Refinancing 101

REFINANCING 101BROUGHT TO YOU BY THE ZING BLOG

Here, we’ll teach you the advantages of refinancing and give you a run-through of several

home loan options. If you’re looking for help in making an educated decision on refinancing

your mortgage, you’re in the right place. Our goal is to arm you with the knowledge

you need to achieve your personal financial goals.

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REFINANCING 101

TABLE OF CONTENTS

Prep School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Why Refinance?

Do the Math . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Equity + You = Power

Do Your Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Go Bigger or Go Home?

Study Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The Short Course in Home Loan Options

Learning from Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Case Studies in Refinancing as the Solution to Financial Hurdles

Never Stop Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Count on Quicken Loans for Life

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Your Mortgage Interest Rate Is Higher than the Current Market Interest RateEven a small reduction in your interest rate could save

you a lot of money in the long run. A refinance can help

you ensure you’re getting the lowest interest rate possible.

The result? More money in your pocket, for you and

your family.

You’re Planning to Stay in Your Home for Several YearsThere’s no better time than right now to evaluate the type

of home loan you have. When you know you’re going

to stay put for several years, refinancing is a great step

toward setting long-term goals.

You Want to Pay Off Your Mortgage SoonerWhen rates fall, you could refinance to a lower rate and a

shorter term, helping you pay off your mortgage sooner.

You Have an Adjustable Rate Mortgage and You Want to Lock In a Fixed RateIf your payments are already fluctuating, refinancing

to a fixed-rate mortgage keeps your payments steady.

Your rate will stay constant in a rising-rate environment.

You Have Other Debt You Need to ReduceDo you have credit card debt, student loans, car loans

or any other high-interest debt? A cash-out refinance could

help you reduce or eliminate your debt. Debt consolidation

is one of the most popular reasons people refinance.

You Want to Make Home ImprovementsWould your home benefit from a new kitchen, new windows

or an addition? A cash-out refinance is one of the most

affordable ways you can fund home improvements.

You Have College Tuition to PayRefinancing with a cash-out option can help you or your

loved ones reach their educational goals as well. Whether

you’re returning to school or you’re paying for your child’s

college tuition, refinancing could help make it happen.

Talk to your tax advisor when paying for tuition, because

there can even be a tax-deduction benefit for taking

the cash-out option.

Your Credit Score Has ImprovedIf you’ve worked hard to improve your financial situation

by paying off credit accounts that were weighing down

your score, it’s time to call your Home Loan Expert. You

could qualify for a much lower interest rate if your score

has substantially improved.

PREP SCHOOL: WHY REFINANCE?

Your life changes, and your mortgage should change with it. Whether you’re moving, staying

put, have a lot of expenses, or experience a change in finances, making sure your home loan

is keeping up with you is of the utmost importance. Here are the most common reasons

homeowners choose to refinance.



DO THE MATH: EQUITY + YOU = POWER

How refinancing to use the equity in your home can work for you.

Home Equity, DefinedHome equity is the monetary difference between the value of your home and how much you have left to pay on your mortgage. For example, if your home is valued at $200,000 and you owe $150,000 on your mortgage, you have $50,000 of equity in your home.

Straight to the Head of the Class: Getting the Home Equity AdvantageThe equity you have in your home can be a powerful tool to help you achieve your financial goals. Home equity can help you get through a rough financial patch, pay for home improvements, fund college tuition, eliminate high-interest debt — whatever fits your needs. Using home equity as a means of payment usually means the interest rate is lower than with most credit cards. What’s more, the interest accrued on a cash-out refinance can be tax deductible.

Refinancing Your Mortgage with Cash OutIf the value of your home increased in the time since you purchased it, you can refinance at its current value. You’ll receive a lump sum of cash equal to the difference in equity.

Benefits• Lower mortgage payments

• Access cash to pay off high-interest debt

• You could shorten the term of your home loan

• Lower interest rate

Extra Credit

Get in control of your finances. If you have debt or upcoming debt, write down exactly what expenses you need to cover and when you have to pay them. It’s easier to gain control of your debt if you know exactly what you’re dealing with.



