Tag: mortgage refinance

Should I Refinance My Mortgage?

There are several reason why you might benefit from refinancing your home. Many people choose to refinance to simply lower their interest rate while others have goals of doing home improvements or debt consolidation.  Depending on your financial goals, refinancing your mortgage may be a smart choice.

  • Refinance to a lower rate
  • Refinance to a shorter mortgage term
  • Cash Out Refinance
  • Refinance to Drop PMI
  • Debt Consolidation Refinance
  • Refinance a FHA loan to a Conventional Loan
  • Refinance to a Reverse Mortgage

Rate and Term Refinance Loans

A rate and term refinance loan is a mortgage refinance that allows you to change the rate and the term for your mortgage. With this loan type you typically cannot get cash back at the closing.  This the perfect loan type to reduce your interest rate or to pay off your loan more quickly.

Refinancing to a Lower Interest Rate

Refinancing your mortgage to a lower interest rate is the most common type of refinance loan.  The rule of thumb is that if you can recover the costs associated with refinancing by the monthly savings in 3-5 years or less then it may make sense to refinance your mortgage.

With mortgage rates remaining low, there is no reason to pay a high interest rate on your home loan.  Many refinance loans do not even require a home appraisal and may have little to no closing costs.

Refinancing your home loan to drop your interest rate is a no-brainer if you plan on being in your home for the next few years and the monthly savings is enough to make sense for your situation. Ask a loan officer to help determine the time to recover your costs by doing a break even analysis.

Pay Off your Mortgage Quickly by Refinancing to a Shorter Term

If retirement age is just around the corner, you may have a financial goal of paying off your mortgage in the next 15 years. If you are currently in a 30 year mortgage then you may be able to drop your interest rate by going with a 15 year loan term. With the lower interest rates of 15 year mortgages your mortgage payment may stay the same or only increase a slight amount.

The benefit of refinancing to a shorter term mortgage is that your loan would be paid off in a fraction of the time saving you a large amount in interest. You do the math. If you currently pay $1,000 per month for your mortgage but your loan is paid off, that is $12,000 more per year in your pocket! If you save 10 years of payments that adds up to $120,000 which changes your financial picture.

Use our Mortgage Amortization Calculator to estimate the total mortgage interest paid on your loan.

Cash out Refinance Loans

A cash out refinance loan is a mortgage refinance that allows a homeowner to receive cash back from the equity in their home.  Once a homeowner has owned their home for a long enough period to accumulate equity by the increased property values they may have value in their home called home equity.

How can a Homeowner Access the Equity in their Home

To access the equity a homeowner could sell their home and receive the cash proceeds after paying off any mortgages. If a home owner wants to keep their home and get access the equity they have then a cashout refinance may be the perfect fit.

Limitations for Cashout Refinance Loans

Typically cash out refinance loans are limited at 80% loan to value (LTV) for conventional loan or 85% loan to value for FHA however a military veteran can access up to 100% of their homes equity with a cash out refinance.

Debt Consolidation Refinance Loans

A debt consolidation refinance is when a homeowner uses the equity in their home to pay off other debts by refinancing the balance into their mortgage.  This type of mortgage can be used to pay off high interest rate credit cards, personal loans, auto loans or even student loans.  Others may use a debt consolidation refinance loan to pay off IRS tax debt or liens against their property.

The benefit of a debt consolidation refinance would be to lower the overall interest rate and monthly payments of a homeowners debts.  For example if they currently  $1,000 for their mortgage, $300 per month for a credit card and $500 per month for their car loan, they may be able to consolidate their debts into a mortgage and have a payment of $1250 per month. In this example they would bring their monthly payments down from $1,800 per month to $1250 per month for an overall savings of $550 per month. This savings adds up to $6,600 per year!

Refinancing to Remove Private Mortgage Insurance (PMI)

Many homeowners refinance their mortgage to drop PMI, or Private Mortgage Insurance, from their payments. This can be done if you have 80% equity in your home.

Private Mortgage Insurance (PMI) is basically foreclosure insurance that protects your mortgage company in case you do not make your payments. There is not benefit to you as a homeowner having PMI other than it may allow you to initially purchase without a large down payment.

