The Government has taken notice of the economic problems that millions of homeowners across the country are facing and have enacted the $75 billion “Making Home Affordable” plan to assist these homeowners. This mortgage refinance or modification plan allows homeowners to obtain a 4% fixed rate mortgage, and save their home from foreclosure.Homeowners are losing their jobs, losing their income, facing huge debts, or are in bad mortgages and this Government backed plan will help them save hundreds of dollars every single month. This money would help ensure that the homeowner gets their financial problems in order, save money for the future, or pay off other high interest debts. Also, a lot of homeowners now are already in the foreclosure process. This plan would help a homeowner, who is facing foreclosure, a fast track refinance or modification and a greatly increased chance of saving their home.As many as 9 million homeowners will be able to take advantage of this plan. This is due to mortgage lenders and banks receiving cash incentives from the Government for every homeowner they approve for refinancing or modification under the guidelines of this plan. Both the Government and mortgage lenders know that foreclosures really benefit nobody when everything is said and done. Banks and lenders stand to benefit much more by working with the homeowner to get an mortgage payment which is actually affordable. To do this mortgage rates will be lowered to as low as 4% through refinance or modification, to help ensure homeowners can stay in their home, and help the foreclosure rate drop.Homeowners who have already taken advantage of this program from President Obama are reporting savings that average in the hundreds, every single month. Other homeowners who were already in the process of foreclosure were able to actually save their homes. The bottom line is that if you are a homeowner who is in a bad mortgage, having financial problems, or are facing foreclosure, Obamas “Making Home Affordable” plan will likely be able to assist you save your home.
When you start to look into home refinance you’ll be given all of the reasons that you should consider this process. You may even be given all of the reasons that you should not refinance and when you should consider refinancing, but you may have a hard time finding anything that tells you who should refinance. There is a reason for this, and that is because refinancing is a very personal choice and everyone has a different reason to do it. There are some things that you can think about or look into to find out if you are one of the people that should consider refinancing.Should You Consider Home Refinance?There is a basic rule of thumb that can help you determine if home refinance is right for you. When you start looking into your options you need to determine if you can actually save money by going through this process. To make it all worth the effort and the money that you may need to pay for this process you should only be considering home refinance if you will be able to refinance and get a loan that is at least two to three percentage points lower than your current interest rate.The reason for this is that anything less will only mean very little in the way of monthly payment changes while the charges that you will encounter as a result of the refinancing will cost you more than you will save, in most instances. When you begin looking around, you might find that a lot of lenders are not able to offer you a home refinance loan for two to three interest points less than you are paying now, and right away that shoots down the timing and the options of refinance for you, at least if you are doing this to save money.Ultimately, it is up to you to decide if mortgage refinance is right for you. Most people are doing this to save money and you have to remember to account for the money that you will have to pay out to have the refinance done. While saving one percent sounds good, when you think about how much you will have to pay to get one percent less you may actually be losing money.The only time when you may not need to consider this is when you are considering home refinance to do away with an adjustable-rate mortgage for a fixed-rate mortgage. It can be difficult to match one of the lower adjustable-rate mortgage rates, but when you do the math you will find that when that rate adjusts that you will be able to save hundreds or thousands of dollars over the course of just one year, let alone the course of the whole loan!Each home owner has to determine when is the best time for them to refinance their home. You may find that you are ready to refinance the first time you consider it or you may find that this is never the best option for you, your home loan, and your financial situation. Keep the option out there, but don’t assume that it is something that everyone should just jump into because this could not be further than the truth!
