Refinancing your home – everyone’s doing it! Everywhere you turn, there’s someone talking about refinancing; when they refinanced their home, how their parents refinanced their home, when are you going to refinance your home… and so on.If everyone’s doing it, it must be the right thing to do… right?Refinancing your home does have some benefits, there’s no doubt about that. After all, if it didn’t, it wouldn’t be such hot news.But does that mean that there’s nothing for you to think about or consider, that you should just run right out and sign up for the fastest and easiest refinancing deal you can get? Refinancing is like a windfall of cash from your home, right?Absolutely not. Refinancing your home is a legal contract and a debt that you’re entering into, and one that should be done only after you’ve given it some thought, time, and attention. There have been many homeowners who have made that mistake, of rushing out to sign the first refinancing deal they can, only to regret it later when they realized just what they had done.Why is that? What information did they miss or refuse to consider?If you don’t want to make the same mistake they did, if you want to be sure that refinancing really is the best deal for you and your family and your unique financial situation, here are seven critical factors about refinancing that you must consider first:1. What it means to refinance.Refinancing your home means setting aside your original mortgage in order to sign a new one; this new mortgage amount would include the balance on your current mortgage plus its own interest amount.When refinancing, you are basically asking the bank to set aside your current mortgage and then loan you the money you currently owe on your home all over again. So, if you originally borrowed $150,000 for your home purchase and since then have paid enough so that you currently only owe $100,000 on your mortgage, to refinance means to set aside that original loan and ask the bank to lend you that $100,000 as a fresh loan.This is important because many people think that refinancing is like a home equity windfall, where you adjust your current mortgage to get cash in your pocket from your home’s equity.This just isn’t correct. Refinancing is a completely new mortgage that replaces your old one.2. Not everyone is eligible to refinance.Your original mortgage that you currently have on your home is a legal contract that you’ve entered into, obligating you for the life of that loan. Not every bank or lending institution even allows for you to set that loan aside and find a new mortgage.Additionally, refinancing into a new mortgage also has qualifications that come with it, including credit history, the home’s value, and so on. Some people have found that their poor credit history has made them ineligible for refinancing, or for refinancing at a lower interest rate than what you have currently. As with other loans and even your original mortgage, the better your credit history, the lower the interest rate you are offered. If you still have poor credit, you might not be eligible for an interest rate that’s any better than what you currently have.To think that you’re automatically eligible for refinancing without first checking with your current mortgage holder to see if you can even set aside this original mortgage, or if your credit history is adequate, would be a mistake. It will save you a lot of time and effort if you first check with your current mortgage holder regarding their policy on refinancing, and do some checking on your own credit score as well.3. There is often a penalty involved.When you realize that refinancing means setting aside your original mortgage, you may naturally ask why your bank would allow you to do that. Won’t they lose money in the interest that you would continue to pay for the life of that mortgage?The answer is yes, they would lose money. Which is why most banks have a stiff penalty for anyone that wants to pay off their mortgage early or refinance with another lending institution.And sometimes this penalty can be steep. It’s usually figured as a percentage of your current mortgage, so if the principal amount that you still owe is quite high, this penalty will be rather high as well. If you’re not sure if your current lender includes a penalty for early payment, don’t hesitate to ask them directly.4. There are fees and closing costs that come with refinancing.Remember when you signed your original mortgage, and you had to pay a number of fees – credit check, appraisal fee, home inspector’s fee, processing fee, title search, title insurance, and so on?All of these fees and costs are also tacked on when you refinance. And as with the penalty for early payment, sometimes these fees can be very high as well, even into the thousands of dollars.5. It doesn’t always save money.Consider the information we’ve given you already, about penalties and fees associate with refinancing.Many people have found that when they add up all these costs, they really are not saving any money with refinancing, at least not right away.Most lending institutions refer to a “break-even point.” This means how many months it takes of paying a smaller mortgage payment before you’ve saved enough to cover, or break even, from these penalties and fees.To figure if you would really save money on a new mortgage, you would need to add up all the potential fees, penalties, and costs with refinancing. Then, you can take the amount of money you would save every month with your new mortgage, and divided those costs by this number, and that will tell you how many months it will take before you break even.Let’s give you a quick example. Suppose your penalties, closing costs, and other fees add up to $3,000.Suppose your current mortgage payment is $1,000. With refinancing, your new mortgage payment will be $850. This means you would be saving $150 per month.