costs: N/A

Fees and closing costs: $4,100

Total interest charges over 7 years: $92,385

Total interest charges over 7 years: $77,207

Total savings: $15,178

The refinance will, indeed, save you money even with the closing costs and fees. It’s time to refinance.

How to negotiate a refinance with your current lender

Like we mentioned before, when financial institutions issue a mortgage or refinance, they don’t typically keep it. They usually sell it off, and then continue servicing your loan for a kickback from the buyer. And they know that in order to keep getting paid that servicing fee, they’ll have to keep servicing your loan. That gives you a bit of leverage.

If you have other offers on the table, your current lender may be willing to meet or beat them.

“Call [your lender], and one of your options will be to speak with a loan officer, or mortgage adviser, or mortgage planner,” says Fleming. He notes that all of these titles are indicative of the same job description. “Tell them that you believe you can get a better rate, and that you have begun shopping and wanted to give them a shot at keeping you as a customer.”

This will only work if you can actually get a better rate elsewhere. While you can refinance with your current lender, the lender will be able to tell if you’re bluffing as they’ll have to pull your credit report and look at recent bank statements and W-2s.

“If [you] love the service of [your] existing lender, by all means ask them for a quote,” says Fleming, “but the market is very competitive today so shopping will almost certainly save you money.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne here

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Maine First-Time Homebuyer Programs

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Do you want to live in a state with gorgeous seaside views and fresh lobster? Maine just might be the right place. Whether you’re new to the state or already call it home, if you need help coming up with a down payment, Maine offers several programs designed to help first-time homebuyers make their homeowning dreams a reality.In January of 2019, we researched first-time homebuyer programs in Maine, which included a review of the Maine State Housing Authority website and other state resources. Here’s what first-time homebuyers in Maine need to know.

Maine first-time homebuyer programs

The Maine State Housing Authority administers several federal and statewide programs aimed at providing affordable homeownership for Maine residents.

Their programs provide fixed-rate mortgages and assistance with down payments and closing costs to help put homeownership within reach. Their mortgages also come with payment protection, in the event that buyers face unemployment.

Eligibility for Maine assistance

Homebuyers who wish to take advantage of one of the Maine assistance programs must meet income and purchase-price limitations. Income and purchase-price limits vary, depending on how many people live in your household and the county in which you buy a home. You can find a list of current income and purchase-price limits online.

Eligible properties include new and existing single-family homes, owner-occupied two- to four-unit apartment buildings and condominiums. Manufactured homes located on owned land and built within the last 20 years are also eligible. However, the purchase-price limit for single-wide and double-wide manufactured homes is $150,000.

MaineHousing First Home Loan Program

The MaineHousing First Home Loan Program provides low fixed-interest-rate mortgages with low or no down payments. It can also provide up to $3,500 in assistance with down payments and closing costs.

Features

The First Home Loan Program offers

  • Thirty-year fixed-rate mortgages
  • Low or no down payments
  • Up to $3,500 in down payment and closing cost assistance
  • Low fixed interest rates
  • Low- and no-point options
  • The option to finance between $500 and $35,000 for necessary home improvements in the same loan

Eligibility

In order to participate in the program, you must

  • Have a minimum credit score of 640.
  • Take an approved homebuyer education class before closing if you take advantage of the down payment and closing cost assistance option.
  • Contribute at least 1% of the loan toward the purchase price of your home (the cost of the homebuyer education class counts toward this 1%).
  • Be a first-time homebuyer (not have owned a home within the past three years) or a veteran, retired military or on qualified Active Duty.
  • Meet household income limits, which vary by county and household size.

How it works

The First Home Loan Program is available through a network of approved banks, credit unions and mortgage companies. You can begin the application process by contacting one of more than 40 approved lenders. The lender can help you determine how much home you can afford, decide on the right mortgage program and take you through the process of applying for and closing on the loan.

Learn more

MaineHousing Salute ME & Salute Home Again programs

The Salute ME and Salute Home Again programs help qualified active duty, veterans and retired military personnel achieve homeownership by giving them a 0.25% discount on First Home Loan mortgages.

