DIY Refi Guide
By Joseph Flannery
Founder & CEO, SELFi
You see, mortgage professionals are compensated the same percentage regardless of whether they spend 10 minutes or 10 hours assisting you. To me, that seemed like a market inefficiency. I questioned, if knowledgeable homeowners applying for a simple refinance required less work by the bank, shouldn’t that homeowner be entitled to lower rates?
The goal of this guide is to condense my mortgage expertise so that everyone has the knowledge to get the best deal on their refinance. Whether you refinance with SELFi or another company, I hope you gain some value.
Understand the basics
What is a mortgage refinance?
Refinancing your mortgage means you are replacing your existing loan with a new loan. You can refinance with any company, you do not have to return to your original lender.
Your servicer is not the holder of your loan
Practically every loan is sold on the secondary market. FHA and VA loans are sold to Ginnie Mae, which is run by the Federal Government. Conventional loans are sold to either Fannie Mae or Freddie Mac, which are government sponsored enterprises.
The agency that buys your mortgage pays your servicer to collect payments from you. A mortgage servicer is a company that collects payments and issues mortgage statements.
Your mortgage servicer is not your lender. A lot of homeowners make the mistake of refinancing directly with their servicer without shopping around. Often, mortgage servicers abuse customer loyalty by offering higher rates to earn more profit. I know, it’s messed up.
Lenders earn profit from selling your loan
Ever wonder how lenders earn a profit? They earn a profit from selling your loan on the secondary market.
So don’t get fooled the next time you see “no lender fees”. It’s all about the interest rate, and corresponding points or credits. More on that later.
Identify the reason for refinancing
- Lowering your monthly payment
- Pay your mortgage off faster
- Consolidate debt
- Take cash-out for home improvement or other use
Lowering your monthly payment
Slight changes in the rate really make big difference. Let’s look at an example:
- Assume you have a 4.5% rate with a $400,000 loan balance. Your monthly principal & interest (P&I) payment is $2,026.
- You decide to refinance to new mortgage at a 4.25%.
- Your new monthly payment would be $1,967, saving you $59 a month ($2,026 – $1,967 = $59)
- Saving $59 a month, no biggie, right? Think again. Over 30 years, you would save $21,240.
- But that’s not all. Those who understand the power of compound interest recognize the opportunity of investing small amounts each month.
- If you were to invest that $59 a month, at an average rate of return, your total savings at the end of 30 years would be $112,140!
And that is just going from 4.5% to 4.25%. Under that same scenario, if you were to refinance from a 4.5% to a 3.5%, you would save $231 a month, or $83,160 over the life of the loan.
If you invested that monthly savings of $231 at an average return, your total savings at the end of 30 years would cumulate to $439,059.
This example demonstrates why getting the best deal today is so important to reaching your financial goals of the future.
Paying off your mortgage faster
If you can afford to pay more each month, you could refinance into a shorter loan term. For example, you can refinance from a 30-year fixed to a 15-year fixed. This reduces the total amount of interest paid.
You can still pay your mortgage off faster even with refinancing to new 30-year fixed. Any additional amount of money included with your monthly payment is applied towards your unpaid principal balance. For example:
- Say your current mortgage balance is $400,000 and current rate is 4.5%. Your existing P&I payment is $2,026.
- You refinance to new 30-year fixed at 3.75% and the new loan amount is $400,000. Your new P&I payment is 1,852.
- You would save $174 a month.
- If you apply that monthly savings of $174 toward your unpaid principal balance each month you would pay off your mortgage in 307 months, or 25.58 years.
- This means you would be eliminating 53 mortgage payments (360 minus 307), which saves you $98,156 ($1,852 x 53).
Some homeowners do not like to restart their 30-year term, however, one thing to keep in mind, is that you can always pay more each month, but you can never pay less.
By restarting at 30 years, you have the flexibility to pay your mortgage off faster or pocket the savings that comes from having a lower rate.
Most credit cards have an interest rate over 20%, so taking out cash to consolidate high interest debt can considerably decrease total monthly expenses.
Taking cash-out and improving your home is a great way to make your property more valuable and more enjoyable to live in.
Choose your loan program
- Rate-and-Term is when you refinance to a different interest rate and/or loan term without taking cash-out.
