If you are a homeowner carrying a home equity loan in addition to your mortgage, refinancing to one monthly payment could save you money. Consolidating these loans has the advantage of one lower monthly payment and you can even lock in a fixed interest rate. Here are several tips to help you refinance your primary mortgage and home equity loans without overpaying for the financing.Refinancing has many advantages for homeowners with multiple loans. Consolidating your primary mortgage and home equity line of credit will make your monthly budget easier to mange by providing you one lower monthly payment. Additionally, you will qualify for a lower interest rate on your new mortgage than the one you were paying on your home equity loan. Home equity loans come with higher interest rates than your primary mortgage because there is additional risk for the second lender. The home equity lender passes this risk on to the borrower in the form of higher interest rates.Refinancing is also not without risk. The main disadvantage of refinancing your mortgage is that you are starting your amortization all over again. At the beginning of your mortgage, most of your monthly payment is applied to interest and very little goes to repaying the loan principle. When refinancing your mortgage there is the additional risk of overpaying for the new mortgage loan. To avoid overpaying for the new mortgage it is important to shop around from a variety of mortgage lenders and brokers. When you compare loan offers be sure and compare all aspects of the loans, not just the interest rates. You can learn more about shopping for the most competitive loan offer by registering for a free mortgage guidebook.
Mortgage cycling is a strategy for building equity in your home and quickly paying down the balance of your mortgage loan. Cycling your mortgage is an effective strategy when executed properly; here are the basics you need to understand before attempting a mortgage cycling strategy to build equity in your home.Mortgage cycling is a repayment strategy that can shave ten years off the repayment of your mortgage loan. This is an effective strategy for any homeowner with a couple hundred dollars of disposable income every month. Many people don’t have this amount of cash on hand every month; if you don’t have the money there is still a way to implement this strategy using equity in your home.Mortgage cycling works by making large equity payments against the principle loan balance of your mortgage, several times every year. Many homeowners make $5,000 equity payments every six months. If you don’t have the cash on hand you can utilize a home equity line of credit to make the equity payments. You will need to pay off the equity line quickly, usually within six months to make the next equity payment. This is necessary to take full advantage of the mortgage cycling strategy. Making these payments quickly reduces the principle balance and the amount of your monthly payment that is applied to interest.If you use the home equity line of credit option to cycle your mortgage it is important to shop for a competitive home equity loan as you will have to pay interest, lender fees, and often closing costs to secure this loan. Most of these fees will be one-time up font expenses and you will only pay finance charges when you borrow against the equity line of credit. It is important to remember that home equity lines of credit come with variable interest rates; when interest rates go up, your payment amounts and finance charges go up with them. You need to factor this expense into your calculations before deciding to go forward with a mortgage cycling plan.To implement a mortgage cycling plan effectively you need to continue making the equity payments for a period of ten years. There are risks involved when using a home equity line of credit; because your home equity line is secured with your home if you fall behind on the payments you could lose your home. You can learn more about your mortgage options by registering for a free mortgage guidebook.
There are a number of reasons for refinancing your home loan regardless of your financial situation or the economy. Refinancing can help you lower your monthly payment amount, qualify for better terms or interest rates, even build equity in your home at a faster rate. Here are three common reasons for refinancing your mortgage and the advantages that go along with themI. Consolidate Your BillsOne of the best reasons for refinancing your mortgage is to cash out equity in your home for the purpose of consolidating your higher interest debts. The advantage of refinancing over using other types of equity loans is that you will be left with one monthly payment and a lower interest rate. When you refinance your existing mortgage and take cash back you are actually borrowing more with the new loan than you owe on your existing mortgage. The difference between the old mortgage and your new loan will be paid to you at closing; this is the money you will use to pay off your bills.II. Lower Your Monthly Mortgage PaymentMany homeowners refinance their home loans because they need a lower monthly payment amount. There are two ways to lower your monthly payment when refinancing. You can qualify for a lower interest rate and extend the term of your new mortgage. The term length of a mortgage is the amount of time the lender grants you to repay the loan. The most common term length is thirty years; however, there are now forty and fifty year mortgage terms available. If you do not qualify for a lower interest rate you can still lower your payment amount by choosing a home loan with a longer term length.III. Build Equity in Your Home FasterMany homeowners refinance their home loans to build equity in their homes at a faster rate. By shortening the term length of the new mortgage loan, your new mortgage payment will go up and you will build equity in your home faster. Common term lengths for homeowners refinancing for this reason are 10 to 15 years. You can learn more about your home loan options and common mistakes to avoid when refinancing by registering for a free mortgage guidebook.
