Military Homebuyer Colorado Springs January 2014 | Page 16

HOMEBUYER

WELCOME

VA LOAN

CULTURE

Are You Ready for
a Refinance?
WHEN THE NUMBERS MAKE SENSE, HOMEOWNERS
CAN SAVE A BUNDLE
The current lending climate is

LOCAL

GET STARTED

the closing costs to your principle
balance—and then hopes you don’t
make the connection before signing
the paperwork.
Every refinance comes at a cost.
There’s no getting around it.
The key is to take a careful look at
the numbers. That typically includes
the monthly savings, the closing costs
and the number of months it will take
for the borrower to recoup the expense.
Every refinance scenario is
different, and it’s best to talk with a
VA loan specialist about your unique
circumstances and goals. But as a
general guide, we’ve created three
scenarios to help give homeowners
a sense of who might be a great
candidate for a VA refinance and why.
Let's take a look at three
hypothetical borrowers and the
numbers behind their respective
refinance loans.

awash in impressively low interest
rates. All those small numbers are
tantalizing, and a well-timed refinance
can make a world of financial
difference for military borrowers and
their families. But the reality is not
every homeowner is a great candidate
for a refinance loan.
Your purpose in securing
a refinance is an important
consideration. Homeowners who

need cash immediately will see their
monthly payments rise, but the
borrowing costs might beat anything
they can get with a home equity line
of credit. Veterans simply wanting to
lower their monthly payment could
save tens of thousands of dollars over
the life of their mortgage.
Beware any lender who boasts of
a “free” or “no money out-of-pocket”
refinance. There’s no such thing.
Instead, the lender simply adds

BORROWER A

BORROWER B

BORROWER C

She wants a VA
Streamline to
lower her monthly
payment.

He wants a VA
streamline to
lower his monthly
payment.

He needs to take
cash out for medical
bills and other
outstanding debt.

BORROWER A

BORROWER B

BORROWER C

LOAN AMOUNT

$300,000

$150,000

$200,000

CURRENT RATE

5.00%

6.50%

5.00%

$1,610.46

$948.10

$1,073.64

CASH OUT

N/A

N/A

$30,000

NEW RATE

4.50%

4.50%

4.50%

$1,560.59

$772.70

$1,210.98

MONTHLY SAVINGS

$49.87

$175.41

None

COST OF REFI*

$8,000

$2,500

$9,000

160 months

14 months

Immediate

CURRENT PAYMENT

NEW PAYMENT

RECOUPMENT PERIOD

*Closing costs vary by location. These closing costs are simply here to show you how to run this calculation. For your actual closing cost figure, please talk to your VA loan specialist.

NMLS 1907

16

Colorado Springs Homebuyer

ColoradoVALender.com