Mortgage Refinance

Refinance Mortgage Loan – Tips on Refinancing Your Home Mortgage

2011-11-27T01:04:00.000-08:00

Refinancing your home mortgage can come with some great perks. If you do it with no money out of pocket, you can skip one to three mortgage payments.
You can save money on your payment or pay off your entire mortgage faster when you have better terms.

Here are a few things to pay attention to when you refinance your mortgage loan, to make sure that you don’t overlook anything that you might regret, or that can cause you problems later:

1. Apply for a pre-approval to many different lenders to make sure you are getting the lowest rate possible. When you do this, make sure that with the initial pre-approval application, the lender is not pulling your credit history. You will want to reserve your credit pull for the lender that you are most likely to work with. You can decide that after you have gone through the preliminary pre-approval process with a few lenders.

Each time your credit is pulled, it docks your credit score just a little. If you have too many inquiries, it could keep you from refinancing your mortgage loan with the lowest rate possible. When you pre-apply for home mortgage loans online, most lenders or mortgage service companies will not initially pull your credit. Check for information about this on their website. They will usually tell you whether or not they are going to pull your credit. Also, if on the application you do not give them your social security number, they cannot pull your credit. If, on the application, they ask you to describe your credit, they are probably not pulling your credit.

2. Make sure that your original mortgage does not have a pre-payment penalty or early payoff penalty of any kind. Sometimes people will get into their mortgage with the mortgage having a pre-payment penalty and they will not even know about it. Pre-payment penalties usually range from 6 months to 3 years with a penalty for an early payoff. The penalty is usually about the amount of 6 months worth of your mortgage loan interest, but this varies. You would have to be able to have some significant payment and interest savings on your refinance loan to justify refinancing a mortgage loan with a pre-payment penalty.

3. When evaluating different lender offers, in the mortgage loan pre-approval process, pay closest attention to the interest rates they are offering & the closing costs. These are the two biggest factors that will help you figure out which lender is right for you. If one of these two factors is too high, it could offset the benefit of refinancing for you.

4. Get your interest rate and closing costs in writing as soon as you decide on a lender to work with. Get your lender to give you a commitment in advance of all of the costs that will be involved with your loan. Find out if the refinance loan you are getting has a pre-payment penalty as well. Sometimes lenders will leave out important information like this, if they think it might scare you away from refinancing with them.

To view a list of highly recommended refinance mortgage lenders, most of which will not pull your credit in the initial application, visit this page: www.abcloanguide.com/refinance.shtml.

Will Refinancing Your Mortrage Save You Money?

2011-11-27T01:00:00.000-08:00

Refinancing a mortgage is simply taking out a new mortgage to pay off the present loan on a home. People refinance loans for many different reasons.
The most common reason is to save
money. If you can get a loan with a

lower interest rate, your monthly mortgage payment and the total amount of interest you pay will be less.

You can also save money by reducing the number of years of your loan. For example, you may decide to change from a 30-year to
a 15-year mortgage. Depending on the interest rate, your monthly payment may stay the same, or even increase.
However, the total amount of interest you pay will be less.

Depending on interest rates, you may want to change from an ARM (Adjustable Rate Mortgage) to a fixed-rate mortgage. With a fixed-rate mortgage, you know your mortgage payment will be the same amount each month.

Changing from one ARM to another ARM with a lower interest rate can save you money. Another reason to change ARMs is to get better protective features such as payment caps. A payment cap limits the number of times interest rates can be raised or the length of time between interest rate increases.

You may want to refinance to get money for other family expenses. For instance, you can use the equity or cash value in your home for a major expense such as a child’s education or a remodeling project. You may want to refinance to consolidate debts or pay off high interest loans. Instead of these loan payments, you would have a larger mortgage but at a lower interest rate and the interest paid would be tax-deductible. However, be cautious about continuing to use your credit cards if you refinance because of potential debt problems.
Refinancing Costs

You need to find out how much refinancing costs. First, check to see if your present mortgage has any kind of prepayment penalty. Next, compare interest rates and loan types for at least three lending institutions. Find out what kinds of fees or closing costs are charged for a new mortgage. Fees for the appraisal, loan application, title search, title insurance, home inspection, and legal advice are common costs. Loan origination fees (also called points) are the largest closing cost you will pay. A point is usually one percent of the total loan. One point or one percent of a $90,000 loan would be $900.

Tax Considerations

Under current tax law, the points charged when refinancing aren’t all deductible from federal income tax in one year. The costs must be amortized over the life of the loan. To do this you must divide the amount of the points by the number of years of the loan. For example, if you have $900 in points for a 10-year loan then you may deduct $90 per year from your taxes ($900 divided by 10 years equals $90).

On an original mortgage the total cost of financing points is usually deducted in the year it’s paid. An additional tax consideration is if the mortgage payment de-creases with a refinanced mortgage then there’ll not be as much yearly interest to deduct.

Figuring Out If Refinancing Saves Money

One of the important things to look at is how long you plan to live in the home. If you’re refinancing to lower the monthly payments, do the following calculation to find out the time it will take until you meet the break-even point and start saving money. This analysis works if you’re refinancing to save money on monthly payments or when refinancing a fixed-rate mortgage with a lower fixed-rate.
Calculate the total refinancing cost. Example: $2000.

Calculate how much you’ll save each month on payments. Example: $50 each month.

Divide the total refinancing cost by the monthly savings to get the number of months you need to keep your home to break-even.

Example: $2000 divided by $50 equals 40 months. In this case, you should consider refinancing only if you plan to live in the home for at least 40 months.

Refinancing costs divided by savings per month on mortage payment equals number of months break even.

If you’re refinancing to switch from an ARM to a fixed-rate loan, or from a 30-year loan to a 15-year loan, it’s much more difficult to perform a break-even analysis. However, on the Internet there are financial calculators that can help you. For example, Fannie Mae has several useful calculators at: http://www.homepath.com.

Zero-Point/Zero-Fee Mortgage Loans

Some lending institutions offer loans without points. Sometimes lenders even pay some of the other closing fees. You don’t need to do a break-even analysis if you have no refinancing costs.

How can lenders afford to offer no-fee refinancing deals? The financial institutions hope that you’ll live in your same home for several years. Interest rates on zero-point loans are a little higher, and the lender will recover costs after several years have passed.

One disadvantage of zero-point mortgage loans is that you’ll pay a higher interest rate and, over the years, more total interest. On the other hand, zero-point/zero-fee loans are good if you plan to sell your home in two or three years. This is an attractive loan when you think interest rates will continue to fall and you may refinance again in a few years.

Written by Barbara Cooper, former Consumer and Family Economics Extension Educator, University of Illinois Extension.

Benefits of Working with a Refinance Specialist

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There are many benefits to working with a refinancing specialist. Below are some of the reasons you will want to consult a specialist before starting your home refinance.
Bad Advice Can Lead to Bad Debt

It is extremely important that you deal with someone who will customize a solution to fit your personal needs. You have no obligation to work with a Refinance Professional, but we suggest that you work with one so that you may ask specific questions about your needs. Then you may determine if a Refinance Professional is able to provide you with a solution that meets all of your needs.
Get Help if You Need to Refinance Immediately

If you need to refinance immediately, make sure that you work with someone who can get you through the process in the smoothest manner possible. Working with an inexperienced refinance professional could delay the process and cost you valuable time.

If you don't need to refinance immediately, then you have the advantage of waiting for a lower rate. We recommended that you get pre-qualified right away so you may have the option of locking in a low rate when it becomes available. If rates dip and you are not pre-qualified, it will be much more difficult to ensure that you will get a great rate.
Get Important Information About Rates

Rates fluctuate frequently, so no one can predict what they will do. But an experienced Refinance Professional can tell you what rates have done historically and may help you to determine which option is best for you based on that information.

If rates are likely to go down in the next few years, you may opt for an Adjustable Rate Mortgage. Lower monthly payments could provide you with the extra money you need to pay off high-interest debt, such as credit cards, or to build your investment portfolio. To get advice based on your particular situation, speak with a Refinance Professional. They can provide you with a free, no-obligation pre-qualification to help you determine if refinancing is the best option for you, and suggest which type of refinance would fit your particular needs best.