DO YOUR RESEARCH: GO BIGGER OR GO HOME?

You own a home and your family needs more space. Now what? Do you add on to your

current home or do you move to a larger one? These quick tips can help you decide.

What to ConsiderIf you love your neighborhood, the school system is great, and everything you need is right nearby, consider remodeling. If you do, consider the costs associated with a remodel and what your neighborhood will approve. It’s also important to find a contractor you can trust.

Raise Your HandAsk your contractor if your home’s style and structure are suited for an addition. Check with your local authorities about land use and zoning regulations as well.

Is It Worth It?Next, add up the potential costs of both options. Your Quicken Loans Home Loan Expert can help you crunch the numbers. Let him or her know what the estimated cost of your remodel will be. By adding the cost of your remodel to your estimated closing costs, and recalculating your cash-out refinance at the current interest rate, you’ll have a good idea of your projected monthly mortgage payment.

In comparison, you could sell your current home and use the proceeds to pay the upfront costs of a larger home. Your Home Loan Expert can also help you calculate the cost of making the move. Have a ballpark price range in mind for an accurate comparison and don’t forget to factor in moving costs, closing costs and real estate agent costs, when applicable. The cost of moving can be around eight to 10 percent of your current home’s value, according to the American Homeowners Foundation. And consider these costs wouldn’t be included as part of a remodeling project.

Extra Credit

Crunch your numbers! Don’t guesstimate when it comes to big financial decisions. You can save a lot of money by pricing out additions instead of just picking up and moving. If you need help with the numbers, your Quicken Loans Home Loan Expert can help you find out what’s right for you.



STUDY GUIDE: THE SHORT COURSE IN HOME LOAN OPTIONSQuicken Loans knows everyone has a specific financial situation. That’s why we offer so many flexible loan options. Take the YOURgageSM, for example. With the YOURgage, you get the flexibility to choose the term of your loan, anywhere from 8–30 years, to fit your needs.

Whether you’re a first-time home buyer, looking for a way to lower your monthly payment, or looking to pay off some debt, your Quicken Loans Home Loan Expert is ready to help you find the right mortgage for you. Here are a few of the loan options and term lengths you might talk about when you call us:

Long-Term Mortgages: 20–30-Year Fixed-Rate MortgagesGetting a mortgage term that’s 20 years or longer is a great option if you plan to stay in your home for 10 or more years, and you expect your income will stay the same. With a long-term, fixed-rate home loan, your payments will never change and your interest rate will stay constant over the life of the loan. The downside? You’ll be paying interest over a longer period of time, which means you may end up paying more over the life of the loan. If you choose a long-term mortgage, you’ll also want to pay close attention to changing interest rates in the home loan market. If interest rates drop below your fixed rate, you’ll want to refinance to take advantage of them.

Shorter-Term Mortgages: 8–15-Year Fixed-Rate MortgagesIf paying off your mortgage quickly is a priority for you, a shorter-term mortgage could be the right choice. The advantage? You’ll pay off your mortgage in less time, and you’ll typically pay less interest because your term is shorter. Most importantly, you’ll build more equity in a shorter period of time, because more of your monthly payment goes toward paying off your loan’s principal. And of course, your fixed interest rate and payment amount will never change over the life of the loan. Talk to your tax advisor about whether a shorter-term mortgage would affect your deductions.



LEARNING FROM OTHERS: CASE STUDIES IN REFINANCING AS THE SOLUTION TO FINANCIAL HURDLES

Case Study #1: Credit CrunchPaul and Karen were in a short-term financial crunch. They were having a hard time paying their bills every month and meeting deadlines. They felt like they had a lot of credit cards to keep track of and were only able to pay the minimum payment on most of them.

SOLUTION: Paul and Karen consolidated their debt by refinancing and lowering their mortgage payment. Now they’re able to pay off the balances on their credit cards much faster.

Case Study #3: Tuition FruitionWith their daughter starting college in the fall, Deon and April needed to pay tuition throughout the school year.

