Refinance

Home Loans Frequently Asked Questions

expand +Are points tax-deductible?
Refinance loan points are only tax-deductible over the term of the loan. Contact your tax adviser for specific tax rules regarding points.
expand +Can I refinance a vacation home?
Yes. We have programs to help borrowers purchase or refinance a second home. Apply online or call us toll-free at 1.888.321.FUND to speak with an experienced loan consultant.
expand +Can I finance an investment property?
Yes. We provide several ways to help you purchase or refinance an investment property. Apply online or call us toll-free at 1.888.321.FUND to speak with an experienced loan consultant.
expand +Can I get a loan if I’m not a U.S. citizen or if I live outside the country?
Yes. As long as the property you are buying or refinancing is in the United States, you can apply for a loan either on the phone or online. We offer special programs for foreign nationals and resident aliens from Canada and Mexico working under NAFTA for FHA, fixed rate and adjustable-rate loans.
expand +Do I have to buy points?
Many mortgages are available without points. Buying points allows you to buy down the interest rate on a mortgage.
expand +Do I need to get an appraisal when I refinance?
Yes. However, if you’re a current IndyMac Mortgage Services customer, you may not be required to get an appraisal. Call your loan consultant for details.
expand +How do I apply for a refinance loan?
Call us toll-free at 1.888.321.FUND or get prequalified online.
expand +How do points affect refinancing?
On a refinance transaction, points can usually be included in the loan amount, rather than being paid out of pocket. If the refinance is a cash-out, the points will typically lower the total cash-out amount the borrower will receive.
expand +How does a refinance closing work?
A refinance closing is conducted the same way as an original loan closing. Your loan consultant will send you a list of documents to bring at the closing. You will also receive an Estimated Settlement Statement for the amount (if any) to bring in the form of a cashier’s check and an outline of how the funds from your new loan will be disbursed. If the refinance is for a primary residence, the loan won’t actually fund until three business days after signing the loan documents, due to the borrower’s right of rescission.
expand +How many points should I buy?
The amount of points you should buy usually depends on how long you plan to stay in your home. The longer your mortgage term, the more you'll benefit from having a lower rate. If you don't plan on owning your home for very long, buying points may not be your best option.

A break-even analysis may be useful in determining your decision about purchasing points. Calculate the number of months it will take for the amount you save each month to equal (break even) the up-front cost of the points.
expand +How much does it cost to refinance?
The closing costs, including lender fees, are typically 1% to 2% of the loan amount. In addition, you may choose to pay points in order to get a lower rate, or accept a higher rate in exchange for having the lender pay some or all of your closing costs.
expand +How much financial documentation will I need?
When you apply for a loan, you will receive a list of the required documentation. Typical documentation includes paystubs, W2 forms, tax returns and bank statements. Other documentation may be required.
expand +What are points?
Also known as discount points, a point is calculated as a percentage of the loan amount. For example, 1 point charged for a $100,000 loan would be $1000, and ½ point for the same loan would be $500. While points are part of closing costs, they are not considered loan fees.
expand +What are the components of a monthly payment?

Your monthly payment is the sum of four factors, commonly referred to as PITI (Principal, Interest, Taxes, Insurance). You may also be required to pay PMI (Private Mortgage Insurance) on a monthly basis.

  • Principal - The amount applied to the loan balance.
  • Interest - The charge paid for borrowing money.
  • Taxes - Property taxes, which may also be paid separately to your local government.
  • Insurance - Lenders require you to maintain adequate insurance to protect your home. This may also be paid separately.
  • PMI – Insurance that protects your lender against some or most of the losses that would occur if you default on your loan.
expand +What criteria do lenders use when approving a loan?
Lenders look at three criteria: Credit, Capacity and Collateral.

CREDIT

To determine your credit risk, the lender will look at previous mortgage payment history, rent payment history, credit card use and installment debt payment history. A history of regular, on-time payments will demonstrate integrity and creditworthiness to a lender.

CAPACITY

The lender will weigh your housing expenses and total debt against your monthly income to determine your ability to repay a loan. The lender will also need proof that you have cash available for a down payment and closing costs by verifying funds from sources such as bank accounts, stocks, bonds, mutual funds, sale of an existing home or gifts from family members.

COLLATERAL

Collateral refers to the borrower’s pledge of property to the lender to secure repayment of the loan. Thus, the lender will need to know the value of the property.
expand +What do points do?
Points allow a borrower to buy the loan interest rate up or down. Generally, the lower the interest rate, the more points will need to be purchased. Buying points is an optional loan feature and can be considered a “discount” since they reduce the rate over the entire term of the loan. Points are paid at closing, and the incurring lower interest rate reduces the monthly loan payment.
expand +What if I can’t supply the necessary documentation for a loan?
Speak to your personal loan consultant for more information about options that allow you to provide supplementary documentation.
expand +What is an impound or escrow account?
Instead of paying large, lump sums to cover the costs of homeowner’s insurance and property taxes, these payments are divided into installments which are paid to the lender monthly along with the loan principal and interest. The lender holds the money in an impound/escrow account and pays the insurance and taxes from the account when they are due.

Impound/escrow accounts may be optional, or they may be required by the lender, depending on the property’s location, the size of the loan in relation to the property’s value, and the type of loan.
expand +What is homeowner’s insurance?
Homeowner’s insurance is designed to protect your home. It may be referred to as hazard insurance or fire insurance. While the lender requires this coverage, you determine which insurance company will carry the policy. Homeowner’s insurance premiums are either paid directly to the insurance agency or by your lender through an impound/escrow account.
expand +What is Private Mortgage Insurance (PMI) and why would I need it?
Generally, lenders will require you to purchase PMI if your loan is greater than 80% of the property’s value to insure its investment in the property against the possibility of default. An estimate of the amount of PMI you will owe is sent to you within three days of submitting your loan application.

PMI premium is paid monthly along with the mortgage payment. As your equity increases, you may qualify to have PMI removed. Loans can be financed such that PMI is not required, for example, providing a down payment of at least 20%.
expand +Why should I refinance?

The following includes some of the benefits of refinancing your current home loan:

  • Lower your monthly payments by refinancing at a lower interest rate.
  • Cash-out a portion of your equity with a new loan for a larger balance than your current loan.
  • Switch from an ARM to the stability of a fixed rate mortgage.
  • Consolidate debt by refinancing a higher loan balance and cashing out on the difference.
  • Switch to a shorter loan repayment term.

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