- Cash-out refinance is when you liquidate some of your home’s equity to get a new loan that consists of your previous mortgage balance, plus the cash you took out.
Here are some specific refinance programs and important criteria:
VA IRRRL also know as VA Streamline
VA IRRRL, which stands for Interest Rate Reduction Refinance Loan, is a type of rate-and-term refinance. Basically, the program enables veteran homeowners to refinance to a lower rate without having to requalify. The benefit is that there is:
- No appraisal, if rate selected has no discount points
- No credit score required
- No income or employment verification
- No bank statements required
- No out-of-pocket costs
As of June 1st, 2018 there are some changes effecting the VA IRRRL program making it more difficult to qualify. The changes are:
- Appraisal required if rate selected has discount points
- Closing costs must be recouped in 36 months or less
You cannot take cash-out, however, with a VA IRRRL you can get your existing escrow balance refunded to you.
Veteran homeowners can pull cash-out of their property up to 100% of the appraised value to consolidate debt, improve your home, or for most any other purpose.
An FHA streamline is like a VA IRRRL in that you do not need to requalify if you are making payments on-time on your existing FHA loan. There is:
- No credit score required
- No income or employment verification
On an FHA cash-out refinance you can take equity out up to 85% of the appraised value.
Conventional Rate-and-Term or Limited Cash-Out
The benefit of conventional loans is that if you have 20% equity in your property, you do not need to pay any mortgage insurance.
If your goal is to lower your monthly payment or pay your mortgage off faster, and you are not a veteran, this is your program.
Additionally, a conventional rate-and-term has a limited cash-out option, which allows you to get up to $2,000 cash back.
With SELFi, an appraisal may not be required. After you apply we will check with Fannie Mae and Freddie Mac to see if you qualify for a property inspection waiver.
You can take cash-out up to 80% of the appraised value without having to pay any private mortgage insurance (PMI).
You can use the funds to consolidate debt, home improvement, or for any other legitimate reason.
SELFi will check to see if you qualify for an appraisal waiver, however, the chances are less likely when you take cash-out.
Understanding Points and Credits
Okay, so now you know the reason to refinance and the program you want, so how do you compare lenders? It starts with understanding points and credits.
Interest rates are for sale
Think of it like this – every interest rate is for sale. The rates do not change daily, rather the cost of rates change daily. For example:
- Assume you can refinance today to 4.000% at $3,000 in closing costs. Tomorrow, the cost of 4.000% will change, for better or worse.
- If interest rates get better, the cost of the 4.000% will decrease – now the closing costs are $2,000.
- If interest rates get worse, the cost goes up, now the closing costs are $4,000.
- The rate of 4.000% does not change, but the cost of the rate does.
When people say, “rates are going up”, what they really mean, is that the cost of rates are going up.
Interest rates and their pricing – understanding Points and Credits
What determines the cost of each rate? It’s called pricing, which means that every rate has an associated Points or Credits.
Paying points is when you choose to pay more in closing costs in return for a lower rate. Conversely, receiving credits means you choose a rate that provides credits towards closing costs.
Look at the sample snippet of a rate sheet below and you see rates and pricing.
Each rate has pricing next it. Points are positive numbers. Credits are negative numbers. The 15-day, 30-day, and 45-day columns refer to lock periods. The longer the lock, the more expensive the cost.
The lower the rate, the more points. The higher the rate, the more credits. For example:
- 3.750%, on a 30-day lock, has .719 in points. If the loan amount is $600,000 you would pay $4,314 ($600,000 x .719%) to get that rate.
- At 4.250%, on a 30-day lock, you would receive credit of 1.290%. So, if your loan amount is $600,000 you would receive a credit toward closing costs of $7,740 ($600,000 x 1.290%).
- A no-cost refinance just means you are choosing a rate that provides a lender credit to cover the closing costs (more on that later).
All lenders offer the same interest rates, however, the pricing of their rates vary widely. The higher the pricing, the more revenue a lender earns.
One lender may offer 4.000% with a 1% lender credit. Another lender may offer that same 4.000% at a 1% point. That is a 2% difference in cost of that 4.000%! On a $500,000 loan amount, a 2% difference, equates to $10,000 in cost ($500,000 x 2%).
Lenders try to get you to pay more
The goal of most lenders is to convince you to pay the highest pricing for interest rates so they can profit more. So far, they have succeeded.
