A lot of people are convinced that the bad housing market and economy are going to prevent them from getting a mortgage refinancing that will be beneficial. However, the truth is that mortgage lenders and banks are more eager than ever before to help struggling homeowners. Nobody wants the market to recover more than the lenders and banks who are holding a lot of risky assets unless things improve. Here are some reasons that homeowners should look into refinancing a home mortgage today, and why it is not that hard to get approved for.Many homeowners are struggling financially due to a tough economy and a unstable housing market. Because of these problems though, there are a few opportunities where nearly any homeowner can get a mortgage refinancing that will save them a lot of money, prevent their home from being lost to foreclosure, or both. Because of the housing market, home loan interest rates have actually been lowered to near record lows to help encourage growth and bring some stability. Because interest rates are so low, nearly any homeowner that has the same mortgage from 5 years or longer ago can refinance into a much lower interest rate that will save them a lot of money over the course of the home loan.Homeowners a few years ago would have needed to have a good overall financial situation, equity in their home, and need to meet a lot of other requirements to get a beneficial mortgage refinance approval. Now though, things have changed, and lenders and banks nationwide are easing their refinancing requirements so that more homeowners will get an approval. The vast majority of mortgage lenders and banks already have huge inventories of foreclosed and defaulted on homes that they need to sell, in a bad market. The last thing they want is to drive prices down even further, or deal with a lot of new home inventory. In order to prevent things from getting worse than they are, the lenders and banks are approving a lot of people, even some who have been denied just a few months prior to them applying again.There is even a stimulus plan from the Obama administration that is providing cash incentives to participating mortgage lenders and banks who help struggling homeowners refinance a mortgage. This main goal of this $75 billion housing stimulus program is to prevent foreclosures. Nearly everyone being foreclosed on is in financial trouble, but these incentives take some of the risk off the lenders and banks. Because of the cash incentives, many homeowners are actually preventing foreclosures that are already in place, and getting an affordable monthly mortgage payment through refinancing.Homeowners are being encouraged to take action and contact mortgage lenders and banks to see what the reality of refinancing a mortgage is in this economy. Most homeowners will be pleasantly surprised to see that the fact of the matter is that refinancing a home loan has never been easier, or more beneficial, than it is now.
To the average consumer, lower interest rates generally mean a reason to refinance. But not many people know that these rates are inversely correlated with the stock market. Hence, as long as the stock market is down, interest rates will continue to remain low. Accredited investors take advantage of an efficient market. Well, how do you take advantage of a down market? The following five facts are a must read for anyone looking to refinance their current home mortgage in 2010-2011.
The Home Appraisal Scenario: The number one reason I see nowadays of home refinance loans being rejected is that the appraisal of the clients home didn’t come back up to par. Basically, for lenders to refinance your home, your loan to value ratios must be 80% or better. This simply means that you must have at least 20% equity in your home. Otherwise, lenders will not refinance your current mortgage.
Choosing the Right Lenders: There are hundreds of lenders who would love to have your business. Make sure that you SHOP your loan scenario around. The most effective way to do this is to contact a mortgage broker who has contacts with hundreds of lenders, as they will be your best bet to attaining the best rate. These professionals will fight for your business and help you throughout the entire process
Digging up your Documents- Make sure you have all necessary documents before you shop around for our loan. This includes a copy of your current mortgage statement, HOA documents, your last two pay stubs, your last two years of tax forms, verification of employment forms, and a copy of your social security and ID cards. If you don’t have these items, it will be impossible to refinance your home loan
Choosing the Best Rates- The most sensible rates out there for “refi-ers” are for 30 year fixed programs. These rates are at all time lows and it makes sense to get locked before rates rise. Did you know that the rates for a 10 year fixed are the same for a 30 year? You should get yourself locked in and consider it a wise investment that will yield you dividends in the form of savings for many years to come
Paying No Closing Costs- Have you heard of a “no cost refinance.” Well, some mortgage brokers will charge you absolutely nothing if the rates are right. You can negotiate yourself into a no cost refinance but it will cost you the best possible rate. It is advised that you run the numbers with your friendly neighborhood mortgage broker and find a scenario that best suits your needs.So, before you consider refinancing, please check the value of your home. Make sure to choose the right mortgage broker who has contacts with various lenders. Also, make sure to dig up your past documents and opt for the best rate and terms available. And lastly, shop, shop, shop for a no-cost refinance. Paying $0 for a refinance is beautiful. We can make it a reality. Please see our website and we can walk you through the refinance process and help you with all five steps listed.