Find a Mortgage Lender

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The market is coming back. It's a buyers market and you need to get in and find a lender that's going to be just right for you. Don't stop at the first one. We recommend that you look at least three lenders before you make a decision.

A mortgage broker is someone who brings borrowers and lenders together. They should find a lender that provides the best possible rates and has best type of loan that best fits your needs. Think of us as your mortgage broker. That's why we suggest you use our service. Just fill out the zip code and click the button, it's that simple. We provide many choices for you.
Today's Mortgage Rates - where can I find the best rates?
Today there are more options than ever to find mortgage rates. Where do you start? How do you know which ones are current? Is there an easy place to compare rates? YES! We can point you to the top comparison sites on the internet. Lock in a fixed rate today.

Is it time to refinance?
How much can you lower your mortgage loan? Refinancing at the right time is critical to your pocket book. Maybe you should think about moving from an adjustable rate to a fixed rate. When ever thinking about refinancing one should think about many items:
You must take into account the closing costs. Can you afford to refinance?
How much will the refinance lower my current mortgage payment? If the amount you gain is offset by the closing cost you should re-think refinancing.
Experts say if you can save 50 basis points (0.5 %) with no closing costs it might be worthwhile.
Credit score is very important. The higher your score the lower the rate you can get. You should find this out before even thinking about getting a mortgage loan or doing a refinance.
Some people may qualify to refinance to an FHA loan. FHA insures the loan so the lender can offer you a better deal. This can significantly sway your decision if you qualify.

Factors Determining Your Refinance Home Mortgage Loan Application

2011-07-21T09:43:00.000-07:00

Knowing what the lenders are looking for to determine your refinance loan application helps you to prepare for it well in advance. The information the lenders require may increase time to time. Nevertheless, it will not be less than what I listed below. You could say that these are the minimum information required. These factors are valid for home purchase loan applications and even for car loans or credit card applications for that matter.

Your Income Level: This is usually called household income and includes your partners income as well if you are buying (or owning) your home jointly (your friend’s income if you are buying with a friend). Refinance home mortgage loan lenders have a metric called income multiplier. For example if the metric is 3 times of the income, it means that you can only borrow 3 times of your earnings (or joint earnings). These metric changes as the lenders get optimistic/aggressive or pessimistic/cautious. Of course the lender will go through the details of your job as far as verifying it. They will at least ask your last three months wage slips. They may want to confirm with your boss. They do this in different manners, though generally by a letter. You will be asked to confirm in your application that it is OK for them to do so. The longer you were in your current job is the better, otherwise you will need to provide information about your previous jobs as well. Self employed people need to provide accounts and probably confirmation from their accountant. Your income is the very starting point of the process. There and than the lenders should be able to tell you how much maximum refinance home mortgage loan they can offer you.

Down Payment: You will need to put down certain amount of the property value. The higher the down payment, the easier the process becomes. Your application gets accepted easier, you are offered better rates and your payments become more affordable. Unless you have a steady, verifiable jobs and best of credit score you are looking at minimum of 15–20% down payment (in refinance cases, that would be the equity left in your home after the loan). They used to do a 25% down payment and no questions asked mortgages, but the lenders wised up the hard way not to ask anything. There is the issue of Private Mortgage Insurance (PMI) that the lenders would make sure you pay if they are lending more than 80% of the value of the property. So you save on that if you can put at least 20% (or refinance up to 80%).

Your Credit Score: It is wise to say that you should not start the process of refinance home mortgage loan application without checking your credit score. There are many free credit score providers available, but I would suggest that you get a copy of your credit report and go through it. This would at least give you an insight to how it works. There may be something that should not have been there and it may be corrected by just calling your credit card company or bank. Your credit score identifies you to the lender as a number. It really is that simple. John Smith becomes 708 to the mortgage underwriter. Looking after your credit score is a long, continuous process. However, if you failed on that do not despair, you can repair your credit in time. No not with the credit repair agents, just yourself. Starting from today, if you put your house in order, start making your payments in time and sorting out your financial affairs you can prepare yourself for a mortgage with good credit score 6–12 months down the line. If you have time, this would be much better option for you than trying to get a refinance home mortgage loan with bad credit.

Your Income and Expenditure Statement: Most refinance home mortgage loan applications will have a section to put your household income and expenditure or there will be an additional form. You will need to put all the sources of income in here with all the expenditures including credit card payments, car loan payments, children’ school fees as well as the usual monthly utility bills, grocery and clothing spending. This will allow the lender to assess your ability to afford the mortgage payments. They will ask you about six months bank statements to verify these spending, so there is no hiding unless you are making some cash and making payment in cash. Clearly high spending household will reduce the limit of refinance home loan amount they can get.

Your Residence Verification: Refinance mortgage loan lenders would want to verify your residence for at least 3 years. If you are in the voters’ registrar or some government data readily available to the lenders, you just need to put your addresses for 3 years. Otherwise, prepare the utility bills for these addresses, you will be asked.

All being well you should get an offer in the post.

External Factors: These are the factors that you can not affect. I am just going to list some of them, so that you know. General condition of the economy has direct effect on mortgages and loans. When the economy is good, everyone including lenders are optimistic and this effects their decision. They look at the applications negatively or positively. Rising or falling house prices have a positive or negative effect on your application, too. Obviously, if the house prices are rising, the security underlying the refinance loan is increasing and vice versa. I know you can not do much about it; however, it is the case. Should you not have time pressures, you may choose the best time to refinance or buy a house according to lenders sentiment. It helps.

How to Find the Best Mortgage Refinance Rates

2011-07-21T09:42:00.000-07:00

1. Internet is a good place to start searching, gathering information about mortgage refinance rates, quotes and lenders. There are numerous refinancing companies available online. They may be able to provide home mortgage refinance loan at a slightly lower interest rates. Because the cost of providing service is lower, if the application is made online and they may save broker commissions. You can still enjoy outstanding customer service and fast approval.

2. Use a broker to help you find the best Mortgage Refinance Rates if the information is becoming too complicated for you. There are numerous mortgage refinance companies that are available in the market and they are providing diverse offers. Therefore, finding out the perfect one could be a tough task for most people. Don’t struggle alone; use a mortgage advisor who is thoroughly acquainted with the ins and outs of this market. A experienced refinance mortgage broker can give you some valuable advice.

3. Another option is just to drop into your bank to ask their terms to start with. Since you have a history with them, it is not a bad idea as long as you remember to check other lenders before deciding. You may easily get too comfortable with your bank, don’t. Your existing lender may modify your mortgage terms instead of losing you. Check with them, too.

What To Do And Look Out For During The Decision Process

Here are a few things to pay attention to when you refinance your mortgage loan, to make sure that you don’t overlook anything that you might regret, or that can cause you problems later.

1. Apply for a pre-approval to many different lenders to make sure you are getting the lowest refinance rate possible. When you do this, make sure that with the initial pre-approval application, the lender is not pulling your credit history. You will want to reserve your credit pull for the lender that you are most likely to work with. You can decide that after you have gone through the preliminary pre-approval process with a few lenders. Each time your credit is pulled, it docks your credit score just a little. If you have too many inquiries, it could keep you from refinancing your mortgage loan with the lowest rate possible. When you pre-apply for home mortgage loans online, most lenders or mortgage service companies will not initially pull your credit. Check for information about this on their website. They will usually tell you whether or not they are going to pull your credit. Also, if on the application you do not give them your social security number, they cannot pull your credit. If, on the application, they ask you to describe your credit, they are probably not pulling your credit report.

2. Make sure that your original mortgage does not have a pre-payment penalty or early payoff penalty of any kind. Sometimes people will get into their mortgage with the mortgage having a pre-payment penalty and they will not even know about it. Pre-payment penalties periods usually range from 6 months to 3 years with a penalty for an early payoff. The penalty is usually about the amount of 6 months worth of your home mortgage loan interest, but this varies. You would have to be able to have some significant payment and interest savings on your refinance loan to justify refinancing a mortgage loan with a pre-payment penalty.