The largest mortgage lender is Quicken Loans. Quicken Loans pricing is much worse than the competition. Compared with SELFi, the rate offered with Quicken Loans is around .500% higher at the same pricing.
That means, if Quicken Loans is offering a 4.750% at 1% points, SELFi would be offering 4.25% around 1% points. A 30-year fixed mortgage is the same regardless of lender, so why pay more?
Some homeowners choose Quicken Loans, and other high-cost lenders, because their advertising makes them trusted. At SELFi, our goal is to limit our expenses as much as possible so that we can pass the savings to you in the form of lower rates.
Wholesale rates vs. Retail Rates
Okay now you know that lenders price their interest rates differently. They do this every day by producing a daily rate sheet.
Lenders produce two sets of rate sheets: Retail and Wholesale. Retail rate sheets are used when you work directly with the lender. Wholesale rate sheets are provided to mortgage brokers.
Wholesale rates have much better pricing. For example:
- 4.000% on a retail rate sheet may have a 1% point.
- That same lender may offer a 2% lender credit at 4.000% on their wholesale rate sheet.
- That’s a 3% difference!
The reason why lenders price their wholesale rates so much lower is because they pay nothing to acquire the customer. There is no advertising or sales expense; it is the broker who pays.
In theory, a broker can offer the lowest rates with the best pricing since they have access to wholesale rate sheets.
In practice, that does not always happen because brokers are paid by the lender. The broker’s commission must be factored into the pricing. The average broker earns 2.500% commission, calculated based on the loan amount. If the broker were willing to earn less, however, then they could pass the savings to the homeowner.
This is what SELFi does. Our commission is .750%. We literally had to plead with lenders to earn less and have them re-write their agreements. They had never heard of a broker taking such a low commission!
So with SELFi, you get access to wholesale rates, without the typical broker cost factored into the pricing. That’s how we offer such competitive rates; we earn less than everyone.
Beware of marketing gimmicks
When lenders sell their loan on the secondary market, the size of their revenue depends on the pricing on the loan.
Most lenders price their rates higher than the competition and then use clever marketing to attract customers. Here are common gimmicks:
- “We have no lender fees.” That’s fine, but it’s all about rates and pricing.
- “As a broker, I’m paid by the lender, so don’t worry about my commission.” If a broker were to earn less they can pass the savings to you, so their big commission percentage is preventing you from getting a better deal.
- “No closing cost refinance.” You are choosing a higher than market rate to get a credit towards closing costs. All lenders offer this so shop around to see which lender offers a no-cost loan at the lowest rate.
- “Guaranteed low rates or we give you $1000.” These guarantees are fraught with so many conditions that they end up never having to pay.
Getting specific with quotes
Instead of asking “what are today’s rates?” be more specific. Ask, “on a 30-year fixed, conventional rate-and-term refinance, which interest rate offers a 1% lender credit?” Then compare among different banks and brokers.
You will find that the rate with a 1% credit will vary. For example, with SELFi, that rate may be 4.375%. With Quicken Loans, that rate may be 4.875%.
You can also get a list of rates and their pricing. For example, you can ask for pricing on 3.750%, 4.000%, 4.250% and 4.500%. Then compare among lenders. Now you are shopping around like a pro.
If lenders are unwilling to provide a detailed quote it likely means their pricing is not competitive. Most lenders do not show rates and pricing online. They want you to talk with a sales agent.
SELFi takes the opposite approach, we are confident that our rates are among the lowest, if not the lowest, so we let you view rates and pricing without even asking for your phone number or email.
Make sure you are comparing Apples-to-Apples as the pricing depends on your specific factors
Your mortgage criteria will impact the pricing on your loan. With SELFi, to provide an accurate quote, you must input your mortgage criteria. These are things like:
- Loan program: Cash-out vs. Rate-and-Term (cash-out refinances have worse pricing)
- Credit score (the better the credit score, the better the pricing)
- Loan amount
- Approximate appraised value (the more equity you have, the better the pricing)
- Type of property (condos have worse pricing than single family residences)
- Use of property (investment properties have worse pricing than primary residences)
- Having a second mortgage such as a HELOC
When shopping around, make sure a lender is using the same criteria. For example, if one lender provides a quote assuming a 740 credit score, and another lender provides a quote using a 640 credit score, you are not getting a true comparison.