Features

The Salute ME and Salute Home Again programs offer

  • An additional 0.25% discount on 30-year mortgages offered through the First Home Loan Program
  • Low or no down payments
  • Up to $3,500 in down payment and closing cost assistance
  • Low fixed interest rates
  • Low- and no-point options
  • Option to finance between $500 and $35,000 for necessary home improvements in the same loan

Eligibility

In order to participate in the programs, you must

  • Take an approved homebuyer education class prior to closing if you take advantage of the down payment and closing cost assistance option.
  • Have a minimum credit score of 640.
  • Be on active duty or have been honorably discharged from military service, have served on active duty for 180 days or within a war zone.
  • Use your new home as a primary residence.
  • Meet household income and purchase-price limits, which vary by county and household size.

How it works

MaineHousing programs are available through a network of approved banks, credit unions and mortgage companies. You can begin the application process by contacting one of more than 40 approved lenders. The lender can help you determine how much home you can afford, decide on the right mortgage program and take you through the process of applying for and closing on the loan.

MaineHousing Mobile Home Self-Insured Program

The MaineHousing Mobile Home Self-Insured Program allows manufactured/mobile home buyers to get higher loan-to-value (LTV) mortgages and pay a higher interest rate instead of mortgage insurance premiums (MIPs).

Features

The Mobile Home Self-Insured Program offers

  • Up to 30-year loan terms
  • Down payments as low as 5%
  • Up to $3,500 in down payment and closing cost assistance
  • The option that 3% of the purchase price may come from a seller contribution
  • The option to add up to $35,000 to the loan for repairs

Eligibility

In order to participate in the program, you must

  • Be a first-time homebuyer (not have owned a home in the past three years), have only owned an unattached manufactured/mobile home on leased land, or be a veteran.
  • Pay a maximum of 33% of your income toward housing and have a maximum total debt-to-income (DTI) ratio of 41%.
  • Have a minimum credit score of 640.
  • Meet income limits, which vary by county and household size.
  • Have a maximum purchase price of $150,000.
  • Purchase a single-wide or double-wide manufactured home that is less than 20 years of age and is permanently attached per code at the time of closing.
  • Move into the home as your main residence.
  • Not use more than 15% of the home for a trade or business.
  • Contribute a minimum of 3% toward the purchase of the home.

How it works

MaineHousing programs are available through a network of approved banks, credit unions and mortgage companies. You can begin the application process by contacting one of more than 40 approved lenders. The lender can help you determine how much home you can afford, decide on the right mortgage program, and take you through the process of applying for and closing on the loan.

National first-time homebuyer programs

If you want to buy a home in Maine, you’re not limited to first-time homebuyer programs available through the Maine State Housing Authority. There are other federal programs available to help first-time homebuyers across the country. If you’re interested in learning about national programs, start by checking out LendingTree’s guide to first-time homebuyer programs nationwide.

This article contains links to LendingTree, our parent company.  The information in this article is accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Janet Berry-Johnson
Janet Berry-Johnson |

Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here

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Rhode Island First-Time Homebuyer Programs

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Buying a new home is a scary prospect — and not just because change can be overwhelming. Figuring out how to afford a down payment, closing costs and monthly mortgage payments can feel like an Olympic gymnastics routine. Luckily, first-time homebuyers in Rhode Island have several programs that can provide assistance.

Whether you’re looking to pay less in taxes or you need help covering a down payment, the state’s solutions may be able to help you. We reviewed the state’s offerings to help you pick the best program for you.

Rhode Island first-time homebuyer programs

Rhode Island Housing offers affordable housing programs designed to make living in the state more attractive and affordable — no matter your financial situation. Not sure how to start your homebuying journey? The organization offers first-time homebuyer education for all buyers to help you understand the ins and outs of this complicated process.

But there’s real money available, too. The programs below offer down payment assistance, tax credits and affordable mortgages. They can even help you avoid paying mortgage insurance.

Eligibility for Rhode Island assistance

All of Rhode Island Housing’s first-time homebuyer programs — except for the First Down Program — require purchasing a house that costs no more than $441,176. Your new home can be a one- to four-unit home or a condominium.

And, of course, you must be a first-time homebuyer.

FirstHomes100

What is it?

Rhode Island Housing’s FirstHomes100 program helps first-time homebuyers at any income level afford a new place. The program combines a traditional mortgage with down payment assistance funds so you can finance your home 100%.

The FirstHomes100 program offers first-time homebuyers

  • One hundred percent financing
  • Assistance with down payment or closing costs through low-interest, 15-year loans
  • The ability to forego mortgage insurance in exchange for a slightly higher interest rate.