3. Pay closest attention to the interest rates they are offering & the closing costs when evaluating different lender offers, in the mortgage loan pre-approval process. These are the two biggest factors that will help you figure out which lender is right for you. If one of these two factors is too high, it could offset the benefit of refinancing for you.

Comparing lenders would certainly help you find the best deal on refinancing, but those numbers can get pretty confusing, especially when you are to investigate rates, fees, and points. Remember though that just because a mortgage company has the lowest rates, it doesn't necessarily mean that it offers the best deal for you.

Many refinance companies will post their rates online. Lower interest on an ARM or fixed-rate mortgage can be tempting, but have a look at the fine print. What points or fees are usually required for the rate? Mortgage lenders lure consumers with low initial numbers, only to have high closing costs. A better number to look at is the APR.

The federal law requires the annual percentage rate, or the APR, to be disclosed to consumers before signing any contract. The APR would include the interest rate of the mortgage and closing costs and this will give you an accurate idea of the total cost of the refinance mortgage loan.

Just as your original mortgage had closing costs, so will your refinance mortgage. Standard fees include origination fees, appraisal costs, and closing fees, while points may also be required to secure a low rate. By looking at the APR, you can determine which lenders are offering the best fees in relation to their rates.

4. Get your interest rate and closing costs in writing as soon as you decide on a lender to work with. Get your lender to give you a commitment in advance of all of the costs that will be involved with your loan. Find out if the refinance loan you are getting has a pre-payment penalty as well. Sometimes lenders will leave out important information like this, if they think it might scare you away from refinancing with them.

5. Before refinancing, decide on how long you plan to keep the mortgage. Then, compare the costs of mortgages for how long you will have them, even if you take out a 30 year mortgage that you plan to have for only a couple of years. Mortgage calculators can always help with the math. The initial lowest rate refinance mortgage loan may not always be the best deal and it will clearly depend on your situation. For example, paying points for low rates will not save you money if you plan to move in a couple of years later.

6. Remember you are in the driving seat. No matter what financial problem you may have, if any, you are always in control. There is no single mortgage lender or bank you must use, and there is no one who can tell you what type of mortgage refinancing you need. You are in complete control of almost every aspect of a home loan refinance. The only things that are up to the mortgage lenders or banks are whether or not you get approved, what the interest rates are, and what other costs, fees, and insurance are needed. Many of these things can be negotiated, but it is ultimately up to the lender you choose to refinance.

While refinancing a mortgage is a great idea for some people, for others it just does not make sense. Each situation is different, and needs to be dealt with in its own way. These are some general tips that will help any homeowner avoid a lot of the hassles of refinancing home mortgage loan, and help them find the best mortgage refinance for their situation.

Refinance Home Mortgage Loan

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When is refinancing not a good idea?

2011-06-03T04:39:00.001-07:00

Amortization of a $200,000 loan for 30 years at 5.9%

You’ve had your mortgage for a long time.

The amortization chart shows that the proportion of your payment that is credited to the principal of your loan increases each year, while the proportion credited to the interest decreases each year. In the later years of your mortgage, more of your payment applies to principal and helps build equity. By refinancing late in your mortgage, you will restart the amortization process, and most of your monthly payment will be credited to paying interest again and not to building equity.
Your current mortgage has a prepayment penalty

A prepayment penalty is a fee that lenders might charge if you pay off your mortgage loan early, including for refinancing. If you are refinancing with the same lender, ask whether the prepayment penalty can be waived. You should carefully consider the costs of any prepayment penalty against the savings you expect to gain from refinancing. Paying a prepayment penalty will increase the time it will take to break even, when you account for the costs of the refinance and the monthly savings you expect to gain.

You plan to move from your home in the next few years.

The monthly savings gained from lower monthly payments may not exceed the costs of refinancing--a break-even calculation will help you determine whether it is worthwhile to refinance, if you are planning to move in the near future.

Why consider refinancing?

2011-06-03T04:37:00.000-07:00

Lowering your interest rate

The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month--lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved. A lower interest rate also may allow you to build equity in your home more quickly.

For example, compare the monthly payments (for principal and interest) on a 30-year fixed-rate loan of $200,000 at 5.5% and 6.0%.

Monthly payment @ 6.0% $1,199
Monthly payment @ 5.5% $1,136
The difference each month is $ 63
But over a year's time, the difference adds up to $ 756
Over 10 years, you will have saved $7,560

Adjusting the length of your mortgage

Increase the term of your mortgage: You may want a mortgage with a longer term to reduce the amount that you pay each month. However, this will also increase the length of time you will make mortgage payments and the total amount that you end up paying toward interest.

Decrease the term of your mortgage: Shorter-term mortgages--for example, a 15-year mortgage instead of a 30-year mortgage--generally have lower interest rates. Plus, you pay off your loan sooner, further reducing your total interest costs. The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month.

For example, compare the total interest costs for a fixed-rate loan of $200,000 at 6% for 30 years with a fixed-rate loan at 5.5% for 15 years.

Monthly payment Total interest
30-year loan @ 6.0% $1,199 $231,640
15-year loan @ 5.5% $1,634 $ 94,120

Tip: Refinancing is not the only way to decrease the term of your mortgage. By paying a little extra on principal each month, you will pay off the loan sooner and reduce the term of your loan. For example, adding $50 each month to your principal payment on the 30-year loan above reduces the term by 3 years and saves you more than $27,000 in interest costs.

Changing from an adjustable-rate mortgage to a fixed-rate mortgage

If you have an adjustable-rate mortgage, or ARM, your monthly payments will change as the interest rate changes. With this kind of mortgage, your payments could increase or decrease.

You may find yourself uncomfortable with the prospect that your mortgage payments could go up. In this case, you may want to consider switching to a fixed-rate mortgage to give yourself some peace of mind by having a steady interest rate and monthly payment. You also might prefer a fixed-rate mortgage if you think interest rates will be increasing in the future.

Tip: If your monthly payment on a fixed-rate loan includes escrow amounts for taxes and insurance, your payment each month could change over time due to changes in property taxes, insurance, or community association fees.

Getting an ARM with better terms

If you currently have an ARM, will the next interest rate adjustment increase your monthly payments substantially? You may choose to refinance to get another ARM with better terms. For example, the new loan may start out at a lower interest rate. Or the new loan may offer smaller interest rate adjustments or lower payment caps, which means that the interest rate cannot exceed a certain amount. For more details, see the Consumer Handbook on Adjustable-Rate Mortgages.

Tip: If you are refinancing from one ARM to another, check the initial rate and the fully-indexed rate. Also ask about the rate adjustments you might face over the term of the loan.

Getting cash out from the equity built up in your home

Home equity is the dollar-value difference between the balance you owe on your mortgage and the value of your property. When you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment (this is called a cash-out refinancing). You might choose to do this, for example, if you need cash to make home improvements or pay for a child’s education.

Remember, though, that when you take out equity, you own less of your home. It will take time to build your equity back up. This means that if you need to sell your home, you will not put as much money in your pocket after the sale.

If you are considering a cash-out refinancing, think about other alternatives as well. You could shop for a home equity loan or home equity line of credit instead. Compare a home equity loan with a cash-out refinancing to see which is a better deal for you. See What You Should Know about Home Equity Lines of Credit.

Tip: Many financial advisers caution against cash-out refinancing to pay down unsecured debt (such as credit cards) or short-term secured debt (such as car loans). You may want to talk with a trusted financial adviser before you choose cash-out refinancing as a debt-consolidation plan.

Refinance Your Mortgage to Regain Your Home

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Paying off the entire loan balance by refinancing

The sinking thought of “foreclosure” often leaves homeowners feeling like a deer in headlights. Many homeowners see notices of foreclosure as their personal white flag--time to give up and walk away.