Beware of Bait-and-Switch Tactics
The rate displayed includes points. Typically, homeowners want the lowest rate without having to pay a lot in closing costs, if any. Many lenders, however, will display their rates with points. These rates will be displayed on their website, on rate tables like BankRate, and in direct mail advertisements.
The rate is adjustable.Another tactic lenders use is displaying adjustable rates. Adjustable rate mortgages (ARM) have lower rates than fixed rate mortgages but are riskier because the rate can adjust higher in the future. Displaying rates with points, or showing adjustable rates, gives the illusion of being competitive, and they use these tricks to get you on the phone with a sales agent.
The lender has one competitive rate. Another bait-and-switch tactic is to show competitive pricing for only one advertised rate. You may think they have competitive rates, but in fact, they just have one competitive rate. Then the sales agent will try to convince you to take a different rate than advertised with a higher profit margin for the lender.
At SELFi, we never bait-and-switch. Our revenue is the same no matter which rate you choose, which means that we’ll never try to persuade you to take a rate that is bad for you and good for us.
Beyond Points and Credits: Understanding Closing Costs
While pricing is the main driver to getting the best deal, it is not the only factor. Closing costs can vary among banks and brokers. It is helpful to separate closing costs into three buckets:
- Fees specific to the lender
- Third party fees, some of which you can shop for
- Closing costs related to your specific property, that are the exact same, regardless of which bank or broker you work with.
Fees specific to the lender
Some lenders have an application fee or underwriting fee. This fee must be factored into the pricing so that you can accurately compare options.
With SELFi, we do this automatically. The options we present have included the lender fee into the pricing so that we can accurately match you with the best priced lender on the day that you apply.
Third Party Fees
These are fees charged by third party companies:
- Title and escrow (you have the option to shop for)
- Flood certification
- Appraisal (if required, this must be paid out-of-pocket prior to closing)
- Subordination fee (if you have a second mortgage)
Third party fees are usually close to the same regardless of the lender.
SELFi has negotiated discounted title and escrow services. If you have a specific title company, we are happy to work with them. Please note that if your title company is more expensive than the firm we negotiated with, then the closing costs would be higher.
Closing costs related to your specific property
These are not fees, but rather costs that come with owning a home. These costs will be the exact same regardless of lender.
Lenders may estimate these costs differently, so be very careful not to decide based on how a lender presents these costs because they will end up being the same. They are:
- Government recording fees
- Transfer taxes
- Prepaid taxes and insurance (if your taxes or insurance are due within 60 days of your refinance being complete, it is required to be prepaid)
- Initial deposit into escrow
Do the math and select an interest rate
The key is to think about how long you will have the mortgage. The longer you have the mortgage the better off you are paying more for a lower rate.
This is shown through the break-even point. For example, let’s say you are comparing two rate options: 3.500% and 4.000%.
- The 3.500% has $5,000 in points. Meaning you pay $5,000 to get that rate.
- The 4.000% has a lender credit of $3,000. You receive $3,000 to take that rate.
- Thus, the difference in cost between the two rates is $8,000.
- If the loan amount is $300,000, the difference in monthly payment is $85 a month ($1432 – $1347)
- To calculate the break-even point, take the difference in cost ($8,000) and divide it by the difference in monthly payment ($85). So 8000 / 85.
- In this example, the break-even point is 94 months or 7.8 years.
- That means you would be better off selecting the 3.500% rate if you plan on having this mortgage for 8 years or longer.
- If you plan on refinancing again, or selling your home in the next 8 years, you would be better off choosing the 4.000% rate.
In my experience, most people are better off choosing a rate that has a lender credit toward closing costs. The reason is that often folks will refinance or sell before reaching the break-even point.
Steps 1 through 6 focus on getting the best deal on refinance. The next step is to apply.
It begins with completing a Uniform Residential Loan Application, which is a standard form that lenders use to gather necessary information to make a decision on your loan application.
There are six pieces of information needed for a mortgage application, they are:
- Name and names of co-borrowers
- Loan Amount
- Social Security Number and Date of Birth
- Address and two-year residence history
- Income and two-year employment history
- Estimated Value of Property
With SELFi our intuitive online application allows you to complete the necessary information quickly and securely while on your own time.