People who have tried to refinance their home mortgages in recent months and been turned down due to the fact that they are still current with their payments may wonder where to turn next. During these times of recession and unemployment, many who manage to scrape together a mortgage payment each month are still being stretched thin financially to do so which is the reason they are hoping to refinance at a lower rate. It’s a frustrating feeling to be rejected because you’ve managed to pay the bills while people who are delinquent are getting help, but it’s the way it is. Still, you shouldn’t give up hope. A Wisconsin mortgage broker may be the answer to all of your woes.Mortgage brokers work with different policies than banks do, and they are often able to secure a loan for you that would be impossible for you to get on your own. Of course, you want to hire a firm that has a good reputation for working in the best interests of their clients and one that you can trust. There are bad firms in the mix that operate on their own agenda and will do whatever they can to get some of your money in your pocket, but legitimate brokers have a base of lenders that they can count on to give you the best possible deal to help you save money on your monthly payments.Recently we used a mortgage broker to refinance our own mortgage. The payments were just higher than we could manage any longer, but our bank told us that since we were up to date with them, they couldn’t help us out. In desperation, we contacted a broker who advertised in our paper. Lo and behold, after just talking with a representative for a few minutes and supplying him with a few documents and some information, he told us that we were eligible for a refinance that would lower our interest from 6.25% to 4.32%. That will mean a difference of almost $200 per month in what we have to pay and considerably lower the total payments we’ll make for our house.There are some things that are critical, even when working through a Wisconsin mortgage broker. One thing that they will require is that you have a good credit rating. They want to be sure you’ll pay your bills. If you don’t have one, then they won’t even consider you. In addition, you need to have at least 20% equity in your home. If you don’t, you’ll have to carry mortgage insurance until you do which will mean less of a savings each month. A mortgage refinance, though, can help you meet your obligations and avoid foreclosure.
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.
Finding a mortgage broker is easy; it’s finding a good, reliable one that you trust 100% that may be a little tougher! A mortgage broker is the middleman between a mortgage lender (in other words, an institution–such as a bank–that finances your mortgage) and you. Some financial institutions only work through mortgage brokers, so not using one can limit your chances of getting a good mortgage.With a few things in mind, you can quickly find a broker that you are comfortable dealing with. First, as with any product or service, ask your friends and family for recommendations. Second, even if you find the broker over the internet, ask to meet him or her at their office. And yes, this means you should find a local broker. Meeting the broker at their office allows you to see for yourself how professional their business is, and the appearance of their workplace can go a long way towards telling you this.Ask for proof of credentials, and if they work for a particular lender, also ask to see proof of this partnership.Ask to have copies of any and all paperwork from the very first meeting! Do this even if you don’t think you need the papers. Remember, the broker you use is, in effect, in control of your finances for your mortgage. They are there to help you get a good mortgage deal, but don’t take their word on anything–document everything. This also means that if they offer you deals or special rates, that all these rates are in paper form, with signatures.
Taking out a second mortgage after a bankruptcy can help you reestablish your credit. Because your home is used as collateral, you will have a much easier time qualifying for decent interest rates when you have bad credit. Here are several tips to help you find the best second mortgage without losing your shirt in the process.Having a bankruptcy on your record is a financial hurdle that can be difficult to overcome. If you have a fair amount of equity in your home you can use this equity to rebuild your credit rating. Responsible use of credit along with making all of your payments on time is the first step to repairing your credit.How Long Can You Wait After Bankruptcy?It is possible to qualify for a second mortgage immediately after your bankruptcy is discharged; however, the interest rate you receive will be extremely high. The longer you wait before taking out a second mortgage, the more affordable the interest rate will be. In as little as six months you can have enough payment history with your existing mortgage to qualify for a competitive interest rate.Before you apply for a second mortgage it is important to start building up your credit history by paying all of your bills on time. You can open a small credit card account and use this to help establish your payment history; however, it is important to maintain low balances on any credit card accounts you open. Making regular, on time payments on low credit card balances will help you reestablish your credit history.How Much Can You Expect to Pay for a Second Mortgage?Second mortgages come with higher rates and fees than you would pay for your primary mortgage. This is because the second mortgage lender assumes more risk than the primary mortgage lender. If you have poor credit or a bankruptcy on your record the amount of risk goes up and the lender passes this risk on to you in the form of higher rates and fees.For homeowners with poor credit a second mortgage can be more affordable than a home equity line of credit. Second mortgage loans come with fixed interest rates and allow you to borrow a specific amount of equity. It is important to shop from a variety of lenders to find the best loan offer for your financial situation. You can learn more about shopping for the best second mortgage by registering for a free mortgage guidebook.