Before surrendering to foreclosure, homeowners should consider every available option. For some, foreclosure doesn’t have to be eminent; in fact the borrower/homeowner may still have the opportunity to stop the foreclosure by catching up on defaulted payments or paying off the entire loan balance usually by refinancing or selling the property.

According to RealtyTrac, foreclosure filings increased 7% in March and many industry experts believe that many homeowners could have possibly avoided foreclosure.
Refinance Before Foreclosure - Try Your Lender First

Before considering foreclosure, explore all of your refinance options. If you’ve been consistently making mortgage payments and still have a decent credit score (over 600) your mortgage company may contemplate a conventional refinance.

Since the refinance market isn’t booming like it was a year ago some mortgage companies may think about playing, “Let’s Make a Deal,” especially if you’ve been a loyal customer. Compare and contrast mortgage brokers before making a decision. Some mortgage companies offer special deals such as reduced or no closing costs or may be more flexible with terms and payments.

Also, if you’ve been approved to refinance your mortgage, use the “excess” savings wisely. Although it may be tempting to go on a shopping spree or buy a new car, put your money back into your mortgage loan.

Your mortgage loan has the biggest influence over your credit--which will enable you to make future purchases. If you’ve been behind on payments or find that the savings will allow you to pay off the loan balance outright, use your savings to cover your mortgage loan expenses.
Unable to Qualify for a Conventional Refi? Consider Government Programs

For those who have been hit by hard times and suffered a reduction in income, followed by a depressed credit score, refinancing may still be within reach. The government has programs that considers the impact of recessionary times on homeowners:

Home Affordable Refinance: Fannie Mae offers two refinance solutions for homeowners struggling to make mortgage payments. This program is available to existing Fannie Mae loans only and is aimed at providing “access to low-cost refinancing for responsible homeowners suffering from falling home prices.”
The idea is to position responsible borrowers to make regular mortgage payments by reducing their monthly principal and interest payments (or moving them from a risky loan structure such as interest-only or short term ARM). Borrowers can refinance up to 125% loan-to-value with mortgage insurance flexibilities.

Refi Plus program is when the refinanced loan is already in the lender’s servicing portfolio.

DU Refi Plus is to increase the efficiencies for origination and underwriting of Fannie Mae loans plus Fannie Mae limited cash-out refinancing.

FHA Short Refinance: Non-FHA borrowers can seek refinancing if they are “underwater” in their mortgage loan and are current on their loan payments. Borrowers must have a credit score of 500 or better and must meet other FHA requirements.

The borrower will have to qualify for a new loan and the property must be the borrower’s primary residence. The existing first lien holder must agree to write off at least 10% of the unpaid principal balance, which brings the borrower’s combined LTV ratio no greater than 115%.

Also, the loan to be refinanced cannot be an FHA insured loan--the refinanced FHA insured first mortgage must have a LTV of no more than 97.75%.

Colorado Senator’s Proposal

Although homeowners currently have options, these avenues aren’t readily available to all homeowners underwater in their mortgage or in the process of foreclosure.

Senator Jeff Merkley of Oregon wants the government to do more to keep families in their homes, as home prices and values continue to tumble.

Like many industry experts, Merkley points to the five million potential foreclosures as holding continuous weight on the market. Every time a home is repossessed, values decline pushing the housing market further away from recovery. On his website he says, “We’re not going to see a true economic recovery until we do something about the broken housing market.”

For the past two years, mortgage companies have filed 300,000 foreclosures a month. National home prices have fallen for 57 consecutive months and economists still don’t have a handle on when the market will hit bottom.

With such a bleak immediate future, Merkley is proposing that lenders back off foreclosure proceedings during the loan modification negotiations.

Also, he believes a “short refinance” program would provide foreclosure relief to the market by allowing homeowners to refinance their mortgages based on current home values and interest rates.

Toward the beginning of the year Merkley created a six-point proposal to help homeowners hang onto their homes. When asked if this proposal was created to encourage Congress to examine questionable rulings he said, “The role is to ensure fairness (in the housing market). The complexities in the system right now can create a challenge to the health of the market. So we have to deal with this.”

Simple Guide to Mortgage Refinance

2011-05-15T08:06:00.001-07:00

Refinancing your mortgage can bring you multiple financial benefits.

"Refinancing" allows you to alter your mortgage to suit your changing needs. As mortgages have a number of extra features, it's best to choose the one that best suits your needs.
How Mortgage Refinancing Works

Firstly you take out a new mortgage, you then use some or all of the funds to pay out your existing home loan. The new loan often comes from a different lender, however you may wish to stay with your current lender. If you change lenders, your new lender will organize paying out your existing home loan.
Advantages of Refinancing your Mortgage

Most people refinance for one of the following reasons:

To make improvements to your home i.e extend/renovate.
To consolidate your debts.
To change to a lower interest rate.
To change from a variable rate to a fixed rate interest rate, enabling you to have control of your monthly repayments.
To changing from a fixed to variable rate, enabling you to pay off your home loan faster.

Costs Involved in Refinancing your Mortgage

There maybe some costs associated with refinancing your mortgage. These include: Stamp duty, mortgage insurance and early discharge fees.

Lenders Mortgage Insurance: payable when more than 80 per cent of the value of your property is loaned. Lenders mortgage insurance generally costs more than one per cent of your total property's worth.
Handling fees, Application fees and settlement.
If you happen to repay your loan before its due date you may incur an early breakout fee.
Valuation fees.
Discharge fees associated with your existing mortgage.
Government Registration fees associated with your new mortgage.

What to do next if you are thinking about refinancing your mortgage

Rate Detective provides you with many tools to help you refinance your mortgage.

Our home loan comparison tool allows you to compare home loans from a large selection of Australian lenders. You can also calculate your repayments with our exclusive mortgage calculator. For more information about home loans and refinancing your mortgage feel free to contact us or complete the form on the right.

Home Loan Mortgage Specialists

2011-05-15T08:04:00.001-07:00

Personal Home Loan Mortgages provides borrowers with the most current mortgage rates, news, resources and information. Browse through our directory of Mortgage Brokers in your city to obtain the best available quotes and advice. Our trusted brokers and lenders will compete for your business, providing you with the most competitive home loan offers on the market. By comparing interest rate quotes, you will be able to make an informed decision on new home loans, home equity loans, mortgage refinancing or a mortgage forbearance. Don't forget to use our mortgage calculators to estimate monthly mortgage payments and payoff projections.

Mortgage refinancing and second mortgages have become popular as the market tightens and interest rates become volatile. As you search the real estate market and decide on a new home, make sure to become educated on the mortgage process by working closely with a mortgage broker. Simply fill out the quick form above to get free rate quotes from our trusted partners, or browse our directory of nationwide mortgage companies.

Refinance Home Mortgage Loan

2011-04-13T10:48:00.000-07:00

Refinance home mortgage loan has always been popular among homeowners in periods of low interest rates. Home loan refinancing allows homeowners to replace the existing high interest rate home loan with a low mortgage refinance rate which would reduce monthly mortgage payments and/or shorten mortgage period considerably.

Refinance mortgage could provide low interest rate and flexible repayment options. If previous loan has been paid timely, homeowner's credit score would improve. This will help to get better refinance mortgage terms. Since new loan offers better rate, mortgage could be paid off faster.

A person with good credit score can easily take advantage of mortgage refinance loan. Those who have bad credit can also get a mortgage refinance. However they will have to pay slightly higher interest rate. Probably the best advice for people with bad credit would be to see if they could improve their credit score first.

Recently, more mortgage refinancing applications have been turned in for approval than ever before. This is due to a struggling economy, low home interest rates, and new stimulus programs that make approval of mortgage refinancing easier. In addition, the lenders and banks do not want to deal with more home foreclosures or defaults. Many new refinancing mortgage options now exist for nearly any homeowner. Eased requirements and restrictions allow more people than ever to get refinance approval.

