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PostHeaderIcon Refinance Mortgage & Mortgage Borrow

Explaining a refinance morgage is simple; a refinance means to pay off an existing mortgage loan and take out a new mortgage loan with a lower interest rate. Refinance mortage is a way for a client to get lower interest rate, consolidate their debt, cash into their equity. To refinance a mortgage there are a few things that come into play. These are the borrower income must be able to support to the loan; meaning is debt to income ratios must be under a certain amount for the loan to go through. Another is that the value of the home must be there. To know if the value is their certified real estate appraiser must do an accurate appraisal of the property. This is an important in a refinance because the lenders want the LTV under a certain number. Also if a borrower want to cash out the LTV is very important. Also if a borrower refinances and doesn’t own more than 20 % of their will be PMI. PMI is private mortgage insurance which is by lender just in case the borrower defaults on the loan.

Mortgage borrow is the money a client borrows from a bank or a lender. How do banks or lenders know if you are eligible to get a loan? There are many factors; they go off your income, credit score and also how much debt you have. The debt is based on something called debt to income ratio (DTI). The DTI is broken down into the front end and the back end. The front end ratio is how much of the borrowers income goes towards the mortgage payment. On average you don’t want your total mortgage including interest, taxes and insurance to be more than 32% of your income. The backend ratio is the borrower’s gross income and what is required to pay all the debt combined. The DTI is a good indictor of how much your income can qualify for.

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