$3,000 divided by $150 is 20; it would take you 20 months (almost two years) to just break even from your penalties and fees.Obviously your own numbers would be different, but it does give you some information to think about. If your savings per month will be even less and your costs even more, and it takes you years to just break even, is it worth the time and hassle to go through refinancing in the first place?6. It can actually save you thousands of dollars in the long run.If we just said that the penalties and costs can make refinancing not worth the time and hassle, how can we say now that it might actually save you thousands of dollars?Simply put, many people signed up for an adjustable rate mortgage (ARM) years ago when interest rates were low. They did this because they were able to use a smaller down-payment and had lower mortgage payments at the time, so they were able to afford a home.However, interest rates have a tendency to do nothing but rise, and many people are finding that their mortgage payments are also creeping up. However, their higher payments are doing nothing to pay down the principal of their mortgage but are simply paying more and more toward the interest.If this is true in your case, you may want to consider refinancing in order to lock in a lower interest rate now, before rates get even higher. While an 8% interest rate may seem high if you signed your mortgage at 6%, it will seem very reasonable a few years from now if your ARM reaches 10% or even more.7. It can be wise if you’re using the home equity in other ways.Let’s suppose you are hesitant about refinancing because that 8% interest may seem high compared to the original interest rate you once had.However, there may be other things that you can do with the equity cash back you receive from refinancing, other than put it toward your mortgage payment. For example, are you swimming in credit card debt? What is the interest rate on your credit cards? If it’s higher than the rate on your mortgage (which it usually is), then it might be wise to use that money you get back or save from refinancing to pay down that debt.No, you don’t build equity by paying credit card debt the way you would by paying your mortgage, but many people simply don’t realize how much money they waste on credit card interest payments, especially when they’re paying only the minimum balance month after month, year after year. Assuming that you don’t even use the credit card to increase its balance, you can actually wind up paying half over again (or even more) in interest charges by the time you pay off your credit card.Additionally, you may be thinking of refinancing so that you can use some cash back to invest in your home for repairs or upgrades. These types of things can only increase the value of your home, making it a worthy investment.So depending on how it is that you expect to use the money you would save from refinancing, it might actually be a wise financial decision.These few tips that we’ve outlined here are in no way meant to be an exhaustive education on refinancing. And of course, as we’ve said, your exact numbers and financial situation will be different.However, the point is that for you to make the best decision for yourself and your family, you do need to do some homework. If you’re considering refinancing, set up an appointment with your lending institution or financial counselor. Don’t hesitate to ask questions and make sure you really understand every detail before you sign papers.And in the end, you’ll be able to make the best financial decision for yourself and your family.
The numbers of home owners refinancing are on ever increasing note. Most of the homeowners opt for refinance home loans to lower the interest rates by which they can gain a considerable amount of money. It is a myth that only homeowners who are on a default or in foreclosure choose to refinance their home loans. Any individual who wants to have better conditions and features for their home loans can do this. Most people approach the local banks and lenders. However, national banks and other larger group of financial institutions offer loans at cheaper interest rates.Some of the disadvantages of the big banks are their location. People living in far away locations cannot approach the banks for every single process. It might be time consuming and add unwanted time to the process. By gathering the documents in advance, borrowers could make the whole process as fast as possible.Documents needed:o The most recent pay slip of an employee is needed to verify income and employment information.o Home owner’s insurance information will help in better negotiation with the lenders. This gives much information regarding who gets paid on occasions of any damage done to the property.o Last two years W-2 is essential which will help the lenders to know about the various income levels and income to debt ratio levels.o Financial account statements such as 401k, retirement accounts are necessary will help the lenders to determine the eligibility for the loan amount.o The purchase transactions alone require the landlord contact info to know about the regular rent payments.The above said documents are needed for the pre-approval of loans. However, there can additional documents needed by the lenders to analyze fiscal position to refinance home loan. The borrowers need to have prior knowledge on the proceedings to avoid any delay in getting the loan.
There are numerous factors which when followed will help in easy approval of refinancing home loan online. Here are some of the tips to contribute to the successful refinancing.o The borrowers must ensure that they get the lowest possible interest rates. With the rising mortgage rates, individuals must not settle for any rates which are within their budget.o Try to avoid middleman or any brokers by which excessive costs can be reduced.o Identify the closing costs as they are vital. It is better to ask the lenders about the closing costs before signing the documents.o It is good to stick with the terms set by the individuals regarding the loan. Everything must be amicably set and there should be no regret.o It is not possible to refinance often. Hence, do not settle anything for less than required.It is always good to take advantage of the internet technology to improve the lifestyle. The refinancing of home loans are just few mouse clicks away from the borrowers. One should be careful enough to safeguard them from the online scammers. There is a phenomenal increase in the numbers of scammers. They try to hack the personal data while being sent. Hence it is very important not to disclose the personal details in a system that is used publicly. It is safe to fill up the online applications using the personal computer or laptop.Before choosing the lenders, one should carefully study the scam reports filed against them, if there is any. Use the internet to find out information about the lenders. The processing methods and other details about the lenders must be known by the users. This will help in getting the refinance home loan in a safer way.