We run credit
After you complete the application, we begin preparing disclosures. Before disclosures go out, we run your credit report. If your credit score ends up being different than what you entered as the mortgage criteria, it may impact the pricing on the loan.
If that’s the case, one of our Mortgage Coaches will contact you to go over revised options.
After we have run credit, we will prepare initial disclosures and e-mail them for your review.
Review and e-sign your initial disclosures
How to read a Loan Estimate
A Loan Estimate (LE) is a standard document that provides a clear and concise summary of all the features, costs, and risks associated with your mortgage. Here is how to read the LE:
- Focus on points and lender credits. This is where you’ll see the true difference in pricing. If your selected rate has points, it will show up on the 2nd page in Section A. If the rate you selected has lender credits, it will appear on the 2nd page under section J.
- Compare to your quote. If the credits or points on the LE do not match the quote provided then this is a red flag.
- Look at the Loan Amount. Some lenders promise “no closing costs” and then roll all the fees into the loan.
- Reviewing Closing Cost detail, not just total costs. On the 2nd page, you will see a breakdown of the closing costs. This is where it helps to remember the three buckets of closing costs: 1) Fees specific to lender; 2) Third party fees; 3) and closing costs specific to your property that are the exact same regardless of lender.
Check to see if your rate is Locked. In the top right-hand corner, it will indicate if your rate is locked. If it’s not, then you know that the points or credits are subject to change.
Your specific situation and loan program will dictate which documents will be required. Typically, you’ll be asked for:
- 2 years W-2s
- 2 years tax returns if self-employed
- 3 paystubs
- Current homeowners insurance declaration page
- Current mortgage statement
- Copy of drivers license and social security card
Once your processor has everything needed, your loan will be submitted to the lender’s underwriter. An underwriter determines whether your application meets the guidelines of the loan program you are applying for.
One advantage with SELFi, is that we have the underwriter review your application prior to you paying for your appraisal. This way if you do not qualify, at least you did not pay for an appraisal.
Most lenders require you to pay for the appraisal before you can lock or have your loan reviewed.
Prep your home for an appraisal
While SELFi will exhaust options to see if your property qualifies for a property inspection waiver, the reality is, most refinances require an appraisal.
The appraisal is important because it determines the amount of equity in your home and this impacts your rate as well as how much cash you can take out.
It is important to make sure your home meets regulations, such as having a smoke/carbon dioxide detector and permitted additions.
If your property does not meet regulations, your property may have to be re-inspected which can involve extra fees and delays.
To prepare your home for the appraiser, make any necessary repairs; even small changes can boost your property value.
Cost of the appraisal is paid before closing
The cost of the appraisal is the one item that is required to be paid out-of-pocket prior to the loan closing. The reason being is that homeowners can walk away from their refinance application anytime. You have the legal right to receive the appraisal.
After the appraisal is received, your file is provided to the underwriter to clear your loan to close.
If your application is denied, your Mortgage Coach will contact you to review the reason why and discuss options. We do not let bad news wait.
Closing and Funding
Just to clear-up some terminology. Closing is when you sign the final loan documents. Funding is when the bank wires the money for your refinance.
Prior to closing, you will receive a Closing Disclosure (CD). A Closing Disclosure is a summary of all your finalized terms. It’s important to compare your Closing Disclosure to your Loan Estimate to see if there are any discrepancies, particularly, with respect to points and credits.
The basics of an escrow account
The escrow account or impound account can often be a source of frustration and confusion amongst homeowners.
Basically, an escrow account is like a savings account, managed by your servicer, and the money deposited can only be used to pay taxes and homeowners insurance.
An escrow account is mandatory for FHA and VA loans. It is optional for Conventional loans.
Your new escrow may be more than existing escrow balance
When you refinance, a new escrow account is set-up, and then your existing escrow account is refunded to you.
Often the amount needed to be deposited into the new escrow is greater than your balance in your existing escrow. This is for two reasons:
- When you refinance, you pre-pay interest until the end of the month so you always go at least one month without a mortgage payment, yet the taxes and insurance need to be accounted for during that month without a payment.
- Your taxes and insurance may have increased, and you are running an escrow shortage. Your current servicer reviews your escrow account once a year to make any adjustments to your monthly contributions.
Review your mortgage payment in two parts
My suggestion is to think of your mortgage payment in two parts: 1) Principal & Interest; 2) Escrow.
