It may be a good idea to finance closing costs, including pre-paid interest, taxes and other costs. What does that even mean to "finance closing costs?"

It's possible you have built up some equity in your home (this means you owe less than the home's market value). You can refinance to "cash-out" some equity. You can use this money in a variety of ways -- usually any way you want! For example, you can pay off or pay down the balances on your credit cards or other debt, make improvements to your home, pay for your education or someone else's. You can pay for anything you might want to pay for...it's your money. If you incur costs when you refinance, they can often be rolled in to the new loan. This is called Financing Closing Costs.

There are sometimes third-party fees (such as an appraisal) or other costs to get a new mortgage. Examples are settlement costs, interest paid in advance (depending on which day of the month you close), reserves for escrow, or any prepayment penalty for your existing mortgage. Borrowers often choose to finance all or a portion of their closing costs in to the new loan.

It's important to be careful, because this isn't always possible, and that's where we help you. It's not always a good idea or even possible to borrow 100 percent of the value of your property. Occasionally there are circumstances where you can get 125 percent of the property's value.  LTV, or loan-to-value, is the basis of a most loan programs -- that, is the loan amount divided by the property value. The best deal may be borrowing 80 percent or less of your property's value. Usually the terms and rates on loans are lower when the LTV is lower, but not always. We verify all the options for you and present them for you to make an educated choice.

The important point to remember is that often you can reduce the out-of-pocket cost of refinancing by accepting a larger monthly mortgage payment. The correct way to make that decision is dependent on the property's value, the new loan amount, and personal choices. We hold your hand through those decisions, and arm you with good information to help you decide.

If you have had your mortgage for years, it's likely you have accumulated sufficient equity to cover your closing costs and have a loan balance that's lower than your original amount. You may also be able to get a better loan program based on an updated LTV (the V, for value, is probably higher now in that ratio because the home's worth more).

Some borrowers decide it's better for them to pay closing costs out-of-pocket. The funds don't typically come literally out of the borrower's pocket, but usually from savings, checking account, retirement fund, or money market account, etc. For those borrowers, they have determined that the less they borrow on the new loan, the lower their payment will be. We will help you to determine if this is the best option for you.

Our job is to get you the absolute best loan we can get you. We are at your beck and call, and work for you! Email or call us now and we can describe more what we do: (310) 623-2690 and toll free (800) 961-5166 (choose the first option).