Refinancing from an FHA loan to a Conventional Mortgage

If you currently have an FHA loan then you most likely pay mortgage insurance. FHA requires mortgage insurance even if you were to purchase and place a 20% down payment. With current FHA guidelines, the mortgage insurance never drops off for most FHA loans. For this reason, it may make sense to refinance from a FHA loan to a Conventional Mortgage with no PMI.

Use our Conventional Mortgage Calculator to estimate your new mortgage payment.

How to Drop PMI from your Mortgage

You may need to pay for an appraisal to document your home’s new value as part of the refinance process.  For example, if your home appraises at $100,000 and you only ow $80,000 then you would have $20,000 in home equity which equals 20%.  By refinancing your mortgage with a conventional home loan you would not have PMI on your new mortgage.

Benefits of Dropping PMI from your Mortgage

Dropping PMI could save you hundreds of dollars off your monthly mortgage payments. If you have been aggressively paying down your mortgage balance or if you believe homes in your area have jumped up significantly in value, then speak with a loan officer and review options to refinance and drop PMI from your mortgage.

Other Reasons to Refinance your Mortgage

There are several reasons to refinance your mortgage as shown above. Others may have additional reasons to refinance such as removing a co-signer, changing your loan servicer that has poor customer service, paying down the principal and refinancing to drop the monthly payments, refinancing to a Reverse Mortgage etc. The list goes on!

To review all the benefits of mortgage refinance programs we suggest that you speak with a licensed loan officer. They will help to determine your financial goals and provide information on refinance options to accomplish your goals. Riverbank Loan officers are standing by to help at 800-555-2098 or you may request information by completing the short form below.

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Are Adjustable Rate Mortgages Still Too Risky?

I know what you’re thinking: Why would I ever want to get an Adjustable Rate Mortgage? Isn’t it too risky? Sure, it could be. But there are actually some circumstances in which it might be the best option. Let’s look at the pros and cons of ARMs, and you can decide whether it’s too risky or just the right fit for you.

Benefits of ARM Loans

When you choose an ARM, your mortgage rates and payments start out lower at the beginning of your loan and have the potential to gradually increase over time.  Because of the lower payment at the outset, you could qualify for a larger or more expensive home than you originally thought possible.

If you are planning on selling your home in a few years, an ARM may be your best option because you can lock in your low payment at a fixed rate for three or five years. Having that low payment may save you thousands of dollars more than you would with a traditional fixed rate mortgage.

Let’s say your ARM monthly payment is $200 less than you’d pay had you gone with a traditional mortgage. If you decide to invest that $200 you’re saving, you could end up earning interest instead of paying interest on your monthly savings. 

Also, with an ARM, you never have to refinance your home. After the initial three or five years with the locked-in fixed rate, the interest rates could drop on their own without you having to pay closing costs and refinancing fees.

Downsides of ARM Loans

With an ARM, your mortgage rate typically fluctuates with the economy after the first three or five years, depending on what kind of ARM you choose. When the interest rate adjusts, so does your mortgage payment. Your payment may go up or down depending on the current rate environment at the time of your adjustment period. If rates go up, your mortgage payment may rise accordingly. For your protection, Adjustable Rate Mortgages have built in Caps which will limit the potential increases in the rates.

With one type of ARM, a negative amortization loan, the minimum monthly mortgage payments may not include the full interest amount so they can be more affordable for borrowers. So, the unpaid interest gets tacked onto your principal balance. In this case, you’ll end up paying more on your overall mortgage — even if you make all your payments in time.

Generally, ARMs can be confusing. Thankfully, the Consumer Finance Protection Bureau has created a great Adjustable Rate Mortgage Resouce Book that explains the ins and outs of how they operate.

If an ARM still sounds too risky for you, you can always opt for an FHA, VA, USDA rural development loan, or conventional 15 to 30-year mortgage.

As long as you understand how it works and plan your finances accordingly, an ARM could be a great fit for you. Schedule an appointment with one of our mortgage professionals at (800) 555-2098 for more information or to find out which kind of loan best fits your needs.

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Brexit gives mortgage seekers the gift of low mortgage rates!