Things To Do To Reduce Costs and Fees Before Applying for Refinancing

Saving money through a home mortgage loan refinance is more than just finding the lowest interest rates. You can further cut fees and costs through the structure of your loan, avoiding PMI and buying lower interest rates. Here are the things you could do to reduce refinance costs;

1. Get prepared. Many homeowners’ refinancing applications are being denied or returned as incomplete due to simple, easily avoidable mistakes that could cost the non refundable application fee. Do your homework; contact one or two mortgage lenders and banks to ask what their requirements are for a home loan refinance. This way, you can prepare for those requirements in the meantime.

2. Close credit card accounts. Close inactive credit card accounts to improve your credit score, making you eligible for lower interest rate loans. You will need to notify the credit card companies in writing that you wish the accounts closed on your request.
Daily Mortgage News

Next, check your credit report after 30 days to be sure closed accounts include the comment "Closed at Customer's Request." You want future lenders to know it was your request and not bad credit that closed your accounts. Also, take the time to check for any mistakes in your credit report that could negatively impact your credit score.

3. Avoid the hidden cost of PMI. When refinancing a mortgage, many homeowners cash out part or all of their home's equity to invest in home improvements or pay off credit cards. But, if you are borrowing more than 80% of your home's value, you will be hit with private mortgage insurance, costing you hundreds a year.

4. Pay points now. If you are planning to stay in your home for several years, then you can save money by paying points for lower interest rates. You pay up front fees to ensure you have lower interest payments over the course of your loan. Remember, this only works if you keep your mortgage for several years.

5. Choose a short-term home mortgage loan. Short-term mortgages offer lower interest rates than long-term mortgages. You save money by the lower interest rates and shorter payment period. The trade off is a larger monthly payment, but this option can save you thousands. Some homeowners get a better interest rate, but also have their home loan lengthened, which may negate savings through a better interest rate. If you have to lower your monthly outgoings due to your current financial position, then you would need to look at extending your payment period, obviously. Homeowners should be aware of what the reality of refinancing a mortgage means to their finances, both good and bad, both long and short term. Set out the objectives you would like to achieve with refinance and pursue those objectives.

How to Find the Best Mortgage Refinance Rates

1. Internet is a good place to start searching, gathering information about mortgage refinance rates, quotes and lenders. There are numerous refinancing companies available online. They may be able to provide home mortgage refinance loan at a slightly lower interest rates. Because the cost of providing service is lower, if the application is made online and they may save broker commissions. You can still enjoy outstanding customer service and fast approval.

2. Use a broker to help you find the best Mortgage Refinance Rates if the information is becoming too complicated for you. There are numerous mortgage refinance companies that are available in the market and they are providing diverse offers. Therefore, finding out the perfect one could be a tough task for most people. Don’t struggle alone; use a mortgage advisor who is thoroughly acquainted with the ins and outs of this market. A experienced refinance mortgage broker can give you some valuable advice.

3. Another option is just to drop into your bank to ask their terms to start with. Since you have a history with them, it is not a bad idea as long as you remember to check other lenders before deciding. You may easily get too comfortable with your bank, don’t. Your existing lender may modify your mortgage terms instead of losing you. Check with them, too.

What To Do And Look Out For During The Decision Process

Here are a few things to pay attention to when you refinance your mortgage loan, to make sure that you don’t overlook anything that you might regret, or that can cause you problems later.

1. Apply for a pre-approval to many different lenders to make sure you are getting the lowest refinance rate possible. When you do this, make sure that with the initial pre-approval application, the lender is not pulling your credit history. You will want to reserve your credit pull for the lender that you are most likely to work with. You can decide that after you have gone through the preliminary pre-approval process with a few lenders. Each time your credit is pulled, it docks your credit score just a little. If you have too many inquiries, it could keep you from refinancing your mortgage loan with the lowest rate possible. When you pre-apply for home mortgage loans online, most lenders or mortgage service companies will not initially pull your credit. Check for information about this on their website. They will usually tell you whether or not they are going to pull your credit. Also, if on the application you do not give them your social security number, they cannot pull your credit. If, on the application, they ask you to describe your credit, they are probably not pulling your credit report.

2. Make sure that your original mortgage does not have a pre-payment penalty or early payoff penalty of any kind. Sometimes people will get into their mortgage with the mortgage having a pre-payment penalty and they will not even know about it. Pre-payment penalties periods usually range from 6 months to 3 years with a penalty for an early payoff. The penalty is usually about the amount of 6 months worth of your home mortgage loan interest, but this varies. You would have to be able to have some significant payment and interest savings on your refinance loan to justify refinancing a mortgage loan with a pre-payment penalty.

3. Pay closest attention to the interest rates they are offering & the closing costs when evaluating different lender offers, in the mortgage loan pre-approval process. These are the two biggest factors that will help you figure out which lender is right for you. If one of these two factors is too high, it could offset the benefit of refinancing for you.

Comparing lenders would certainly help you find the best deal on refinancing, but those numbers can get pretty confusing, especially when you are to investigate rates, fees, and points. Remember though that just because a mortgage company has the lowest rates, it doesn't necessarily mean that it offers the best deal for you.

Many refinance companies will post their rates online. Lower interest on an ARM or fixed-rate mortgage can be tempting, but have a look at the fine print. What points or fees are usually required for the rate? Mortgage lenders lure consumers with low initial numbers, only to have high closing costs. A better number to look at is the APR.

The federal law requires the annual percentage rate, or the APR, to be disclosed to consumers before signing any contract. The APR would include the interest rate of the mortgage and closing costs and this will give you an accurate idea of the total cost of the refinance mortgage loan.

Just as your original mortgage had closing costs, so will your refinance mortgage. Standard fees include origination fees, appraisal costs, and closing fees, while points may also be required to secure a low rate. By looking at the APR, you can determine which lenders are offering the best fees in relation to their rates.

4. Get your interest rate and closing costs in writing as soon as you decide on a lender to work with. Get your lender to give you a commitment in advance of all of the costs that will be involved with your loan. Find out if the refinance loan you are getting has a pre-payment penalty as well. Sometimes lenders will leave out important information like this, if they think it might scare you away from refinancing with them.

5. Before refinancing, decide on how long you plan to keep the mortgage. Then, compare the costs of mortgages for how long you will have them, even if you take out a 30 year mortgage that you plan to have for only a couple of years. Mortgage calculators can always help with the math. The initial lowest rate refinance mortgage loan may not always be the best deal and it will clearly depend on your situation. For example, paying points for low rates will not save you money if you plan to move in a couple of years later.

6. Remember you are in the driving seat. No matter what financial problem you may have, if any, you are always in control. There is no single mortgage lender or bank you must use, and there is no one who can tell you what type of mortgage refinancing you need. You are in complete control of almost every aspect of a home loan refinance. The only things that are up to the mortgage lenders or banks are whether or not you get approved, what the interest rates are, and what other costs, fees, and insurance are needed. Many of these things can be negotiated, but it is ultimately up to the lender you choose to refinance.

While refinancing a mortgage is a great idea for some people, for others it just does not make sense. Each situation is different, and needs to be dealt with in its own way. These are some general tips that will help any homeowner avoid a lot of the hassles of refinancing home mortgage loan, and help them find the best mortgage refinance for their situation.

Factors Determining Your Refinance Home Mortgage Loan Application

Knowing what the lenders are looking for to determine your refinance loan application helps you to prepare for it well in advance. The information the lenders require may increase time to time. Nevertheless, it will not be less than what I listed below. You could say that these are the minimum information required. These factors are valid for home purchase loan applications and even for car loans or credit card applications for that matter.

Your Income Level: This is usually called household income and includes your partners income as well if you are buying (or owning) your home jointly (your friend’s income if you are buying with a friend). Refinance home mortgage loan lenders have a metric called income multiplier. For example if the metric is 3 times of the income, it means that you can only borrow 3 times of your earnings (or joint earnings). These metric changes as the lenders get optimistic/aggressive or pessimistic/cautious. Of course the lender will go through the details of your job as far as verifying it. They will at least ask your last three months wage slips. They may want to confirm with your boss. They do this in different manners, though generally by a letter. You will be asked to confirm in your application that it is OK for them to do so. The longer you were in your current job is the better, otherwise you will need to provide information about your previous jobs as well. Self employed people need to provide accounts and probably confirmation from their accountant. Your income is the very starting point of the process. There and than the lenders should be able to tell you how much maximum refinance home mortgage loan they can offer you.