With refinance home mortgage rates super low right now, you are probably thinking you should take advantage of it. You already researched everything you could research on your own. So you know that your home’s value is enough to cover the whole loan in a refinancing transaction. Your credit score is over 700, which is excellent. And your income to debt ratio is very good. You make more than enough for even several house payments. Ok, so maybe that’s not the case, but that does not mean you will not quality. Working with a good loan officer, you will be able to find a solution that will let you lock in an excellent interest rate. So, as you are going through the paperwork, the topic of discount points comes up. Should you take the discount point?The answer all depends on what you are planning on doing in the future. Are you planning on selling within 5 years? Or are you planning to stay for the long term?If you are going to sell, you have to consider the real estate market. Will you be able to realistically sell and make enough money to have made it worthwhile? Right now, it is unlikely that a house will appreciate enough to make it worthwhile. You have to consider that you will be paying the realtors’ commissions which will amount to 6%. Then you may have to pay taxes and insurance so that you will have a buyer. This all adds up and if your house has not appreciated by at least 10%, then you would be losing money and thousands at that. But if you are confident that you will be able to sell, then it would be wiser to not take a discount point as it will only add to your cost. If anything, you might want to take a slightly higher rate just so you get the rebate upfront. If do some calculations, you can figure if the upfront savings will be more than what you would pay on the interest and when the break-even point is. This will let you know the deadline by which you would need to sell before you starting losing money.If you are not going to sell your property, then of course, taking the discount point is the wisest course. You will be locking in at one of the terrific refinance home mortgage rates available right now. In the long term, you will end up saving a lot in interest payments. It really is amazing how much you really do end up paying.
Refinancing means taking a loan to repay one of your existing loans and finance the same with the new loan. Refinancing home loan is for repaying the home loan you have already taken and finance the rest with this new loan. There are several reasons why people go for refinance. These are as follows:o You need to use your Home equity which has been used as collateral.o You may need to consolidate debts.o To get a flexible loan.o To get added features in the loan.o To get a loan on better interest rates.o To move from fixed to variable rate in home loan.Home loans are offered by different banks and financial institutions. There are so many players in the market that these players are offering loans at very competitive rates to attract customer attention. A layman would get confused with everybody offering so many features all the loans look beneficial and the best one to fulfill their need.But choosing a refinance scheme is not so easy. So better be careful and compare the entire borrower’s offer that is there in the market. Read their offers carefully and look for hidden clauses as most of them have it. A refinance is costly as it involves the following expenses:o A new loan entails the establishment and application fee.o The fee that is charged by the borrowers for early settlement in case of existing loan.o Then there is also a discharge fee on the current loan.o Some of the lenders also require Valuation fee.o The legal fees that are charged by some of the lenders.Refinance Home loanGo for refinance only if you need it. It requires a lot of detailing. Before taking the decision consider these things.o Has your income changed? Or have your liabilities changed. Only if these two have changed consider refinancing.o Are the features in your existing loan in tandem with the ones offered in the market and are they satisfactory.o Are the services of your existing lender up to the mark?Some of the companies also show you the comparison rates. These are very helpful when it comes to comparing features of all the loans that are being offered in the market. The rates will obviously not be very different but will differ closely. Choose the one offering loans at the least rate even if is only 0.8%.One should always put in a lot of thought and do a lot of research when it comes to money matters. That is why in case of refinancing first see if you really need it. Refinancing home loans involve a lot of expenditure. Consider them and take your decision.
