4 Benefits of Refinancing After a Home in Five Loan

While these loans are designed to help qualified home buyers get into a new home with reduced upfront costs with a non-repayable grant for up to 6% of their home’s value, they don’t necessarily offer the best interest rates. Here are some benefits to refinancing your Home in Five loan program.

Did you finance your new home through a Home in Five Loan? Did you know you could save money off your mortgage by refinancing your loan within 12 months?

Get a Better Interest Rate & Lower Payments

The Home in Five program in Arizona offers advantages to those struggling to come up with the large upfront costs of buying a home. The grant issued through the Industrial Development Authorities in certain counties in Arizona gives up to 6% for veterans and 5% for other home buyers that qualify for their upfront closing costs. However, although this can save money off the closing costs and down payment, the loans through this program are typically at higher interest rates.

By refinancing the original loan you received through the Home in Five program, you can take advantage of the lower interest rates available before they rise again. Over the life span of the loan, this can save you thousands of dollars in interest. In addition, with a lower interest rate your monthly mortgage payment can be reduced to help you manage your household budget. By lowering your interest, some other advantages can include:

  • Reduce your monthly expenses. If your monthly budget is tight, lower mortgage interest rates can free up some of your cash flow to save for emergencies or put toward higher interest debts.
  • Reduce the length of your loan. In some cases, refinancing at a lower interest rate can reduce the length of your loan while you still make the same monthly payment.
  • Build equity in your home quicker. With a lower interest rate, more of your mortgage payment is applied to the principle. This helps build your equity quicker, an advantage if you plan to sell your home in the next several years.

Simple Refinancing Process

Since you just financed your home in the last 12 months, the refinancing process can be simple and quick compared to applying for your original loan. Many of the hoops you needed to jump through to get the Home in Five loan will not be needed when you refinance. Some of these simpler processes include:

  • Streamlined paperwork. The paperwork for refinancing will not necessarily need to be as extensive as your original loan. All the information you needed to provide for the first loan will not necessarily be needed as refinancing is a different process.
  • No appraisal needed. Since you just had an appraisal performed in the last 12 months, another one is not needed for many refinancing loans. This saves on time and the cost of securing a new loan.
  • Quick closing. Unlike your first loan, the closing process on a refinance will not take as long. The extended delays put in place for buyers or sellers to change their minds are not needed since the home is not changing owners.

Keep the Home in Five Grant

There are no stipulations that you must stay on your original loan to keep the grant your received from your Home in Five loan. The money given to you through your county’s IDA does not need to be repaid since it is a grant, not a loan. This means you get the advantage of receiving a home at a lower price after the grant was applied but can still reap the rewards of a lower interest loan.

Qualify for No Closing Costs

In some cases, you could qualify to have the closing costs waived on your refinancing loan. This adds more money to the overall savings from a lower interest rate and payments. However, even if you don’t qualify for the “no closing costs” option, the closing costs are usually much less than the money you will save, both off the interest over the life of the loan and the reduction in your monthly mortgage payment. The closing costs can usually be added onto the cost of the loan, meaning no out-of-pocket expense for you.

For most homeowners that qualified for the Home in Five program, refinancing within the first year can reap many of these benefits. At Galaxy Lending Group, we are specialists in helping those with Home in Five loans get a better interest rate quickly through our streamlined refinancing process. Many of our clients even qualify for our “no closing costs” option. Call one of our expert refinancing experts today to learn how you can save money by getting a new loan through us!