Requirements

In order to qualify for the FirstHomes100 program, you must

  • Purchase a house that costs no more than $441,176.
  • Buy a one- to four-unit single-family home or a condominium.

How to apply

If your income is less than $93,623 for a one- or two-person household, or less than $107,667 for a household of three or more, you’ll need to work directly with Rhode Island Housing’s Loan Center. Homebuyers with higher incomes can contact any participating lender to begin the loan application process.

Learn more

FirstHomes100+

What is it?

FirstHomes100+ is the sister program of FirstHomes100. It allows first-time homebuyers to not just purchase but also renovate the home of their dreams. Once buyers are approved for a FirstHomes100 mortgage, they’ll work with a consultant from the U.S. Department of Housing and Urban Development (HUD) to determine what repairs are needed. Once the final costs are determined, and if they exceed $5,000, the loan will become an all-inclusive FirstHomes100+ loan.

FirstHomes100+ provides buyers with

  • One hundred percent financing to buy and renovate the home of their choice.
  • Assistance with down payment or closing costs through low-interest, 15-year loans.
  • The ability to forego mortgage insurance in exchange for a slightly higher interest rate.

Eligibility

To be eligible for FirstHomes100+, first-time buyers must

  • Purchase a house that costs no more than $441,176 and that requires a minimum of $5,000 in renovations.
  • But a one- to four-unit single-family home or a condominium.
  • Complete FHA 203(k) Homebuyer Education before closing.

How it works

Buyers with incomes of less than $93,623 for a one- or two-person household or less than $107,667 for a household with three or more people will work directly with Rhode Island Housing’s Loan Center. If your income is higher, you can contact any participating lender to apply for the program directly through them.

Learn more

FirstHomes Tax Credit

What is it?

The FirstHomes Tax Credit is a federal tax credit for part of the mortgage interest you pay in a given year. A tax credit directly reduces the tax amount you owe. You can claim the tax credit every year, making this program helpful for years to come. Reduce your taxes even further by itemizing and deducting any other mortgage interest you’ve paid.

The FirstHomes Tax Credit offers buyers

  • A mortgage credit certificate for 20% of the total mortgage interest you pay each year.
  • Maximum credit of $2,000 a year.

Requirements

To be eligible for the FirstHomes Tax Credit, buyers must

  • Purchase a house that costs no more than $441,176.
  • Be buying a one- to four-unit home or a condominium.
  • Plan to live in the home as their primary residence.
  • Have income of less than $93,623 for a one- or two-person household, or less than $107,667 for a household of three or more.
  • You don’t have to be a first-time homebuyer if you live in the federally targeted areas of Central Falls, Pawtucket, Providence and Woonsocket.

How to apply

Ready to get started? Get in touch with Rhode Island Housing’s Loan Center or reach out to any of the approved lenders.

Learn more

First Down Program

What is it?

The First Down Program helps first-time homebuyers in the counties most affected by the recent foreclosure crisis. Through this program, buyers receive down payment assistance in the form of a second mortgage. As long as you live in the house full-time for five years, the assistance is forgiven. If you sell, refinance or no longer use the property as your primary residence, you’ll need to repay part of the loan.

The First Down Program offers buyers

  • A forgivable down payment assistance loan of $7,500.

Requirements

To be eligible for this down payment assistance program, first-time buyers must

  • Treat the home as their primary residence.
  • Purchase a home that costs no more than $454,250.
  • Be buying a one-to-four-unit home or condo.
  • Live in Cranston, Pawtucket, Providence, Warwick or Woonsocket counties.
  • Have income of less than $93,623 for a one- or two-person household, or less than $107,667 for a household with three or more people.

How to apply

Funds for this program are limited. Reach out to Rhode Island Housing’s Loan Center or a participating lender to get started.

Learn more

National first-time homebuyer programs

Rhode Island offers several helpful programs for first-time homebuyers, but buyers in the state should consider looking to nationwide programs, too. These programs can help you find an affordable mortgage, down payment and closing cost assistance, and federal tax credits.

LendingTree’s guide to first-time homebuyer programs can help you find the solution that works best for you.

This article contains links to LendingTree, our parent company.  The information in this article is accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jamie Wiebe
Jamie Wiebe |

Jamie Wiebe is a writer at MagnifyMoney. You can email Jamie here

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