Refinancing home loans have become so much easier with the advent of internet technology. It has become as easy as purchasing an airline ticket. A needy borrower can sit in front of his computer and could easily obtain the loan in just few clicks of a mouse. In olden days, people had to toil between the various banks hoping to get a refinance mortgage loan. Securing loans online have become a viable option for the potential buyers. There is a silent revolution going on in the online loans. Every lender has got their websites offering free EMI calculator and other tools that help the borrowers to identify their needs.The internet has become the best tool in assisting to get refinance home loans. An easy application can be obtained with competitive quotes from different lenders. The borrowers will have to sit back and wait till they receive their favorite quote. They can be in the driver’s seat in getting the deal done. Every process is made easy and ‘E-mortgages’ is the new buzz word in the market. It is important to take advantage of this option and reap the maximum benefits.Refinance home loans online can offer lower interest rates because of various factors. The processing of applications can be made within few hours and instantly. This does not involve any personal meeting and hence there are only few members of the lender’s institution take part. So the human costs are less and therefore the lenders are able to provide a cheaper loan. The traditional loan may take several weeks to process. With a good credit rating, refinance online loans can be obtained at ease. Obtaining and closing the loans are made easy without the usual piles of clunky paperwork.
There’s a spanking new hybrid in your garage. You’re itching to speed up on the highways and show off what you got from your refinance home loan, but please wait. Do you still remember how to drive with care?The hot hybrid carsThe new small and efficient hybrid cars run on gas and battery. That’s how it got its name. It guzzles less gas and you get 10-15 miles per gallon than your old gas-thirsty pick-up. You reason that it’s time now to change to save the environment, that’s why you got a refinance home loan.Your choice was a Honda Civic hybrid. It runs without the drag and is wind resistant giving a nice feel when you go full throttle. Whether on a dirt road or asphalt, you’ll do fine.In traffic, your car shuts off automatically; saving you tons of gas money, and anytime you can switch from gas to electric without batting an eyelash. What a nice buy indeed.Driving safelyA funny guy quipped that safe driving is getting away from the crazy driver behind you and ahead of you. So zoom ahead. But kidding aside, there’s a grain of truth to the joke. Distance between you and the drivers ahead and behind you should give you room to maneuver.With all those news stories about car accidents and road rage, you should practice defensive driving and shore up on patience. You need to practice your skill rounding the bends and the treacherous curves.Curves are the most dangerous especially when driving at night. Better stay on the right lane all the time. Don’t be tempted to cross to the other lane no matter how urgent your mission is. It’s your life, your car, and there’s your refinance home loan to settle.Another driving obstacle is driving along on 4 lane highways. As always, stay on the right hand lane. If the coast is clear you can overtake a car and cross to the left lane. If an oncoming car loses its brakes, it’ll veer further to the left. So you’re safe from head on collisions staying on the right lane.Traffic rules were not put up just for the heck of it. There is science here. So heed these and you’ll enjoy your Honda Civic for years and pay off your refinance home loan body and soul intact.Other friendly remindersDon’t drink and drive. If at a party, better sleep your drunkenness on the coach or let somebody sober drive you home. Also avoid making calls on your mobile phone while driving. Don’t get distracted. Keep your eyes on the road and hands on the wheel.With winter calling, better prep your car. Check the battery, wipers, and the tire pressure. When on the road, you can’t be too careful.Your passengers’ lives depend on your careful driving, and the life you save be yours. Just because you got a sleek hybrid from your refinance home loan does not mean you can drive recklessly. Your car may be fully paid but your loan is not.
The decision whether to refinance your home is one that many Americans face everyday. Over the last 30 years interest rates have gone up and down numerous times. In the 80’s they were as high as 18%, and now some 30 year fixed rate loans are as low as 5%. Many homeowners who bought when interest rates were higher are now considering refinancing to reap the benefits of a lower interest rate.Some of the benefits of a lower interest rate are listed below:First, Lowering your interest rate will lower your monthly payment. With the economy in such terrible shape if you can lower your monthly mortgage payment could give some added relief to some homeowners. Even if it costs you some money to get a new loan you could save a great deal of money over the life of the loan.Secondly, changing the type of loan can be a possibility for you. Many homeowners may have flexible mortgages that have rates that can change, without very much notice. Also you may have a loan that has a balloon payment after a certain period of time. It may be very difficult for some people to come up with that payment in today’s touch economic times.Lastly, if you bought your house over 10 years ago, you may have equity in your home due to the appreciation of your home. Refinancing your loan and taking some money out of your homes equity is a good way of helping with your children’s education or making plans for a better retirement. If you are thinking about pulling out equity from your home make sure you discuss your plan with an experienced loan broker so you can be advised if you are making the right decision.