With a fixed rate, your principal and interest will never change. The amount paid into escrow will likely change annually.
This because your property taxes are assessed annually and are subject to change, often going up. Additionally, your insurance carrier will review your homeowners insurance policy annually and may adjust the premium.
SELFi has no control over your escrow account.
SELFi will contact you to schedule your closing at a place and time convenient for you. Often the notary can meet you anytime between 9am and 8pm.
The final loan documents will consist of your
- Final Application
- Closing Disclosure
- Note – this is the promissory note
- Mortgage or Deed of Trust
- Right of Rescission
After you sign the documents your loan will go back to the lender.
After you sign, and just before funding, the lender will check with your employer to make sure you still work there.
Funding and Recording
Three business days after you have closed, your loan is eligible to fund. Funding is when the lender wires the funds to escrow. Escrow will then disburse the funds exactly as it has been detailed on the Closing Disclosure.
Recording takes place at the county where your home is located. The vesting deed are recorded and become public record.
Once your transaction is funded and recorded, your refinance is completed.
Now that wasn’t so bad… was it? 😊
After your refinance is completed - skipping payments
After your loan is funded, the title company will record your mortgage with the county and your refinance is officially completed.
This is often a source of great confusion among borrowers. Here is the truth: You can go two months without a mortgage payment, but there are no payments actually being skipped.
Here is how “skipping payments” actually works:
- Mortgage interest is paid in arrears
When you make a mortgage payment, you are actually paying the interest that accrued during the previous month. For example, when you pay your mortgage in June, you are actually paying the interest that accrued in May. This is the opposite of paying rent, which is paid in advance.
- Your payoff demand contains unpaid interest
As part of the refinance, a payoff demand is generated from your existing lender. Your payoff demand is the total amount needed to pay your existing mortgage in full. It is common for borrowers to confuse their current unpaid principal balance with their payoff demand. The payoff demand is the total of your unpaid principal balance + unpaid interest. Everyday you have a mortgage, interest accrues. So if you close on the 15th of the month, you will have 15 days of unpaid interest on your payoff demand.
- You prepay interest at closing until the end of the month
When you refinance, you prepay interest until the end of the month. For example, if you closed your refinance on the 10th of the month, you would prepay 20 days of interest.
- You always go one month without a mortgage payment
Since you prepay interest at closing, and since your mortgage payment is paid in arrears, your first payment is not due until one month after closing.For example, if your loan funds on September 25th, you would prepay 5 days of interest for the days of September 26th – 30th. Then your first payment on the new loan will not be due until November 1st.So while no interest is skipped, you effectively went the month of October without a mortgage payment.
- Going TWO months without a payment
If your mortgage is paid in full during the month which your payment is due, you do not have to make that mortgage payment.For example, if you have yet to make your September mortgage payment, and your refinance closes on September 12th. You do not have to make the September mortgage payment and your first payment on the new loan is not due until November 1st. So you effectively went September and October without a mortgage payment.Keep in mind, by not making your payment in September, that means the unpaid interest will be added on your payoff demand. So while you can go two months without a payment, you are not “skipping” any interest.If you choose to go for two months without a payment, here are a couple things to remember:
- Keep the money for the payment in your account. If your refinance is delayed you are going to have to make your mortgage payment or else it will be reported late after 30 days.
- Know that your “skipped” payment is going to included into the payoff demand
Paying your mortgage
After your loan closes, you will receive instructions from the lender regarding making mortgage payments. We have collected independent reviews of the servicers to make sure your loan is serviced with care. If you have any concerns with the servicing of the loan please let us know at hello@SELFi.com. We are here for you long after you complete your refinance.
Make every dollar count
For too long, banks have grown fat and happy charging excessive fees and interest: ATM fees, overdraft fees, balance fees, wealth management fees, transaction fees, 30% interest on credit cards. The list goes on and on.
I started SELFi because I believe banks and brokers charge too much on refinances but the mission of SELFi does not end there.
Our mission is financial freedom through self-empowerment. We believe that without financial literacy, banks and brokers are going to continue to profit off consumer ignorance.
So when you refinance, take the opportunity to review your finances and see where else you can save. Make every dollar count. Ask yourself, are you enriching yourself or financial service companies?
I can promise you this, SELFi will not stop working to help people save money until every one of our members has achieved financial freedom.