A loan modification is when a borrower has the terms of his or her mortgage modified in order to make the loan more affordable. This is done when a loan becomes too expensive and a borrower finds themselves struggling to make their monthly mortgage payments. Generally, modifications are completed in situations where a borrower may be facing foreclosure unless the loan is made more affordable, yet they are unable to refinance their loan, due to insufficient equity in the home.An FHA loan is a mortgage loan that is backed by the Federal Housing Administration. These loans were created to be more affordable than conventional loans, as well as easier to obtain. This helps families with moderate or low incomes and less than perfect credit, become homeowners, even though they would be unable to qualify for a conventional one.The Differences Between Mortgage Modification and FHA Loans:The main difference between loan modification and FHA loans is that an FHA loan is a federally insured, affordable loan, while a modification refers to changing the terms of a loan. A home buyer could obtain a FHA loan while purchasing a home, but could not modify their loan until the payments became so expensive that they were unable to pay. A modification is usually not obtained until a homeowner’s financial situation becomes so dire that they are facing foreclosure.Additionally, mortgage modifications are completed on loans insured by Freddie Mac or Fannie Mae, not by the Federal Housing Administration. When FHA ones become too expensive, they are usually refinanced, not modified, as refinancing is an easier process to qualify for. This is because of the Hope for Homeowners program, which allows homeowners to lengthen their loan to 40 years, refinance 96.5% of their home’s value, and be excused for any debt over 96.5% of the home’s value.The Similarities:The main similarity is that these programs were both designed to help homeowners avoid foreclosure and be able to afford their mortgage. The Hope for Homeowners program also makes refinancing an FHA loan decently similar to a loan modification. This is because this program forces lenders to forgive any debt that a homeowner has over 96.5% of the value of their home, while allowing homeowners to change the terms of their loan to make it more affordable. Therefore, while there are differences between FHA loans and loan modifications, there are important similarities that will help homeowners avoid foreclosure and improve their finances.
The term conventional loan includes loans under the current lending limits set by the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Fannie Mae and Freddie Mac, respectively. A Federal Housing Administration (FHA) loan is a loan based on an insurance program that enables you to buy a home with a down payment of as low as 3%. FHA is administered by Housing and Urban Development (HUD). It is one of two government loan programs available to borrowers. The other is a Veterans Administration (VA) loan, available only to veterans of the military service.The FHA loan program, similar to conventional loan programs, allows for mortgage refinancing of owner occupied properties as fixed mortgage rate loans and adjustable rate mortgages (ARMs). Similar to conventional refinances, FHA refinances can be used for such purposes as:o Home Improvements and Renovations.o Debt Consolidation, including consolidating a home equity loan (second mortgage), if 2nd loan is less than 1 year old.o Large Purchases.o Schooling.o Vacation.o Investment(s), including second home or vacation home purchase.According to the FHA, 1-2 unit primary residences may cash-out up to 95% of the estimated property value. For other property type the maximum cash-out is 85%. This is at least 5% more than on a conventional refinance loan. And, you do not have to have an existing FHA loan in order to get FHA refinancing.While FHA loans are funded by financial institutions such as mortgage centers or banks like conventional loans, it does not actually lend money but rather guarantees a loan in case of borrower default. As a result, there is less financial risk to the lender, allowing them to offer lower rates to borrowers than rates offered by conventional refinancing. And, FHA has the most forgiving credit criteria–FICO scores of 580 (east coast), 560 (Midwest) and 520 (west coast) being considered acceptable.Similar to conventional loans, FHA mortgages require mortgage insurance. Conventional loan mortgage insurance is cancelable under most circumstances once you build at least 20% equity in your home. The FHA states that, in most cases, FHA insurance will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property, whichever is longer.
To help you recover from your poor credit status, consider refinancing your home mortgage loan to improve your financial situation for the long term. When you work with a high risk refi lender, you can secure near market rates and lock in reasonable fees. Sub prime lenders also allow you maximum flexibility with your loan terms, allowing you to design your own debt elimination plan.Getting The Most Out Of A Refinanced MortgageTo get the most out of your refi, identify your financial goals for the refi process. Do you simply want lower payments with your home loan or you looking at your total debt picture? Do you want to sell in a couple of years? How soon do you want to be out of debt?The answers to these questions will help you pick the best refinance package for your goals and budget. If you are planning to apply for a home equity loan in the future, you may do better to cash out your home’s value now to save on fees and rates. That way you can consolidate credit card debt and other high interest bills.For those planning to move or refinance in a few years, don’t pay a lot in upfront fees and points. Even though these closing costs can lock in a lower rate, you won’t have enough time to recoup the cost, let alone see a savings.To get out of debt faster, shorten your loan period. You may also reduce your rates with this step.Focusing On The Numbers Gets You A Better RefiFocus your lender search on loan quotes. When you request these no risk loan estimates, you get numbers on interest rates and fees that you can compare. Based on your general credit standing, you also get an idea on your monthly payments.In today’s lending climate, many more companies offer sub prime financing. So don’t rule out banks or credit unions in your loan search. Recommended financial companies are a good place to start your search. But remember that the more lenders you investigate, the more likely you are to find a low cost loan.
Homebuyers have several loan options. Hence, purchasing a new home has
never been easier. Individuals who cannot afford a down payment or
closing costs may take advantage of loan programs that offer assistance.