Many people believe having bad credit means that buying a home is out of the question. However, there are purchase loans available for consumers with less than perfect credit. Read on for a basic lesson in subprime lending.The credit score consumers see on their credit report can range from approximately 300 to approximately 900. (A credit score can also be referred to as a FICO score). Most people fall somewhere between the 600 and 700 range. According to Bankrate, those with a 620 credit score or lower tend to have a history of late or missed payments on their existing debt and most likely will not qualify for a conventional mortgage. These consumers are considered subprime, and the mortgages that are granted to them are called subprime mortgages.The interest rates for non-prime mortgages are higher than for traditional, or prime, mortgages, but how much higher can vary a great deal from lender to lender. The rate quoted to a consumer also depends on factors such as credit score and down payment size. Non-prime loans may also carry a significant prepayment penalties and/or balloon payments. A prepayment penalty is charged to the borrower if they decide to sell the home or refinance before the term of the loan is complete. A balloon payment means that the borrower has to pay off the loan in full after a certain period of time. If they are unable to do so, they must refinance the loan or sell the home.What if a consumer already owns a home, but is faced with bad credit? In order to help clean up their FICO score, some homeowners may want to cash out on their home equity. Sometimes called bad credit mortgages, these loans are designed to take the equity in one’s home and use it to pay off credit card and other types of debt. These loans typically have relatively low mortgage interest rates and the interest is usually tax deductible.There are definitely options for those with less than stellar credit who are looking to purchase a home or use existing equity to get out of financial trouble. However, because of the variables that exist within the structure of subprime mortgages, borrowers should always compare rates among mortgage brokers and know their credit score before shopping for a mortgage.
As mortgage rates continue to be some of the lowest in recent years, an increasing number of homeowners have made the decision to refinance their homes. In fact, Fannie Mae and Freddie Mac have refinanced millions of homes in the last year or so. Most of these loans have been fixed rate mortgages, regardless of whether the original loan was adjustable or fixed. The reason is simple. Most homeowners today are wary of adjustable rate mortgages and crave the security that fixed rate mortgages offer.This spells good news for borrowers because fixed rate mortgages are available just a fraction of a point higher than ARMS while offering far more stability. In fact, some homeowners have been able to actually save additional money by refinancing from a previous 30 year mortgage to a 15 year mortgage. By home refinancing, this means that they can pay off the mortgage loan in a shorter amount of time and save a tremendous amount of money in interest while also enjoying affordable monthly mortgage payments.If you are considering refinancing your home in the near future, there are some important things you should know. First, do pay attention to your credit score. Always check your credit score before you apply to refinance your home. The interest rate that is available to you will depend upon your credit history. The best rates will only go to those who have a minimum credit score of 740. If your credit score is not in that rage, try to wait a few months to refinance and give yourself time to improve your credit score by paying off as much debt as you can and being sure payments are sent in on time.You may benefit by consider a shorter term mortgage. Consider whether you can afford to pay a little bit more each month in order to obtain a 15 year loan over a 30 year mortgage. While the monthly payment might be slightly higher, you will likely have a lower interest rate and will pay less interest in the long run.Review your budget and be sure you do not stretch your payments beyond what you can realistically afford. It is best to try to keep your total housing expenses below 35% of your total income. Make sure you figure in all of your housing costs, including homeowner’s insurance.In some cases, it could be worth it to go ahead and pay for discount points upfront in order to gain an even lower interest rate. This can be especially beneficial if you know that you are planning to remain in the home for a long time. Also, you may be able to deduct the cost of the points on your income tax return.Keep in mind that if your mortgage has less than 20% equity you will have to pay for PMI or private mortgage insurance. This applies even if you are refinancing. The cost of the PMI may be required as a monthly payment or could be required as an upfront cost. Either way, this is an additional expense that you will need to plan for. Do not make the mistake of overlooking this as it could make the difference between your monthly payment being affordable and suddenly breaking your budget.Remember that lenders tend to be very wary regarding the values of homes today. Consequently, appraisers are taking a conservative approach as well. As a result, you should not set your hopes on a higher than average appraised value. In order to obtain the best deal for your upcoming refinance, you should set your sights on having equity of at least 20% of your total appraised value.Be sure to check out available government programs. You could very well be eligible for such programs if you have an adjustable rate mortgage and your payments have recently increased or your home value has dropped. The Making Home Affordable Refinance Program, also known as HARP, makes it possible for homeowners who have a mortgage debt between 80% and 105% of the home’s value to refinance without the need to pay additional PMI.Currently, mortgage rates are still quite low, meaning that there has never been a better time to refinance your home if you can meet the qualification guidelines. Following the suggestions above can help you to ensure that you are prepared for the refinance process and that you can obtain the best deal possible when the time comes to refinance your mortgage loan.