Obtaining a self-employed refinance mortgage in Arizona
By Justin Hunter
Chances are that when you originally signed on your
first mortgage you did your homework and chose a loan
that was best for you and your family’s situation.
After five or more years, your financial situation or
the changing prime interest rate may leave you wanting
to change your monthly mortgage payment, so you refinance.
However, if you are self-employed there are specific
things you must think about before you refinance that
may be different in certain states.
The article, “Getting a Self-employed Arizona
Mortgage Refinance,” written by J. Hale and posted
on ezinearticles.com provides the key components to
ponder before completing an Arizona self-employed refinance.
“Deciding whether or not to refinance your home
mortgage can be a decision fraught with worry. This
only increases when you are self-employed and seeking
an Arizona mortgage refinance. Because of the nature
of self-employment, any change in financial circumstances
can add stress to the household finances. However, when
carefully approached, a mortgage refinance can be a
money-saving opportunity for the self-employed.”
One of the first things you will want to determine is
whether you want to convert your mortgage from having
an adjustable rate to a fixed rate. An adjustable rate
mortgage (ARM)
has many setbacks.
Self-employed individuals often lack yet are in constant
search of stability. An ARM is very unstable as a result
of its changing monthly payments. When the prime interest
rate changes, so does the interest rate included in
your monthly payment. When you refinance to a fixed
rate mortgage, you will know what your required minimum
monthly payment will always be.
Next, you have to determine your break-even point.
“This is a way of determining whether refinancing
your mortgage would actually benefit you. You figure
out how long you would have to be in the home
to break even: If the cost of refinancing your home
is $3,000, and you save $80 per month, your break even
is at about 37.5 months (or 38 months). This means it
would take three years and two months to start realizing
savings. Will you be in the house past that point? If
so, it is worth the refinance.”
Getting out of debt as quickly as possible is a primary
goal for many mortgage borrowers and is even more important
if you are self-employed since you already have enough
undetermined finances looming over you.
“Refinancing your mortgage from a 30-year term
to a shorter term can save you a great deal of money
in the long run, even if you pay more now. Say you pay
$900 a month on your mortgage now, and refinancing would
bump it up to $1150. If you are five years into your
term, you will still make 300 more payments amounting
to $270,000. With 15 years to go, you will make 180
payments of $1150 for a total of $207,000. That’s
an overall savings of $63,000.” Of course the
big question to ask yourself would now be: Are you comfortable
paying an extra $250 per month?
You should also be aware that the documentation needed
to conduct a self-employed refinancing in Arizona will
be slightly different than if you were going to do just
a basic mortgage refinance.
Make sure to have your current
mortgage statement along with a “year-to-date
profit and loss statement.” You will also need
your two most recent tax returns, homeowner’s
insurance information and all statements for liquid
accounts including savings, checking, etc.
Refinancing your mortgage will help you either save
more money monthly or will allow you to shorten you
mortgage term. Either way, some of your financial
stress will be reduced once you refinance.
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