Brexit Lowers Mortgage Rates!Mortgage rates have dropped yet again in the wake of the Brexit (Britain voting to leave the European Union).  The world markets have been very volatile since the news broke early Friday morning. Financial instability brings lower mortgage rates. Now is the best time to buy a home or refinance your mortgage to a lower rates that we have seen in years.

At the start of 2016 average mortgage rates for a 30 year fixed rate mortgage hovered around 4.00%. Industry experts advised that rates would continue to climb as the Federal Reserve announced plans to increase their rates throughout 2016. The results have been quite the opposite with current mortgage rates hitting as low as 3.50% for prime borrowers.

June 2016 Mortgage Rates

What Do Low Mortgage Rates Mean for Home Buyers?

With mortgage rates near the lowest point in 3 years, home buyers are able to afford more house for the same payments. Here is an example from Riverbank’s Conventional Mortgage Calculator with a home buyer getting a loan of $250,000 to buy a home.

January 2016 with a 30 year fixed rate mortgage at 4.25% would give the home buyer a principal and interest payment of $1229.85.

June 2016 with a 30 year fixed rate mortgage at 3.5% would give the home buyer a principal and interest payment of $1122.61 which is a $107.24 per month savings.  For the same payment of $1229.85 a home buyer would be able to get a mortgage of $273,882. This increases their buying power by $23,882 for the same payment!

Why Refinance to a Lower Mortgage Rate?

There are several “rules of thumb” when it comes to refinancing your mortgage to a lower rate. Some say if you can drop your rate by ½ of a percent then it makes sense. Others say if you can do it with no costs then it makes sense. The true answer will be different for each individual circumstance.

The way to tell it if makes sense to refinance your mortgage is if you will save more money than the costs of getting a lower rate. For example if it costs $3000 in closing costs but you save $250 per month you will recover your costs in 12 months ($3000 / 12 = 12 months). In this example if you plan on keeping your home for at least 12 months, then anything after that would be money in your pocket.

Should I Refinance to a 15 Year Mortgage Term?

Many home owners are taking advantage of the low mortgage rates to pay off their mortgage faster without increasing their payment significantly. By refinancing to a 15 year mortgage you may save thousands of dollars in interest over the life of your loan. How is that for retiring early?

Here is an example of a home owner refinancing to a 15 year mortgage from a 30 year mortgage.

The homeowner has a $250,000 mortgage and is currently at 4.5% on a 30 year fixed rate. If he pays the minimum payment he will have paid $206,018.10 in mortgage interest. See Riverbank’s Mortgage Amortization Schedule Calculator for more information.

This home owner decides to refinance to a 15 year fixed rate mortgage at 2.875%. If he pays the minimum payments on his new loan his total interest will only be $58,063.75 which saves him $147,954.35!

With these low mortgage rates, now is a great time to start saving. Call a licensed loan officer today at 1-800-555-2098 and request your free rate quote.

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**Mortgage Rate Disclaimer: Recent rate but rates, loan products & fees subject to change without notice. Your rate and term may vary. Fees & charges apply and may vary by mortgage product. Subject to underwriting approval. Application required; not all applicants will be approved.  Important information relating specifically to your loan will be contained in the loan documents, which alone will establish your rights and obligations under the loan plan. Call for details at 1-800-555-2098.

Mortgage Rates have Dropped to Recent Lows

average mortgage rates 2016

Interest rate chart data from Freddie Mac mortgage rates based on US weekly average survey.

Mortgage rates have dropped again officially hitting the lowest levels in one year which is near historic lows. According to the Freddie Mac weekly mortgage survey, rates are as low as 3.72% for a 30 year fixed rate mortgage and as low as 3.01% for a 15 year fixed rate mortgage.

If you have been considering refinancing your mortgage now is the time to lock in a low rate. With falling oil prices, stock investors have been getting nervous and fleeing to more stable and safe investments such as government bonds and mortgage backed securities. This demand to buy bundled mortgages has driven mortgage rates to recent record lows.

Refinance to Drop Mortgage Insurance

In additional to low mortgage rates, home values have been setting records for appreciation. The rise in home values may make it possible to drop mortgage insurance (PMI) which is required on most loans with less than 20% equity.

