AZ refi refers to mortgage refinancing in the state of Arizona. Many residents are entering into mortgage refinance in order to reduce interest and monthly loan installments. This is particularly true for real estate investors holding rental properties.
AZ refi allows investors to extend the terms of their note and reduce loan payments. Arizona has been hit hard by foreclosure and many previous homeowners are seeking rental properties. In order to compete in a declining market, investors find they must reduce rental rates to attract tenants. Investors turn to mortgage refinance to prevent negative cash flow.
Arizona homeowners struggling to make ends meet might find refinancing mortgages can help them recover from economic turmoil. Many Arizona residents have lost their jobs or taken pay cuts in order to keep their job. Mortgage refinance can lighten their financial load and help them get back on track or prevent foreclosure.
It is important to realize that refinancing mortgages costs money. Borrowers are required to undergo the loan application process and pay fees normally associated with buying a house. Refinance rates can include loan application and origination fees, points, legal fees, and closing costs.
Depending on the age of the home loan, Arizona mortgage lenders may require borrowers to provide a current property appraisal or obtain a home inspection. Most lenders accept broker price opinion appraisals which are less expensive than traditional property appraisals.
Borrowers often turn to their home loan service provider when refinancing. However, it is smart to comparison shop to determine which lenders offer the best AZ refi rates. As little as 1/4-percent interest reduction can save borrowers thousands of dollars over the term of the loan.
Arizona homeowners should strive to reduce interest rates by at least 2-percent. At minimum, interest should be reduced by 1-percent to make mortgage refinancing feasible. If borrowers cannot obtain these levels of reduced interest, refinancing will cost them more than they will save.
Another factor to consider when entering into AZ refi is how much home equity is available. Home equity refers to the difference between the appraised property value and loan balance. For example, a house is valued at $250,000 and the loan balance is $175,000, giving borrowers $75,000 in equity. In order to refinance, banks typically require borrowers to have a minimum of 5-percent home equity.
Last, but not least, borrowers should obtain a current copy of their credit report and their FICO score. In today's economy, most lenders require borrowers to have a FICO score of at least 720. Banks offer prime interest rates to borrowers with exceptional credit.
Although prime rates fluctuate daily, the current prime rate hovers around 3.25-percent, while fixed rate of interest hovers around 4.85-percent. As you can see, having exceptional credit offers more benefits than just being able to qualify for a loan.
It is crucial to do your homework and calculate the true cost of AZ refi. While it may sound tempting to obtain a new loan with a reduced payment, refinancing costs can amount to several thousand dollars. Should you decide to refinance, your lender will provide a Good Faith Estimate which outlines anticipated refinance rates. Obtaining this information does not require borrowers to move forward with refinancing if costs are too high.
We invite you to learn more about refinancing home loans in Arizona and throughout the country. Our mortgage refi library offers information and resources to help visitors make informed choices. New articles are published weekly, so take a moment to subscribe to our mailing list to be notified when new information is available.