Furthermore, those hoping to obtain a low rate mortgage may consider a
loan with an adjustable rate. Because of the initial low cost of
adjustable rate mortgages, monthly mortgage payments are also lower. However,
low rate mortgages are short term. To avoid an interest rate hike,
homeowners should refinance before rates begin to increase.Advantages of Adjustable Rate MortgagesThere are several advantages to accepting an adjustable mortgage. For
starters, a low rate mortgage allows buyers to purchase pricier homes,
while maintaining an affordable monthly payment. Moreover, because of
record low rates, homebuyers who obtain an adjustable rate mortgage can
enjoy falling rates without refinancing their mortgage. Thus, they avoid
closing costs and other fees.Adjustable rate mortgages are also ideal for individuals who plan on
moving in a few years. Some people enjoy the stability of living in one
place for many years. In this case, refinancing for a fixed rate is a
wise choice. However, if you prefer the flexibility of moving every three
to five years, you will save money with an adjustable rate.Pitfalls of Adjustable Rate MortgagesWhile adjustable rates offer many attractive features, one major
drawback is that low rates are temporary. If interest rates continue to fall,
you will not be subjected to the dangers of these loans. However, if
rates begin to climb, so will your mortgage payment. Homebuyers who
cannot afford an increased mortgage are at risk of losing their home. Thus,
if your goal is to remain in your current home for many years,
refinancing for a fixed rate will offer predictable mortgage payments.How Soon Can You Refinance a Mortgage?Fortunately, home mortgage loans can be refinanced whenever you like.
Some lenders suggest allowing the loan to mature at least 12 months.
However, if you detect a change in market trends, refinancing shortly
after purchasing your home is a smart maneuver. Those contemplating
refinancing must be prepared to pay additional closing fees. Moreover, contact
your current lender and inquire of prepayment penalties.
There are many benefits of home refinance and when you start to look into it you may find that now is the time for you to consider refinancing. A lot of people refinance for a whole variety of reasons and you’ll have to determine when and why you want to go through this process. This is a very personal decision and with the benefits comes some risk or disadvantages so you have to weigh the benefits with your specific situation.Home Refinance Has Many BenefitsOne of the most well known benefits of home refinance is lowering your interest rate. When you bought your home you might have thought you were getting a good rate, but when you compare the rates that were great with the rates that are considered to be outstanding now, you may find that you are paying too much interest on your loan. If you look into refinancing and you find that you can reduce your interest by two percentage points, this is a great time to make your move and refinance. Even the two points can save you a bundle on the cost of your mortgage over the years.Another reason that people look into home refinance is to limit their risks associated with their mortgage. If you have an adjustable-rate mortgage because that is all you could qualify for when you bought your home, you may want to look into refinancing to see if you can be approved for a fixed-rate loan now. Going with a fixed-rate loan is a great option because you have more stability and you don’t have to worry about your interest rate increasing along with your monthly payment.Many people look into home refinance because it gives them the option to pay off their loan sooner without paying a penalty. Many mortgage loans have a pre-payment penalty, which means that if you pay off the loan early you will be charged for the early payment. For most of us this wouldn’t be an issue as we would not be paying off the loan early, but if your financial situation has changed or you have just adjusted your finances and you would like to pay off your loan sooner rather than later, you may want to refinance and get a loan with a shorter term as well as no pre-payment penalty.A lot of people choose to refinance simply because they owe less on the home and when they get a loan for 30 years with the lesser amount, their monthly payment can be dropped drastically. For the majority of the population our housing payment is by far our most expensive payment, and when you are able to reduce this payment suddenly life becomes a lot more affordable.As you can see, there are simply a lot of benefits to refinancing your home. You need to consider the pros and the cons when you refinance, as this is not the best option for every home owner out there. With all of the benefits though, if it is a good option for you, you can truly save a lot of money and make your mortgage something that is affordable and not a strain on the rest of your finances. Remember to weigh all of these benefits with the risks to make the best decision for you and your specific situation.