SOLUTION: Deon and April refinanced their mortgage with cash out. They used the cash they took out to make large tuition payments every semester. Because the interest rate on the cash they’d taken was lower than using a credit card, they paid less in interest.

Case Study #2: Uneven Income, Smooth RefiCari is a successful equipment sales agent, but her income is cyclical. She has an influx of cash during some months, but other months are too slow to make ends meet.

SOLUTION: Cari refinanced to 30-year fixed-rate mortgage, which helps her manage the peaks and valleys of her finances. When her commission income is up, she pays down the principal of her loan by paying more than the minimum monthly payment. When her income is down, she continues to make the minimum payment, but since it’s a 30-year mortgage, her payment is spread over the 30-year term of her loan, making the payments as low as possible. She can now count on a low, fixed monthly payment when sales are down, and the flexibility to pay down her principal when sales are great.



NEVER STOP LEARNING: COUNT ON QUICKEN LOANS FOR LIFEYour Quicken Loans Home Loan Expert is not only here to help you manage your home financing today,

but also to help you to achieve long-term goals. After all, life changes and your mortgage should change

with it. Quicken Loans keeps you informed of industry trends and new home financing options long after

your closing. We’re always tracking current mortgage rates, and we alert you if market moves could benefit

you in any way.

If you ever have home financing questions, contact your Home Loan Expert. From your first call to closing

and beyond, Quicken Loans gives you outstanding client service for the life of your loan. And if you had

a great experience with us, tell someone you know. A referral is the best compliment we could ever receive.

In fact, nine out of 10 clients would refer us to their friends and family.* We’d be glad if you would, too.




Quicken Loans is an Equal Housing Lender. Quicken Loans Inc. is a licensed mortgage lender. Arizona: Quicken Loans Inc., 16425 North Pima, Suite 200, Scottsdale, AZ 85260, Mortgage Banker License #BK-0902939; Arkansas: Quicken Loans Inc., 1050 Woodward Avenue, Detroit, MI 48226-1906, (888) 474-0404; California: Licensed by Department of Corporations, CA Residential Mortgage Lending Act; Colorado: Quicken Loans Inc., NMLS #3030, (888) 474-0404, Regulated by the Division of Real Estate; Georgia: Residential Mortgage Licensee (#11704) – 1050 Woodward Avenue, Detroit, MI 48226-1906; Illinois: Residential Mortgage Licensee #4127 – Department of Financial and Professional Regulation, 1050 Woodward Avenue, Detroit, MI 48226-1906; Maine: Quicken Loans Inc., Supervised Lender License NMLS #3030; Massachusetts: Quicken Loans Inc., Mortgage Lender License #ML-3030; Minnesota: not an offer for a rate lock agreement; Mississippi: Licensed by the Mississippi Department of Banking and Consumer Finance; Nevada: Quicken Loans, Inc. 8860 S. Maryland Parkway, Las Vegas, NV 89123, License #356738; New Hampshire: Licensed by the NH Banking Department, #6743MB; New Jersey: Licensed Mortgage Banker – NJ Department of Banking, first (and/or second) mortgages only; New York: Licensed Mortgage Banker – NYS Banking Department; Oregon: Quicken Loans Inc. – License # ML-1387; Pennsylvania: Licensed as a first Mortgage Banker by the Department of Banking and licensed pursuant to the Pennsylvania Secondary Mortgage Loan Act; Rhode Island: Licensed Lender; Texas: Quicken Loans Inc., 1050 Woodward Ave, Detroit, MI 48226; Virginia: Quicken Loans Inc., NMLS ID #3030 (www.nmlsconsumeraccess.org); Washington – Consumer Loan Company License CL-3030. Quicken Loans Nationwide Mortgage Licensing System #3030. Rates subject to change. Restrictions may apply.

© 2015 Quicken Loans Inc., All rights reserved. Lending services provided by Quicken Loans Inc., a subsidiary of Rock Holdings Inc. “Quicken Loans” is a registered service mark of Intuit Inc., used under license.

* Based upon a Quicken Loans market research questionnaire of clients whose loans closed between 1/1/2014 and 10/30/2014.


Refinancing 101

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