And When Does it Pay to Do So?
Why Should I Renance
William Francis Galvin
e Massachusetts Secretary of the Commonwealth
updated 3/6/15
William Francis Galvin
Secretary of the Commonwealth
Registry of Deeds Division
McCormack Building
One Ashburton Place, Room 1710
Boston, MA 02108-1512
617-878-3152
Fax: 617-723-1372
E-mail: [email protected]
Website: www.sec.state.ma.us/rod
Dear Homeowner,
is pamphlet has been designed to answer some of the basic
questions asked every day pertaining to renancing your home. is
information is not designed to provide any legal advice or address
the practical eect of renancing. As in all areas of the law, to fully
understand your rights, you should consult an attorney of your
choice.
If you have any further questions or concerns, please do not hesitate
to contact the Registry of Deeds oce directly. We are here to serve
you.
Sincerely,
William Francis Galvin
Secretary of the Commonwealth
There are several reasons to renance your home including:
• To lower the interest rate on your mortgage, and therefore
reducing your monthly payments and overall cost due to
changes in market conditions or improvement in your credit
score;
• To reduce the term or length of your loan – doing so can save
you thousands of dollars in interest;
• To provide a means of consolidating your debt.
All of these are excellent reasons to pursue renancing, but several
issues should be considered rst.
Renancing is similar to the process you encountered when you closed
on your rst mortgage. At times it requires an application, credit
check, new survey and title search, plot plans, homeowner’s insurance,
possible prepayment penalties, as well as an appraisal and inspection
fees. As you know, this process can be quite lengthy and expensive.
As a rule of thumb, it pays to renance if you can get an interest
rate at least two percentage points lower than what you are currently
paying. However, every situation is dierent. Some lenders are oering
reduced fees or no points. Asking yourself a few questions may help
you determine if you can save money:
• How much can I lower my current monthly payment?
• How long do I plan to stay in the house after I renance?
• How much will I pay in renancing costs?
Next, gure out what you still owe on the house, how much you’re
paying each month, and how much you initially paid for the house.
Itemize all the expenses of the renance and estimate your new
monthly payments. With this, you can gure out where you break
even and when you begin saving money.
Since your home may be your most valuable asset, you want to be
vigilant when choosing a lender or broker and specic mortgage terms.
Why Should I Renance? • 1
You may even decide to combine a primary mortgage and second
mortgage into a new loan.
Renancing will force you to reconsider lowering your interest rate,
adjusting the length of your mortgage, changing from an adjustable-
rate mortgage (ARM) to a xed-rate mortgage, getting an ARM
with better terms, and getting cash out from the equity built up in
your home. Keep in mind that some lenders may also oer ‘no-cost’
renancing to avoid paying up-front fees. However, these renancing
fees could later be deferred to higher interest rates or rolled into or
nanced into your loan. Always ask the lender to explain all the fees
and penalties associated with a no-cost loan.
is information is not designed to provide any legal advice. We
strongly urge homeowners to consult an attorney of your choice to
fully understand your rights.
Visit our website at www.sec.state.ma.us/rod/rodre/reidx.htm
and use the Mortgage Renancing Calculator as a guide to help you
through this process.
2 • Why Should I Renance?
Shopping for a New Loan
When shopping for a new loan talk to your current lender, compare
loans before deciding
1
, get information in writing, use newspapers
and the Internet to shop around, and be careful with advertisements
that entice you with low initial interest rates and monthly payments.
For additional information, please consult the appropriate Regulatory
Agency listed below.
1
Lenders are required by federal law to provide a “good faith estimate” within three days
of receiving your loan application. You can also ask for the HUD-1 settlement cost form
one day before you are due to sign the nal documents.
Federal Reserve Consumer Help
P.O. Box 1200
Minneapolis, MN 55480
(888) 851-1920
www.federalreserveconsumerhelp.gov
Consumer Financial Protection Bureau
(CFPB)
P.O. Box 4503
Iowa City, IA 52244
(855) 411-2372
www.consumernance.gov
Oce of the Comptroller of the Currency
(OCC)
99 Summer Street
Suite 1400
Boston, MA 02110
(800) 613-6743
www.occ.treas.gov
Federal Deposit Insurance Corporation
(FDIC)
Consumer Response Center
1100 Walnut Street, Box #11
Kansas City, MO 64106
(877) 275-3342
www.fdic.gov
www.fdic.gov/consumers
Federal Housing Finance Agency (FHFA)
Consumer Communications
Constitution Center
400 7th Street, S.W.
Washington, DC 20024
(202) 649-3800
www.fhfa.gov
National Credit Union Administration
(NCUA)
Consumer Assistance
1775 Duke Street
Alexandria, VA 22314-3428
(800) 755-1030
www.ncua.gov
www.mycreditunion.gov
Federal Trade Commission (FTC)
Consumer Response Center
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
(877) 382-4357
www.ftc.gov
www.ftc.gov/bcp
Small Business Administration (SBA)
Consumer Aairs
409 3rd Street, S.W.
Washington, DC 20416
(800) 827-5722
www.sba.gov
U.S. Department of Justice (DOJ)
Criminal Division
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
(202) 514-2000
www.justice.gov/criminal
Department of Housing and Urban
Development (HUD)
Oce of Fair Housing/Equal Opportunity
451 7th Street, S.W.
Washington, DC 20410
(800) 827-5005
www.hud.gov/complaints
Information provided by the Federal Reserve Board’s “A Consumer’s Guide to Mortgage
Renancings,” August 27, 2008.
Why Should I Renance? • 3
William Francis Galvin
Secretary of the Commonwealth
Registry of Deeds Division
McCormack Building
One Ashburton Place, Room 1710
Boston, MA 02108-1512