Should You Refinance Your Home Loan?

The mortgage market and interest rates go through many changes, and what seems like a great deal one minute can become a poor one the next. Refinancing is designed for those that took out a home loan deal in the past, and for whatever reason have realised that there are now better, more affordable, or more flexible home loan deals on the market that could suit them far better than their existing ones.By taking the time to refinance your home loan you can enjoy benefits such as reducing the term of your mortgage, paying less on your monthly repayments, or increasing the flexibility that you have on your mortgage. You may find that when you refinance your loan you can lock yourself into a lower rate by switching to another loan to replace the existing one, and this could save you a lot of money over the long term.Another reason why you want to refinance your home loan is because you have equity in the home that you want to tap into. If the value of your property is higher than the outstanding loan that you have on it you may want to consider refinancing your mortgage so that you can access the equity that is tied into the home without having to resort to taking out a second loan on top of your first mortgage.It is a good idea to keep your eye on the changing mortgage market, checking on different deals available from a variety of lenders and monitoring interest rates, as this will enable you to determine if and when a more suitable deal comes along. If you do find something that you feel will suit you far better than your existing mortgage you can then do your research to determine whether it is worth taking the time to
refinance your mortgage.It is important to remember, however, that refinancing is not for everyone, and it can cost you money to refinance a home loan. The idea when you refinance your home loan is that you may have to pay upfront costs such as exit fees on the old mortgage and application fees on the new one but you will save far more money over the long term by refinancing the loan. It is important for those looking to refinance a home loan to check on the upfront fees and compare these to the amount that will be saved by taking out the new loan. This makes it easier to then determine whether refinancing is the best option.

Second Mortgage – Home Equity Vs Refinance

Why should you take out a second mortgage or a home equity line of credit instead of refinancing?Well…You Shouldn’t!Why Not?1. Second Mortgages usually have an interest rant that is twice or even three times as high as your first mortgage rate. You can refinance instead and keep a very low rate. In the long run a second mortgage will just cost you money in interest charges.2. Home equity lines of credit are designed for mortgage account executives (salespeople) to sell you on using it like a credit card attached to your home. They will try to convince you to use it over and over again.3. A refinance loan is better for the equity in your home. Very few companies will refinance your home at 100% of it’s value without forcing you to take out a second mortgage. You don’t want to use 100% of your equity because that means you no longer have that equity to fall back on in emergency situations.4. Second Mortgages and Home Equity lines of credit are designed to provide account executives (salespeople) with another tool to sway you into putting another commission in their pocket.5. Your equity is a precious thing and should not be used for unnecessary add ons or impulse buys. If you don’t need it and there is even a slight chance you can’t afford it, then don’t get a second mortgage to buy it.The only reason that I would ever recommend a second mortgage or a home equity line of credit is in an emergency situation. Only when there is no other option and you must take out a loan would I recommend either one of these options.

Home Mortgage Refinance Explained

Refinancing is often considered one of the most beneficial ways to save money on your home mortgage.  Refinancing is when you renegotiate the terms of a loan, essentially the refunding or restructuring of debt with new debt, equity, or a combination of both.  Refinancing is basically taking a new mortgage to replace an old one.  Refinancing is often the best way to save money, get a lower interest rate and a lower monthly payment, or keep the monthly payment the same and have a shorter loan term.  Refinancing is used in most cases to improve overall cash flow.There are many things that play a role in whether or not refinancing is a good move.  Calculating the up-front, ongoing, and potentially variable costs of refinancing is an important part of the decision on whether or not to refinance.  Sometimes, refinancing is an appropriate way to resolve financial problems.  Refinancing is not advisable if you plan to move in next few years, because the price that you pay for the refinance will just reduce or negate the savings that you get from the interest rate or lower monthly payment.  Another obstacle to refinancing is the current slump in the housing market where values of many homes have decreased to below their purchase price.  If cash flow is an issue and refinancing isn’t available, try to work out a plan with your lender to modify your current loan that would allow you to make either a smaller payment, or to miss a payment until you have the funds.In the context of personal finance, refinancing a mortgage can be used to pay off high-interest debt such as credit card debt.  Debts can be paid and revolving accounts satisfied so that the homeowners credit is not ruined.  If the borrowers have wisely used their time and opportunities to establish a positive credit history, this should be a benefit to them.  You may be able to secure a lower interest rate because of changes in the market conditions or because your credit score has improved.  If your credit points have been decreasing in recent years, lenders may not endorse the refinance.Refinancing may be undertaken to reduce interest rates, to extend the repayment time, to pay off other debt, to reduce or alter risk (such as by refinancing from a variable-rate to a fixed-rate loan), or to raise cash for investment.  As part of the mortgage refinancing process, various information that was required for your first mortgage will again be needed (such as your financial records and credit reports for you new loan report.)  You should know how much you will pay in all (interest and principle together) as well the term over which you will be making payments.  Interest rates and number of credit points determine the total cost for a second mortgage refinancing.  Most refinancing lenders offer a variety of combinations of points and interest rates.  Paying more points typically allows one to get a lower interest rate than one would be capable of getting if one paid fewer or no points.  A general role of thumb is that refinancing becomes worthwhile if the current interest rate on your mortgage is at least 2 percentage points higher than the prevailing market rate.  The average cost of refinancing is usually in the range of three- to six percent of the value of the loan, plus any prepayment penalties and charges associated with paying off any second mortgages that may exist.Though banks have been directed to tighten their credit purse strings by stiffening their loan qualification criteria somewhat, as long as homeowners have done their part by paying their mortgages on time, it’s likely that they’ll have very little trouble finding a lender to accommodate their wishes.  If you decide that refinancing is not worth the costs, ask your lender whether you may be able to obtain all or some of the new terms you want by agreeing to a modification of your existing loan instead of a refinancing.  Whether refinancing is right for you depends upon your own personal situation with regard to your financial objectives and goals.