Refinance to a 15 Year Mortgage

Other homeowners may choose to refinance from higher rate 30 mortgages to low 15 year fixed rates and keep their mortgage payment low. Paying a mortgage off 15 years sooner has the potential to save thousands in mortgage interest.

Refinance from a FHA loan to a Conventional loan

Government backed mortgages, such as FHA loans, are a popular mortgage option for those with smaller down payments. While government loan rates may be low, they typically have higher monthly PMI than conventional mortgages.  Higher property values may allow homeowners to refinance from a FHA mortgage to a conventional loan and save significantly on their monthly payments.

For more information on your refinance options call a loan officer today at 800-555-2098 or request information below.

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Tis the Season to Refinance your Home

Refinance SeasonIt’s that time of year again with the holiday’s right around the corner. Many homeowners take pride in being able to decorate their homes to celebrate the seasons. It’s one of the best parts of homeownership. Often times making it well worth the headaches and financial burdens that also come along with homeownership. Our homes are a reflection of who we are and so it can be unfathomable when we are unable to keep up with the responsibilities of taking care of a home due to hardships beyond our control. The economy over the last several years has forced many homeowners to make tough decisions that have jeopardized what we once felt very secure in and cut back on things like holiday spending. Refinancing to a lower payment can help to ease the financial strain caused by this tough economy and make the season more enjoyable.

Interest rates have dropped to possibly the lowest we will ever see in our lifetime, which is a huge benefit for homeowners needing to reduce their mortgage payments due to hardships from job losses or lower incomes.  A refinance to today’s current mortgage rates could shave hundreds off from a home owner’s mortgage payment. For a lot of homeowners the reduction of their mortgage payment could potentially be the difference of not facing the possibility of foreclosure.

If you have not refinanced within the past year, now is the time to do so. The first step is finding a mortgage broker if you don’t already have one.  The next step is getting preapproved. You will need to provide some documentation and if your spouse will be on the mortgage, you’ll need their documentation as well. Having this available when talking to a loan officer will help them get you preapproved quicker and easier. Remember that the more accurate the information you provide to them, the more accurate your quote will be. Here is a list of the basic information you will need to get started:

    • Monthly income (gross income before taxes)
    • Account balance (in case you need to bring money to the closing)
    • Employment information
    • Your current interest rate and mortgage payment (easily found on your current mortgage statement)
    • Annual taxes and homeowners insurance premiums (this may be included in your mortgage payment)

Once you have established a preapproval by the loan officer, they will send you an application to be signed and sent back along with some other documentation. Those documents, depending on the loan program, could include:

    • Most current paystubs
    • Previous 2 years W2’s statements
    • Copy of your homeowner policy
    • Copy of your mortgage statement
    • Most current 2 months bank statements
    • Copy of tax returns (only if self-employed)

You’ll want to send everything back as quickly as you can so the loan officer can get your file submitted to the underwriting. The process from submission to closing can take anywhere from two to six weeks depending on the lenders turn times and the borrowers timeliness on getting necessary documents back to them.  If you get started now, you may be able to skip one or two mortgage payments for the holidays and free up extra cash so you can relax and focus on spending time with your family.

Whether you are facing a hardship or just looking to free up some cash for the holiday season, taking advantage of the interest rates and programs available to homeowners during these tough economic times is a very good idea.  Submit a request below for more information on how to lower your payments and interest rate.

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FHA Streamline Refinance Changes

Streamline Refinance ChangesI’m sure I don’t really need to go over the drastic changes our housing market has witnessed over the past few years so I’ll just limit this blog to the ever expanding hope on the horizon for homeowners. At least for those of you who have found yourselves in quite a sticky situation in regards to your mortgage. There are plenty, in fact millions of homeowners who are enduring their own mortgage crisis whether that means they’re “underwater” or just paying far too much. That’s where all of the new refinance programs come into play.

One of the most popular and widely sought after refinance programs would be the FHA (Federal Housing Administration) Streamline Refinance program. It’s not only made a massive change in the lives of countless people so far, but it seems more change is on the way. On June 11, we will see the FHA Streamline Refinance program institute some great changes that will allow for millions of people to get out of their current mortgage situations and save themselves a pretty penny.