President Obama is aware of the hard financial times that the average American faces. Home values have dropped, and the rising number of foreclosures just makes things even worse as each foreclosure lowers the surrounding home values even more. In an effort to help homeowners, the Government now offers 2% home mortgage refinance or modification.This plan, enacted just last month, makes millions of homeowners eligible for a 2% refinance or modification. Some things that were typically needed to be eligible to refinance, such as a 20% equity stake in your home, are no longer required as mortgage lenders and banks strive to follow Obamas guidelines and approve as many homeowners as possible. This stimulus refinance package should make the average homeowners average monthly payment much smaller and savings of hundreds every month are typical. This will help a lot of homeowners who are in foreclosure, or will be, by giving them a chance to save their home.This government backed plan will restore consumer confidence in the housing market, prevent millions of foreclosures, and to help struggling homeowners. There is over $75 billion dollars available to mortgage lenders and banks to help them approve homeowners they otherwise would have denied. This means that getting approval for a mortgage refinance or modification is now easier than ever.Homeowners who are seriously looking into a mortgage refinance or modification and use this stimulus plan will be able to obtain a mortgage payment that is no larger than 31% of the homeowners gross monthly income. A lot of homeowners currently pay 50% or more every single month just on their mortgage payment. A reduction of 20% would equal big time savings which would add up quickly.The mortgage lenders and banks who abide by this stimulus bailout plan will need to follow an exacting set of guidelines set by the Government. Homeowners will easily be able to save huge sums of money every single month just by taking advantage and refinancing their home. At least look into the potential savings from modifying a home using this “Making Home Affordable” plan from Obama.
Things couldn’t be any worse for you if you’re facing foreclosure trouble after losing your job, as there are almost no solutions in store for you to tackle and overcome this issue. Mortgage refinance is a way to overcome this complication, yet how successful would you be if you approach any bank and say that you want to refinance your mortgage without having a stable job to back you up? This issue has also not been addressed in a proper manner by the government as of now, thus it is best that you look at other alternatives if you are seeking a refinance mortgage loan for your home while you are unemployed.Wanting to refinance your home while you are unemployed is almost impossible, though don’t lose heart just yet! When you want to refinance your home, the first thing that a creditor or a lender would look at is the number and value of the assets that you possess in your home. The second thing the banks would look at would most definitely be your employment. Let’s face the fact, if you are unemployed, there is little chance of you being able to service your mortgage loans even after your refinance it, thus banks would not be keen to offer refinancing packages to those who do not hold a stable job! The thing is, even if you have a job, it is not guaranteed that you would get a good deal from the lenders, they would still evaluate factors such as the stability of your job, how long you have worked with your current company, and other relevant factors. Thus imagine how your application would look if you are unemployed!Thus, the most realistic method to save your home while being unemployed is through loan or mortgage modification. You could do this by making use of private programs from the banks out there, or the government backed options such as President Obama’s Mortgage Modification Program. Loan modification is also free, thus it makes it easier to obtain without having to pay upfront charges. You can also modify your loans yourself, as long as you understand how it is done, and qualify for the criteria for loan modifications. It is easier to gain approval for loan modification as your credit, assets in your home as well as your employment do not come under scrutiny like how refinancing packages work. It also proves to be a useful short-term solution for you until you can find a job and get your financial situation back on track!Find loan modification guides that are widely available online, and start applying for one to ensure that you successfully salvage your home even when you are unemployed!
Refinancing your mortgage can be important at various points in time to make sure you are saving the most you can from your interest, or can help with managing your monthly repayment requirements. This is particularly the case when interest rates are falling. It is important to thoroughly research your refinance options if you are considering this. Here are 5 points to consider when looking at mortgage refinancing.1. Ensure you thoroughly research your options and the costs and profitability associated with refinancing. As well as obtaining all the necessary information, you can run your various options through an online mortgage refinance calculator to help get an idea of the overall profitability of your various options. Such calculators are useful to see things such as the total interest savings with a refinance option or how long until your interest savings offset the closing costs.2. Before refinancing, you should be familiar with the various types of mortgages that you can use to refinance. Such types include fixed rate mortgages, adjustable rate mortgages, interest only mortgages and option ARM mortgages to name a few. Different types of mortgages have different properties and you should research which of these suit your needs the most.3. You should be aware of the additional costs associated with refinancing, such as processing fees, appraisal, escrow fees and so on. Some of these fees may be negotiable with the lender so you should always explore the option of reducing your fees associated with the mortgage.4. One option to consider when refinancing is a cash out refinance. This when the equity in your home allows you to refinance with a principle greater than your current mortgage (as well as any additional refinancing costs). You can then use this extra money as you see fit. A common use of this may be to consolidate higher interest debts.5. Another type of refinance option is a no cost refinance. Here the lender or broker pays any closing costs associated with the refinancing in exchange for charging a higher interest rate. Instead of this, it is also possible to add the closing costs to your new principle, or pay them upfront yourself.