Down Payment: You will need to put down certain amount of the property value. The higher the down payment, the easier the process becomes. Your application gets accepted easier, you are offered better rates and your payments become more affordable. Unless you have a steady, verifiable jobs and best of credit score you are looking at minimum of 15–20% down payment (in refinance cases, that would be the equity left in your home after the loan). They used to do a 25% down payment and no questions asked mortgages, but the lenders wised up the hard way not to ask anything. There is the issue of Private Mortgage Insurance (PMI) that the lenders would make sure you pay if they are lending more than 80% of the value of the property. So you save on that if you can put at least 20% (or refinance up to 80%).

Your Credit Score: It is wise to say that you should not start the process of refinance home mortgage loan application without checking your credit score. There are many free credit score providers available, but I would suggest that you get a copy of your credit report and go through it. This would at least give you an insight to how it works. There may be something that should not have been there and it may be corrected by just calling your credit card company or bank. Your credit score identifies you to the lender as a number. It really is that simple. John Smith becomes 708 to the mortgage underwriter. Looking after your credit score is a long, continuous process. However, if you failed on that do not despair, you can repair your credit in time. No not with the credit repair agents, just yourself. Starting from today, if you put your house in order, start making your payments in time and sorting out your financial affairs you can prepare yourself for a mortgage with good credit score 6–12 months down the line. If you have time, this would be much better option for you than trying to get a refinance home mortgage loan with bad credit.

Your Income and Expenditure Statement: Most refinance home mortgage loan applications will have a section to put your household income and expenditure or there will be an additional form. You will need to put all the sources of income in here with all the expenditures including credit card payments, car loan payments, children’ school fees as well as the usual monthly utility bills, grocery and clothing spending. This will allow the lender to assess your ability to afford the mortgage payments. They will ask you about six months bank statements to verify these spending, so there is no hiding unless you are making some cash and making payment in cash. Clearly high spending household will reduce the limit of refinance home loan amount they can get.

Your Residence Verification: Refinance mortgage loan lenders would want to verify your residence for at least 3 years. If you are in the voters’ registrar or some government data readily available to the lenders, you just need to put your addresses for 3 years. Otherwise, prepare the utility bills for these addresses, you will be asked.

All being well you should get an offer in the post.

External Factors: These are the factors that you can not affect. I am just going to list some of them, so that you know. General condition of the economy has direct effect on mortgages and loans. When the economy is good, everyone including lenders are optimistic and this effects their decision. They look at the applications negatively or positively. Rising or falling house prices have a positive or negative effect on your application, too. Obviously, if the house prices are rising, the security underlying the refinance loan is increasing and vice versa. I know you can not do much about it; however, it is the case. Should you not have time pressures, you may choose the best time to refinance or buy a house according to lenders sentiment. It helps.

Should You Choose Fixed Rate or Flexible Rate Refinance Home Mortgage Loan?

This article may seem to conflict with my other blogs where I talk about keeping your options open and not getting into high redemption penalty situation, but you will see that it does not. Let us look at the terminology.

Fixed rate home mortgage loan or refinance loan means that you fix your loan interest for a long period of time. Once you get a fixed rate mortgage, you will have a peace of mind of knowing how much you are going to pay each month in that duration. In return to giving you a fixed rate, lenders would want you to be committed to that loan. They will make sure with the redemption penalties that you will not refinance it anytime soon. I think it is only fair for them to do this, because to cover your fixed rate they will have to go out and find fixed source of capital. So your flexibility will be much lower but you will have a peace of mind just in case the mortgage rates shoot again.

Flexible home mortgages keep your mortgage rate flexible, meaning your loan interest will go up or down with the determined criteria (usually the base rate). Here you will have a very small (or no) redemption penalty, giving you flexibility to refinance again or pay your loan back say when you sell your home. However, you do not know where the rates are going to be in two years time. It may shoot up as well as hit the rock bottom.

One thing to note here is that some fixed mortgage lenders may allow you to move your mortgage if you decide to move, although usually selling your home and buying a new one must be done in the same time. In general the real fixed rate mortgages would be slightly higher interest; however there are so many different mortgages to generalize. Some mortgages may only be fixed to start with and then it may become flexible and higher interest after the short initial fixed period. These are little tricks the banks play on the customers to show them how low their monthly payments. Somehow consumers are focused on the near term and starting monthly payments plays an important part in their decision. What we are discussing here is a real deal fixed mortgage of considerable duration, not an introductory fixed period.

Now the decision of which of the rates to get depends entirely in your beliefs and circumstances. For example, a) you believe that the home mortgage loan rates hit the rock bottom and can not go much lower anymore, b) you have found your ideal home and you will not move for a job or other reasons for a long time, c) your credit score is very good just now to qualify you for the best rates, d) you are worried the rates will go up quite much and you want a peace of mind. Then, you should look to fix your mortgage interest as long as you can. In the completely opposite scenario, you should remain flexible. I hope it is all clear.

Differences Of Refinance And Home Equity Loan

Refinancing your home mortgage loan is different from getting a home equity loan. While both allow you to cash out equity in your home, these two types of home financing serves different purposes.

Refinancing Your Home Mortgage Loan is basically replacing one mortgage loan with another. Typically, refinancing lowers mortgage payments through lower interest rates or longer loan terms. You can also cash out part of your home’s equity while refinancing. The real reason behind it is simply you have been offered a better interest and you will save money on the long run. You may in fact choose to shorten your mortgage by paying a bit more or the same (you pay less interest more capital repayment). Refinancing requires paying closing fees. To recoup these costs, you usually need to stay in your home for a few years. However, you will save money with better terms than if you choose a home equity loan (second mortgage).

Second mortgages have slightly higher rates than mortgages, but you have less or no closing costs. In the case of second mortgages, you keep your existing mortgage and borrow more on top of it. So your new interest rate only applies to the additional amount you borrowed while first mortgage remains the same. If you want to tap into your equity to make some home improvements but plan to sell soon, then a second mortgage would be better than refinancing your mortgage. Second mortgages also are a better choice when your current mortgage interest rate is lower than those being offered by refinancing lenders.

When deciding which financing option to choose, consider the purpose of the loan. If you want to reduce monthly payments, then refinance. If you simply want to tap into your home’s equity for a small amount, then apply for a second mortgage. As these two mortgages are separate, you will be able to pay your second mortgage earlier than your main mortgage.

Also, consider how long you want to stay in your home. You can lose money refinancing your mortgage if you don’t stay in your home long enough to recoup the closing costs with the savings you made from refinancing. Only you know which loan fits your financial needs best.

Benefits of Refinancing a Home Loan

2011-04-13T10:47:00.001-07:00

Like most homeowners, you’ve probably heard compelling reasons for refinancing your home loan:

* Keep your payments stable with a fixed-rate loan
* Lower your interest rate
* Get cash out from your home’s equity
* Consolidate debt

But how do you know if it’s the right time for you to refinance?

LendingTree has a mortgage refinance calculator, the Mortgage CheckUp, to help you compare your mortgage home loan to current loan options and interest rates, and decide if refinancing is the smart move.

Once you’re ready to refinance, we can connect you with lenders providing a wide range of home loans including cash-out refinancing. Our lenders compete for your loan by offering mortgage loans with competitive refinance rates that can save you money.

When comparing your home mortgage refinance options, you can choose between fixed rate loans and variable rate loans, both for 15 or 30 year terms. You can also compare refinance interest rates, points and other loan options to find the best mortgage for your financial needs.