The best part of all this is that you don’t need to wait for the new changes to be implemented. See the institutions we here at Riverbank Finance work with would like to help you get started in refinancing immediately. So even though the changes don’t effect for over a week yet, we can get you on file and start chugging away once June 11th roles around.

In order for us to help you, there are just a couple things you need to do. Make sure you’re a Michigan resident and give us a call at 1-800-555-2098. You can also fill out the email form below.

Refinance w/ The Streamline Program Today

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FHA Streamline Refinance Update

Mortgage RefinanceIt seems the Federal Housing Administration (FHA) is making its mortgage program (FHA Streamline Refinance) even more affordable. Allowing for hundreds of thousands of additional homeowners to reap the awesome benefits of today’s low mortgage rates. Their goal is to reduce the mortgage fees and mortgage insurances to all homeowner’s that qualifies. These lower fees will be implemented fairly soon as the set date is for June 11, 2012. So just a couple weeks from now! This means that borrowers who refinanced their loans, which were endorsed by the FHA before June 2009, can take action now!

One mortgage insider, made the following statement in regards to the new change. “If you had your loan endorsed prior to that [June 2009], this is you’re your chance to save money with a streamline [refinance]…” This insider couldn’t be closer to the truth either.

The FHA Streamline program only asks for a very limited amount of documentation from the borrower and also does not require a formal appraisal of the home. The great thing about the no-appraisal rule is that homeowners are allowed to refinance, even if they’re in an “underwater” situation. Meaning they’re owe more on their mortgage than the home is worth.

Take the following as a brief example in regards to the type(s) of savings that will become possible for homeowners.  This example is based on a $200,000 FHA mortgage (30-year fixed rate loan with an LTV greater than 95%)

Before June 11

After June 11

Upfront Premium Paid at Closing

$3,500.00

$20.00

Annual Premium Monthly Cost

$208.33

$91.67

Upfront Premium Percentage

1.75%

0.01%

Annual Premium Percentage

1.25%

0.55%

These huge changes to the FHA Streamline Refinance program make it the perfect time to refinance your mortgage and start saving yourself a pretty penny. We would love the opportunity to help guide you through this awesome loan. If you have property located in Michigan, then be sure to contact one of our licensed loan-officers at 1-800-555-2098 or feel free to fill out the form below.

Mortgage Questions or Concerns?

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Obama’s HARP 3.0 Proposal

HARP 3.0The Home Affordable Refinance Program (HARP), which was originally proposed by President Obama, may be expanded for the third time.  The program has been in effect for a while now and it seems as if it may undergo yet another transformation to help additional homeowners refinance. Our previous blog post covered the transition to HARP 2.0, which is the current program, and now it seems we will see the emergence of HARP 3.0.  This won’t be a small transformation in anyway as there are quite a few big changes that could benefit many homeowners.

The biggest changes we could see occur will include extension of dates, no income requirements, and higher LTV ratios. The eligibility date could be extended up to May 10, 2010.  This date was chosen, as it seems many home purchases made after this date were made with a mortgage rate below 5%. There will no longer be verification requirements for things such as employment and income (state income loans could make a come back). The loan-to-value or LTV will be switched from 125%, up to 140% for most investors.

Perhaps the biggest change that could draw it several homeowners is the adjustment made to the appraisal costs. Included in the proposal is a change that all borrowers who would require a manual appraisal should have the fee waved. This means that, if you’re someone who lives within a neighborhood that has been struggling with home sales recently. Then your appraisal would be completely waved.  This will save you time in refinancing and will help keep money in your pocket.  Of course, everybody loves free things, so this would be a huge benefit if HARP 3.0 becomes a reality.

All of this is a great attempt to quickly transform and turn around the housing market as soon as possible. This is definitely a step in the right direction to help out those remaining homeowners that are still struggling with their current mortgage payments and find themselves in “underwater” situations.

We here at Riverbank Finance are doing our best to eliminate the worries in the minds of countless homeowners here in Michigan by helping them with refinancing to these historically low rates.  We have partnered with several investors that participate in the HARP loans to offer the lowest rates and fees available.  Even if you have been turned down by other banks for the a HARP refinance, give us a call as we have great programs to transfer mortgage insurance, unlimited LTV loans, and we can even help if you have a second mortgage.