Stop Foreclosure, Save Your Home, Refinance at 90 LTV of Current Market Value Using FHA Financing

I have been approached by a swarm of homeowners who are currently facing foreclosure. It saddens me to see so many people in this situation, and how they have been deceived into thinking they can afford these homes. Even until now I hear stories about homeowners being promised false hope that they can be saved from foreclosure by paying a short sale fee, loss mitigation fee, or just being striped totally of their equity by scrupulous professionals.The fact of the matter is that you can save yourself from foreclosure; because you don’t have many options.
The first thing homeowners in trouble have to come to realization is to separate their emotional attachment to their home if they have owned it for less than four years. I say that because if you bought your home within the last four years most likely you bought really high priced and most of these homeowners bought with a 100% financing with no income verification. If this is the case you must realize you have no equity and your house isn’t worth keeping. What I recommend is a family meeting putting together a budget; net Income minus all expenses and if you’re in a negative forget it! cut your loses and move on its not too late to start over.Refinance may be an option with the new FHA guidelines that go into affect October 1, 2008 this where homeowners that are behind on their mortgage can refinance only if they can prove that their income is sufficient to pay the mortgage at 29% of their income, and only if their current lender agrees to take a loss (short Pay) on the current mortgage FHA will purchase the current mortgage up to 85% of current Fair market value with closing cost and debt all bagged together not to exceed 90% of current fair market value. You can visit their website at and search for the HR 3221 housing bill for full description of bill. Please remember this is a full documentation loan it will not work for people who cannot prove their incomes!After you realize you can’t afford it and refinancing couldn’t help you call your lender don’t be afraid bottom line you can’t afford it. your lender must see that you can’t afford it so you have to lay the cards on table with them period give them all the truth once they see you can’t afford it obviously a payment plan won’t work. The lender may offer you loan re-modification if your income proves that you can pay the new loan terms so you see why I say sometimes its better to come to reality and forget the emotional attachment we have for homes. Most lenders offer forbearance which is deffer payments for up to six months but again if you still have the same income in six months it defeats the purpose.Option 4 is to put the house on the market to sell at current market value hire a Realtor to give you a free market data analysis if you list with them most likely your home won’t be worth what you bought it for, so its important that you maintain communication with your lender during this process, so they can at least see that you are trying to get yourself out the hole, plus they will pause foreclosing procedures during this time. Once the Realtor gives you the market value send a copy to your lender as they have to agree to take a loss; this is called a short sale. During this time make sure you save your money to start looking for accommodations to move out don’t get too comfortable. It surprises me how many people wait til the sheriff is knocking on their doors before they reality actually hits home.If after a few months the property doesn’t sell you have the right to claim Chapter 13 Bankruptcy. Just keep in mind that if you file chapter 13 its only temporary, if you can’t afford your current mortgage chapter 13 won’t help you as now you will have to pay your regular mortgage payment and all of your debt consolidated in another payment to the state trustee so now you will have two payments. Notwithstanding the enormous fees you will pay an attorney. Chapter 13 is for individuals who can prove they will be able to pay their current mortgage plus all arrears in a payment plan over 5 years.If Chapter 13, Selling, Refinancing, short selling, forbearance, payment plan, loan re-modification, don’t work out for you just give it up ask your lender if they have cash for keys ask for a couple of months to move out and you will voluntarily give them the deed in lieu of foreclosure, it’s certainly less embarrassing than the sheriff forcing you and your family out.Just remember during these tough times we fail to think straight and anyone who offers us a sign of hope will look like a god; but reality is you can save your own home if you just talk to your lender and come to realization if you can truly afford to keep this home even if the lender works with you.I can’t stress to how important it is to communicate with the lender, they will offer the options that they will offer any body else you hire to do it for you. Don’t fall into a trap just tell your lender the exact truth be bold and un-embarrassed tough times could happen to any one of us and it’s never too late to start over. Take it from me I have walked the path and I have helped hundreds some I saved their homes and the others just gave them up gracefully and started a new chapter in their life.After all is said and done just educate yourself on credit repair as your starting point.