There are many good reasons to refinance. With today's low interest rates, you may be able to save on your monthly payments. Mortgage refinancing can also give you cash back to use for home improvement or other purposes, or to consolidate debt or eliminate credit card debt. If you already have two loans or a second mortgage, refinancing both loans can simply your finances and save you money at the same time. You can also choose to change your payment terms, such as converting to a fixed rate loan to lock in low interest rates, or change to a shorter mortgage term to pay off your home more quickly.

When you are ready to refinance, LendingTree can help you enjoy all the benefits of a home refinance loan custom-fitted to your needs.

Mortgage Refinancing Basic Series

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Refinancing is when you apply for a secured loan in order to pay off another different loan secured against the same assets, property etc. If this original loan had a fixed interest rate mortgage which has now declined considerably, then you would like to avail of a new loan at a more favorable interest rate.
When is Refinancing an Option

Typically home refinancing is done when you have a mortgage on your home and apply for a second loan to pay off the first one. While taking the decision to go for the home refinancing option, it is important to first determine whether the amount you save on interests balances the amount of fees payable during refinancing.
Refinance Guide

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Guide to Mortgage Refinancing »
o Introduction to Mortgage Refinancing
o Tax Advantages of Refinancing
o Refinance or Second Mortgage?
o Closing Costs and Refinance Risks

Home Refinancing Benefits

Imagine a scenario where you can have access to extra cash, while simultaneously lowering your monthly mortgage payment. This dream can become a reality through mortgage refinancing.

A house is the largest asset you may ever own. Likewise, your mortgage payment may be the largest expense you'll have in your monthly budget. Wouldn't it be great to use this asset to reduce your monthly payment and put extra cash in your pocket? When you refinance your mortgage, you can take advantage of the equity in your home and enable this to take place.
Lower Refinance Rate, Lower Payments

When you purchased your dream home, the financial environment dictated interest rates. While certain factors, like your credit rating and the amount of the down payment that you were able to afford, influenced your interest rate, the single most important factor was the prevailing rates at that moment. However, interest rates fluctuate. When the Federal Reserve enters a rate-cutting period, the prevailing rates may become significantly lower than when you originally purchased your home.

By refinancing your mortgage when interest rates are lower, you can exchange a higher interest rate for a lower one, which, in turn, will lower your monthly payment.
Shorten the Length of Your Mortgage when Refinancing

Another advantage of home refinancing is that you can shorten the term of your mortgage. Let's say, for example, that you originally had a 30-year mortgage and have been paying it for eight years. Thanks to mortgage refinancing, you can switch to a shorter term of either 10, 15 or 20 years. This can save you thousands of dollars of interest. Also, if the refinance rate is lower, but you maintain the same monthly payment, you will build up equity in your home more quickly, because more of your payment will be going towards principal.
Exchange an Adjustable Rate (ARM) for a Fixed Refinance Rate (FRM)

When interest rates are low, adjustable rate mortgages (ARMs) are the housing market's darlings. However, as interest rates increase, that adjustable rate may not look as sweet. It's also possible that you opted for an ARM because your financial future was less secure, or you weren't sure how long you'd stay in your home. If, however, you've become financially stable and know that you'll be staying in your home for several years, it may be beneficial to swap that fluctuating adjustable rate for a fixed one. You'll have more security knowing that your monthly payment will remain steady, regardless of the current market environment.
Cash-out refinancing

One way to put more money in your pocket is to tap into the equity you've built in your home and do a "cash-out" refinancing. In this scenario, you can refinance for an amount higher than your current principal balance and take the extra funds as cash. This can provide money for remodeling your home, paying off high-interest rate bills, or sending your kids to college.
PMI (Private Mortgage Insurance)

If you were unable to make a down payment of 20 percent when you purchased your home, you may have been required to purchase Private Mortgage Insurance or PMI. If your house has appreciated since then, and you've steadily paid down your mortgage, your equity may now be more than 20 percent. If you refinance, you will no longer need PMI.

In many ways, your house is like a cash cow. If you have discipline and knowledge of the benefits of refinancing, you can tap into its milk for years to come.

To find the best refinance loan offers complete our short form. You will find lenders and brokers that offer home refinance loans in California, Florida and all other states.

When not to refinance

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Refinancing is not a good idea if:

* Your property value has gone down:
If your property value goes down and you refinance up to 80% of the appraised value, your original mortgage amount may be higher than the amount you borrow. Therefore, the new loan will not be enough to pay down the existing one.

* You have been paying off the first loan for a long time:
If you are almost finished paying off a 30 year fixed mortgage, then refinancing is not a good idea. You will lose equity in proportion to the amount you borrow over and above the remaining loan amount.

* You have used up enough equity:
Refinancing is not a good idea if you have already reduced the amount of your equity by taking out a 2nd mortgage or a home equity loan. Refinance loans for 100% of the loan are rare, and with the mortgage market currently in a crisis, are hard to find.

* You have a few years left on the current loan:
If there are only a few years left on your current loan, then refinancing is not a good idea. Taking out a new loan will only put you deeper into debt just when you were about to become debt free.

Refinancing makes sense for the right reasons and at the right time. You need to decide whether to opt for a simple interest rate adjustment refinance or a refinance that will provide you with extra money. If you'd like to check out what mortgage refinance rates and terms are currently available, request a no-obligation free mortgage refinance quotes from our community lenders and brokers.

When to refinance a mortgage

2011-02-20T01:39:00.000-08:00

"Should I refinance my house now?" – This is what most people ask when they're looking to reduce their mortgage payments by taking advantage of low rates. To find the answer, check out the mortgage refinance tips below:

* Build up equity:
You can refinance when you have built up at least 10% equity in your home (Fannie Mae owned mortgages, require 5% equity). It is possible for you to refinance if you have less than 5% equity, but you may have to pay a certain amount of money in order to make up the difference in equity.

* Check if mortgage refinance interest rates are low:
It's better to follow the 2% Rule. The 2% Rule allows you to enjoy the benefits of home refinance if the refinance interest rate is 2% lower than your current loan's interest rate. The savings in interest will help you recoup the costs of the new loan, provided you aren't planning to move soon (the break-even period). However, there are no-cost as well as low-cost refinance loans where the costs of getting the loan are included. However, these loans have comparatively higher rates than loans that do not include the refinance costs and your options are limited when the credit market is experiencing a slump. Learn more about the when to refinance rule of thumb.

As always, compare mortgage refinance interest rates offered by different lenders in order to get the best interest rate. This will help you save more over the life of the loan.

* Pay off any late payments:
There is no such limit on the number of times you can go for home refinance loans. Most lenders prefer that you have no late payments in the last 12 months before you refinance.

* Remove negatives and improve your credit score:
Get your credit report from the bureaus and review it for any negative items (late payments, collections, etc) and inaccurate items. Dispute any inaccurate items and remove them from the report. Pay off as much of your debt as you can. Otherwise, you won't get a low interest rate and may not even qualify for a refinance loan. Of course, there are lenders in the subprime lending market who may offer you a mortgage refinance loan, but it's better to avoid them as they'll charge higher interest rates and fees and could be fraudulent.

5 Reasons why you should refinance

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If you're thinking of refinancing your house, check out these 6 reasons why a mortgage refinance might be right for you.

* You want to save more:
Your monthly payments will be reduced if you get a lower interest rate or when the term of the loan is extended. However, with an extended term, you will be paying more in interest during the life of the loan.

* You want to pay down your mortgage quickly:
You can shorten the length of your mortgage by reducing the term of the loan. Your Monthly payments will go up, but you will be able to save more in interest payments. Moreover, you'll be debt free sooner.

* You need extra cash to pay off credit cards:
If you have enough equity in your home, you can refinance and borrow more than the current loan balance. With the extra money, you can pay off high interest debts such as credit card balances or installment loans. This refinance loan may be tax deductible under certain conditions.

* You wish to consolidate 2 loans into one:
If there's enough equity (due to high appreciation), you can consolidate a 1st and 2nd mortgage into a single mortgage. The monthly payment on the new loan might be lower than the combined payments on the first loan and the second mortgage.