If you would like to see what a few of our previous clients had to say about us, be sure to check out our reviews on Google. Feel free to contact one of our licensed loan officers today at 1-800-555-2098 or complete the form below to see if you are eligible for a HARP refinance.

Request information for HARP 3.0

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FHA Streamline Refinance Premiums Dropping

Lower FHA PremiumsThere was a bit of speculation recently after an announcement from the Federal Housing Administration (FHA) stated their insurance premiums would be rising.  The speculation was that premiums regarding the FHA Streamline Refinance program would be dropping.  Well it seems that is the case.  Homeowners with mortgages backed by the FHA will now face premium fees that are roughly half of what they previously were.

Every step, even if they’re baby steps, made towards fixing the housing market is a good one.  Reducing the premiums is the right thing to do in order to attract homeowners who are still in “underwater” situations.

The FHA has released the exact numbers so here is what you can expect.  The upfront insurance premiums borrowers face will be reduced from 1% to .01% of the overall loan balance.  Beyond that, annual premiums will drop from 1.15% to 0.55% of the overall loan balance.  Now there is one little catch that has been implemented, these changes are only viable for those borrowers who took out their loans BEFORE June 1, 2009.  That deadline is definitely a big downside to this change, a downside for both the FHA and for homeowners as the FHA has backed a large amount or mortgages AFTER that date.

You would think that homeowners would be chomping at the bit to refinance and save themselves some cash but there are still plenty out there that are still resistant to do-so. According to the White House, the potential number of homeowners this mortgage program ALONE could help, is 2-to-3 million.

That averages out to near 60,000 homeowners in every state that could benefit from an FHA Streamline Refinance.  Meaning, there are 60,000 people in Michigan that we could help save a pretty penny and all that is needed is a quick call to one of our loan-officers at 1-800-555-2098 to get started on your refinancing!

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Michigan FHA Streamline Refinance

FHA Streamline Refinance in MichiganOwing more on your mortgage than your house is worth is a common problem in Michigan.  After the economy took a downturn only a few years back, property values have plummeted.  The U.S. federal government has recently announced programs to help people refinance their mortgages that are owned by Fannie Mae and Freddie Mac.  This is great news for many homeowners, however that still leaves millions of homeowners that may not qualify for a HARP refinance because their mortgage loans are insured by the Federal Housing Administration through an FHA loan.

Before you give up all hope, there is a program that is a solution to underwater homes in Michigan. If you are currently in an FHA mortgage then you may qualify for a FHA Streamline Refinance with no appraisal.  FHA’s streamline refinance program will allow Michigan homeowners to refinance to today’s historically low mortgage rates while also drastically reducing the steps needed to qualify.

When it comes to qualifying for the FHA Streamline Refinance, you have to be up-to-date on all mortgage payments for the past year.  This means that you must have paid all your mortgage payments on time for the past 12 months with no 30 day late pays.  You also have to be sure you’re the original property owner for the last six-months, minimum, to take advantage of the program.  The next step is to call Riverbank Finance, a mortgage company in Michigan, so a loan officer can help give you your options to for FHA streamlines mortgage rates.

Benefits of a Michigan FHA streamline Refinance

There are several great benefits to the streamline program including the amount of paperwork needed is miniscule.  The closing costs and fees for this type of refinance are very low, in fact there are zero cost loan options available for most situations.  Many programs involve application fees but that’s nothing to worry about, as applications fees are waived.  Another great benefit is there is no appraisal required therefore the value of your home is not an important factor.

When you take advantage of an FHA Streamline Refinance, you can expect to receive as very low to zero-cost loan options!  No matter where your property is within the state of Michigan, we can help you benefit from an FHA Streamline Refinance. Call Riverbank Finance today at 1-800-555-2098 to begin your refinancing process to see if you can save thousands in interest.

For more information on a FHA Streamline Refinance, request information below, or visit: http://riverbankfinance.com/mortgage-programs/streamline-fha-mortgage.html

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