Would-be investors often ask whether or not it’s a good strategy to refinance their home in order to purchase investment property. The answer is a definite: maybe, but it depends upon a variety of factors.RiskWhenever you take on an investment property by borrowing the money to get it, you’re assuming a risk that the cost of borrowing that money will outpace the property’s income, which can cause severe negative consequences over time.HELOCSometimes it makes more sense to take out a home equity line of credit (HELOC) rather than to refinance the first mortgage. This money can be used over and over without paying new loan costs. In other words, the investor can purchase one house, sell it, pay the money back and then have immediate access when another bargain property comes along, without paying more loan fees.So investigate both options before you make any decision to borrow, and make sure you’re comfortable with the risks that are inherent in any investment opportunity, because things can and do go wrong–and when they do, your home may be in jeopardy.Income Tax DeductionSince you can claim the interest on your principal residence on your taxes, you many realize some tax benefits to refinancing, especially if you’re planning to use the money to pay off other debts that aren’t deductible. Check out IRS Publication 936, “Home Mortgage Interest Deduction,” before you make any decision. It discusses how to approach the interest involved with owning and financing your home.Consider Investing OptionsRefinancing of your home is a serious step, and shouldn’t be taken lightly. If you’re like most Americans, your home is the single largest asset you own. Make certain that you know all the ins and outs involved with the purchase of the investment property you’re considering before you commit to a refinance. If, after long and careful consideration, you determine that the investment is sound and won’t adversely affect your home and family (always think in terms of the absolute worst case scenario; that way, even if the sky falls, you know that you’ll be able to survive financially), you can begin talking seriously with your lender about the advantages and disadvantages of refinancing or a home equity loan. Investors tend to be an optimist lot, but never let a rosy-looking profit potential blind you to the possible pitfalls if thing go awry. A little caution at the beginning of the process can save lots of both financial and emotional heartache and frustration later on. If you feel insecure about risking your home, look into 100 percent financing options for investment properties. With good credit, you open the way to buying property without jeopardizing your home.Educate YourselfThe best way for you to get started investing in real estate is to do your research first. Understand your local market trends, your local employment outlook, and your capabilities. When you know how to make a wise investment, you can make money and secure your future.Copyright © 2006 Jeanette J. Fisher
While walking your dog, you may have seen rows of houses for sale. You want one of those brick houses with three bedrooms to accommodate a growing brood of kids. The possibility is not remote if your home’s value has increased considerably. A refinance home scheme may let you enter one of those bigger homes.Ready to Jump Through Hoops?For your first mortgage, you had to undergo a paper chase to satisfy the requirements of the mortgage company. This experience will serve you well. But for your refinance home project, there are still some do’s and don’ts to observe to give yourself the upper hand when entering a contract.So check your documents. Are your tax income papers in order? Is your credit history satisfactory? Is your employment record updated? Are the records of the first mortgage complete and neatly filed? These are just some of the documents to prepare. Looking for lost documents or calling up certain offices for your records eat up your valuable time just when the refinance home loan agent is ready to talk to you.When you’re ready for an audience with the loan agent, make sure you’ve done your homework. You should know about mortgages before signing a contract. One simple rule is: don’t rush into a refinance home loan.The Do’sFind out about your home’s value. If this has increased, expect to pay more for the mortgage. But settle on a company that offers a lower interest rate than your present mortgage. The new loan should be able to give you 2% less in interest rates than your current loan.Do shop for lower interest rates. You may be surprised that an adjustable mortgage rate is lower than a fixed mortgage rate. The catch, though, is the possibility that your monthly bills might shoot up. Consider this if this is not a risk.Do ask about penalties for loan prepayment and getting out of the contract. The loan agent should make it clear that you have the right to rescind the contract within three days, which is the rescission period.Do make sure that if you’re going to resort to this option, let the refinance home company know of your decision and your reasons through a formal letter followed up with a telephone call to the right people before the 12PM deadline on the third day.Do check the company’s background if you’re using a new mortgage company. With several mortgage companies competing for business, you might fall for a lousy deal with the lure of very low interest rates and no closing fees.The Don’tsDon’t be rushed into a home refinance loan, and don’t be afraid or intimidated by the mortgage companies. Check out online sites that provide information on consumer rights.Don’t entertain calls purportedly coming from companies requesting more information. Go to the company office. Inform them of the request for additional information and verify if indeed this request came from them.Don’t entertain strangers offering a better deal and cash even if they give their credentials. Tell them you prefer to discuss things in their office. Don’t sign anything. Some people lost their homes to scammers because of those nice strangers.These tips can help you safeguard yourself from getting duped into dubious deals. Your new loan should be your chance to own a home, not lose it.