If you are refinancing your mortgage and are considering using a mortgage broker, it is important that you negotiate with your broker for the best loan. Mortgage negotiation intimidates most homeowners; however, when it comes to screening mortgage brokers, the process is very simple. Here are several questions you will need answered when shopping for a mortgage broker that will help you avoid overpaying for your home loan.Mortgage brokers are a typically a third party that places borrowers with a mortgage lender for a commission. There are several advantages to using a mortgage broker to find your next mortgage loan. Brokers can save you time and money if used with caution. Here are questions to ask your broker before entering into an agreement.o I’m shopping for a mortgage broker, one with access to a variety of wholesale lenders that close in the lender’s name. Is this how you work?This is important to determine if the broker is actually a broker and not a broker-bank. Broker-banks are exempt from RESPA legislation that protects homeowners from predatory lenders and will overcharge you for the mortgage every time. You only want to work with a mortgage broker that does not close in their own name.o Do the quotes come from the wholesale lender’s rate sheets or are you issued a company rate sheet?This is important because you want your interest rate lock to come from the wholesale lender and not the broker. If the broker locks from a company rate sheet you will get stuck with a higher interest rate because the brokerage company pads the interest rates in order to receive additional commission from the wholesale lender. Make sure the interest rate guarantee you receive comes from the wholesale lender, and not the mortgage company.o Tell your broker that you will pay 1 to 1.5 points for origination fees and processing fees and no more. Tell the broker you will not pay Yield Spread Premium (YSP). Tell the broker you will pay the necessary third party charges, but will not pay any broker markup.YSP is the markup the broker adds to your interest rate in order to receive a bonus from the wholesale lender. Mortgage brokers cleverly disguise this markup in their loan documents and Broker-Banks are not required to disclose this markup at all due to a loophole in RESPA legislation.o Ask your broker to see the original lock confirmation from the wholesale lender and the lock agreement from the broker’s mortgage company. Insist on seeing the HUD documents and the Good Faith Estimate prior to your closing date.If the broker agrees to these terms you have found a good mortgage broker for your home loan. You can learn more about your mortgage options including common mistakes to avoid by registering for a free mortgage guidebook.
Home refinance loans are used by home owners everyday to secure a lower rate, get cash out or consolidate credit card debt. When securing home refinance loans most borrowers either go to their bank or through a local mortgage broker, or an online mortgage lender.Your Local Bank Or Credit UnionYour local bank used to be the only source for home refinance loans and most still offer some very good home loan programs. Your local bank or credit union is great if you have good credit and do not need to take out a high equity loan. In most cases they do not offer some of the more aggressive programs or offer any assistance to borrowers with bad or marginal credit. Recently some banks have moved away from 100% financing loans as well.With the local bank you are pretty much limited to choosing from the loan programs they offer in house because almost all banks do not broker mortgage loans. Although if you get your refinance loan at your bank many times they can give you special incentives on other financial products they offer, mortgage brokers cannot do thisOnline Mortgage LendersThe recent trend for refinance home loans is to secure them online. many online lenders claim to offer better loans and rates then banks or mortgage brokers. The truth is that they normally have access to the same lenders and programs as mortgage brokers but they are often located out of state and if a problem arrives it can be hard to get someone to talk to. Additionally paperwork and any extra items they require will have to be mailed or faxed over, this just add’s frustration and time to the refinance process.Independent Mortgage BrokersMortgage brokers are quickly becoming the primary source for mortgage loans and for good reason. Not only do mortgage brokers offer many more programs then local banks and credit unions they often times can offer lower rates as well. Mortgage brokers are also the first to offer any new loan programs that come onto the market and most mortgage companies cater to borrowers of all credit situations.Mortgage brokers also have a huge advantage over local banks because they can move your loan around from lender to lender if interest rates improve, your loan gets denied or a better program becomes available at another lender. They can literally have hundreds of lenders to choose from. They also have the advantage over online lenders because they are local and you can talk to and see the person who is handling your loan with a simple trip to their office.
There are several ways to borrow against equity in your home. You can refinance your mortgage and take cash back, take out a second mortgage loan, or open a home equity line of credit. Each method has its advantages; carefully evaluating the costs associated with home equity loans will help you choose the loan that will cost you the least. Here are tips to help you avoid overpaying for the home equity financing.The most common methods of borrowing against home equity are second mortgages and home equity lines of credit. Equity in your home is simply the difference between what you owe and what your home is worth. Second mortgages and home equity lines of credit are secured by your home just like your primary mortgage; if you fall behind on any of the payments the lender could take your home.Home Equity Lines of CreditA home equity line of credit works much like a credit card. The lender will issue you a debit card and a check book you can use against a predetermined limit secured by your home. The main advantage of a home equity line of credit is that it is an extremely convenient way to borrow against the equity in your home. One of the main disadvantages of a home equity line of credit also that it is a convenient way to borrow against the equity in your home; because of this convenience you might be tempted to overspend. Home equity lines of credit come with variable interest rates and many of the same fees you paid when applying for your mortgage. If you only need a small amount of equity and plan on paying it back quickly, a home equity loan could save you money over a second mortgage.Second Mortgage LoansA second mortgage differs from a home equity line of credit in that you receive the amount you are borrowing in one lump sum. Second mortgages come with fixed interest rates; a fixed interest rate can save you money and give you peace-of-mind for the long term. If you need to borrow a large sum of money, a second mortgage can save you money over a home equity line of credit.You can learn more about your home equity options including how to avoid common homeowner mistakes by registering for a free mortgage guidebook.