* You want to convert an Adjustable Rate Mortgage (ARM) into a Fixed Rate Mortgage (FRM):
A FRM prevents the lender from increasing your monthly interest payments over the life of the loan, unlike with an ARM. This means your monthly payments will remain the same.

Things To Do To Reduce Costs and Fees Before Applying for Refinancing

2011-01-30T05:37:00.000-08:00

Saving money through a home mortgage loan refinance is more than just finding the lowest interest rates. You can further cut fees and costs through the structure of your loan, avoiding PMI and buying lower interest rates. Here are the things you could do to reduce refinance costs;

1. Get prepared. Many homeowners’ refinancing applications are being denied or returned as incomplete due to simple, easily avoidable mistakes that could cost the non refundable application fee. Do your homework; contact one or two mortgage lenders and banks to ask what their requirements are for a home loan refinance. This way, you can prepare for those requirements in the meantime.

2. Close credit card accounts. Close inactive credit card accounts to improve your credit score, making you eligible for lower interest rate loans. You will need to notify the credit card companies in writing that you wish the accounts closed on your request.
Daily Mortgage News

Next, check your credit report after 30 days to be sure closed accounts include the comment "Closed at Customer's Request." You want future lenders to know it was your request and not bad credit that closed your accounts. Also, take the time to check for any mistakes in your credit report that could negatively impact your credit score.

3. Avoid the hidden cost of PMI. When refinancing a mortgage, many homeowners cash out part or all of their home's equity to invest in home improvements or pay off credit cards. But, if you are borrowing more than 80% of your home's value, you will be hit with private mortgage insurance, costing you hundreds a year.

4. Pay points now. If you are planning to stay in your home for several years, then you can save money by paying points for lower interest rates. You pay up front fees to ensure you have lower interest payments over the course of your loan. Remember, this only works if you keep your mortgage for several years.

5. Choose a short-term home mortgage loan. Short-term mortgages offer lower interest rates than long-term mortgages. You save money by the lower interest rates and shorter payment period. The trade off is a larger monthly payment, but this option can save you thousands. Some homeowners get a better interest rate, but also have their home loan lengthened, which may negate savings through a better interest rate. If you have to lower your monthly outgoings due to your current financial position, then you would need to look at extending your payment period, obviously. Homeowners should be aware of what the reality of refinancing a mortgage means to their finances, both good and bad, both long and short term. Set out the objectives you would like to achieve with refinance and pursue those objectives.

Refinance Mortgage - How much to save by refinancing

2011-01-30T05:21:00.000-08:00

Are you stuck with increasing monthly payments and looking for favorable rates and terms on your loan? Or, do you want to consolidate your debts and pay them off faster? All these and more can be done by refinancing your mortgage. If you want to know what refinancing is all about, check out the following topics:

* What is refinancing?
* 5 Reasons why you should refinance
* When to refinance a mortgage
* When not to refinance
* 9 Refinance Mistakes and how to avoid them
* Frequently asked mortgage refinance questions
* Is bad credit mortgage refinance available?
* Home Affordable Refinance - What is it all about?
* What is conventional streamline refinance?

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* How much to save by refinancing
* Consolidation and Refinance Calculator

What is refinancing?
Refinancing replaces your current mortgage with a new loan that has a more favorable interest rate and terms that you can afford to manage. The new loan is secured on the same property as your current loan. The new loan funds are used to pay down the current mortgage while any remaining money can be used to your best advantage.

Example: Mr. X and Mr. Y both took out a mortgage loan worth $400,000. After 4 years, both of them paid off $200,000. Mr. X then took out another home loan worth $200,000 in order to repay the existing loan balance.

On the other hand, Mr. Y took out another mortgage worth $300,000 in order to repay the unpaid loan balance which is $200,000. Mr. Y could use the remaining balance in order to fulfill other financial obligations.

The first scenario is a simple refinance while the second is that of a "cash-out refinance".
5 Reasons why you should refinance
If you're thinking of refinancing your house, check out these 6 reasons why a mortgage refinance might be right for you.

* You want to save more:
Your monthly payments will be reduced if you get a lower interest rate or when the term of the loan is extended. However, with an extended term, you will be paying more in interest during the life of the loan.

* You want to pay down your mortgage quickly:
You can shorten the length of your mortgage by reducing the term of the loan. Your Monthly payments will go up, but you will be able to save more in interest payments. Moreover, you'll be debt free sooner.

* You need extra cash to pay off credit cards:
If you have enough equity in your home, you can refinance and borrow more than the current loan balance. With the extra money, you can pay off high interest debts such as credit card balances or installment loans. This refinance loan may be tax deductible under certain conditions.

* You wish to consolidate 2 loans into one:
If there's enough equity (due to high appreciation), you can consolidate a 1st and 2nd mortgage into a single mortgage. The monthly payment on the new loan might be lower than the combined payments on the first loan and the second mortgage.

* You want to convert an Adjustable Rate Mortgage (ARM) into a Fixed Rate Mortgage (FRM):
A FRM prevents the lender from increasing your monthly interest payments over the life of the loan, unlike with an ARM. This means your monthly payments will remain the same.

When to refinance a mortgage
"Should I refinance my house now?" – This is what most people ask when they're looking to reduce their mortgage payments by taking advantage of low rates. To find the answer, check out the mortgage refinance tips below:

* Build up equity:
You can refinance when you have built up at least 10% equity in your home (Fannie Mae owned mortgages, require 5% equity). It is possible for you to refinance if you have less than 5% equity, but you may have to pay a certain amount of money in order to make up the difference in equity.

* Check if mortgage refinance interest rates are low:
It's better to follow the 2% Rule. The 2% Rule allows you to enjoy the benefits of home refinance if the refinance interest rate is 2% lower than your current loan's interest rate. The savings in interest will help you recoup the costs of the new loan, provided you aren't planning to move soon (the break-even period). However, there are no-cost as well as low-cost refinance loans where the costs of getting the loan are included. However, these loans have comparatively higher rates than loans that do not include the refinance costs and your options are limited when the credit market is experiencing a slump. Learn more about the when to refinance rule of thumb.

As always, compare mortgage refinance interest rates offered by different lenders in order to get the best interest rate. This will help you save more over the life of the loan.

* Pay off any late payments:
There is no such limit on the number of times you can go for home refinance loans. Most lenders prefer that you have no late payments in the last 12 months before you refinance.

* Remove negatives and improve your credit score:
Get your credit report from the bureaus and review it for any negative items (late payments, collections, etc) and inaccurate items. Dispute any inaccurate items and remove them from the report. Pay off as much of your debt as you can. Otherwise, you won't get a low interest rate and may not even qualify for a refinance loan. Of course, there are lenders in the subprime lending market who may offer you a mortgage refinance loan, but it's better to avoid them as they'll charge higher interest rates and fees and could be fraudulent.

When not to refinance

Refinancing is not a good idea if:

* Your property value has gone down:
If your property value goes down and you refinance up to 80% of the appraised value, your original mortgage amount may be higher than the amount you borrow. Therefore, the new loan will not be enough to pay down the existing one.

* You have been paying off the first loan for a long time:
If you are almost finished paying off a 30 year fixed mortgage, then refinancing is not a good idea. You will lose equity in proportion to the amount you borrow over and above the remaining loan amount.

* You have used up enough equity:
Refinancing is not a good idea if you have already reduced the amount of your equity by taking out a 2nd mortgage or a home equity loan. Refinance loans for 100% of the loan are rare, and with the mortgage market currently in a crisis, are hard to find.

* You have a few years left on the current loan:
If there are only a few years left on your current loan, then refinancing is not a good idea. Taking out a new loan will only put you deeper into debt just when you were about to become debt free.

Refinancing makes sense for the right reasons and at the right time. You need to decide whether to opt for a simple interest rate adjustment refinance or a refinance that will provide you with extra money. If you'd like to check out what mortgage refinance rates and terms are currently available, request a no-obligation free mortgage refinance quotes from our community lenders and brokers.

Mortgage Refinancing Basic Series

2011-01-30T05:18:00.000-08:00