Mortgage Cycling: Build Equity and Pay off Your Mortgage Quickly Cycling Your Mortgage

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.

Home Modification and Refinance Program Changes

The “Making Home Affordable Program” has had its ups and downs. The program was introduced by the Obama Administration in 2009 to help get the economy back on track. The goal was to stabilize the housing market and help 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.To do this, the government would work with up to 4 to 5 million homeowners with loans guaranteed by Fannie Mae or Freddie Mac to refinance their monthly payment into something more affordable.The problem has been in the amount of paperwork and people looking to participate in the program getting the run around. The second problem is for those who still owe a large amount on the principal of their home which doesn’t match the home’s value.Now, the Obama administration is looking at ways to offer piggyback lenders incentives to lower payments on second mortgages.This has been followed by the Treasury Department planning to help find ways to streamline the process designed to get more borrowers to complete the loan modification program. The program can help reduce mortgage rates to as low as 2 percent for five years.Even with this, economists and mortgage experts continue to press the government into forgiving loan balances to restore equity to borrowers who owe more than their home is worth. They say without addressing the real problem, more and more people will walk away from their homes and accept foreclosure rather than make payments on properties overpriced.What will the Treasury ultimately do? It is possible they may seek ways to streamline refinance programs instead and make it easier for those seeking refinancing to qualify. For instance, they could make pay stubs an acceptable means of verifying income rather than tons of tax documents.With the original plan, not only were borrowers to submit a ton of documents to qualify but also those receiving the documents were overwhelmed by the amount of paperwork to sift through. Paperwork was getting lost and those trying to qualify were getting lost in the shuffle.Now, the Treasury Department is not only reducing the amount of paperwork but also lengthening the trial period borrowers were getting of three months to five months.In addition, servicers must acknowledge borrowers within 10 days receipt of their paperwork and also let the borrower know within 30 days if he or she is approved for the trial modification. If the documentation is not complete, the servicer must tell the borrower where the problem is.But the idea of ‘equity forgiveness’ is still not off the table and as complex as it would be to implement, the Obama administration is still trying to work it out.

Understanding Obama’s Home Mortgage Refinance Or Modification Stimulus Plan

The recent announcement of President Obamas “Making Home Affordable” plan will allow millions of current homeowners the chance to refinance or modify their home loans into new 2% fixed rate mortgages. The savings, through interest alone, easily add up to hundreds of dollars per month. Here is how this $75 billion housing bailout plan works:-Homeowners who have seen their home or property values drop by 15% or more as a result of this housing crisis, are in luck. Millions of homeowners who purchased their home in the past few years now are stuck with mortgages that are actually worth more than the home. Now, you will still be approved for a 2% fixed rate finance even if you owe up to 5% more than your home is actually worth.-Homeowners who have been able to make every one of their mortgage payments on time and in full for the past 12 months, or longer, in a row, can now refinance into the Government backed fixed rate 2% home loan. All homeowners will qualify for this refinancing part of the “Making Home Affordable” plan as long as you have not been late or missed any payments.-“Financial Hardships” such job loss, income loss or reduction, hospital bills or tuition payments, high interest debts, or a whole list of other things will help a homeowner qualify and be approved for a home loan modification. This loan modification will allow homeowners who have missed or been late on a few mortgage payments and are struggling financially. Include a handwritten letter stating your “Financial Hardships” and hand sign it. Attach this letter to your loan application for a 2% fixed rate, government backed, home mortgage loan modification.-A homeowner who is lucky enough to have a mortgage financed or backed from Freddie Mac or Fannie Mae will be automatically eligible, regardless of your financial situation, for a 2% home loan refinance or modification. This is possible, again, because of President Obama’s and the Federal Governments “Making Home Affordable” plan.By taking advantage of this great time for refinancing or loan modification, a homeowner can easily save hundreds of dollars every single month, in interest savings alone. This easily adds up, in most cases, to tens of thousands of dollars in savings over the course of the mortgage, which is usually 30 years. Homeowners who are having financial problems, or think there mortgage payments are too high and they could do better, should look into the potential savings refinancing or modification of your home loan are. Odds are, especially using this “Making Home Affordable” plan, you will qualify for a much better home mortgage than you have now.

New 2% Home Mortgage Modification Or Refinance Stimulus Plan

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.

When Should You Refinance Your Home Mortgage?

The question many of us are asking these days is whether to refinance our mortgage, or wait for better terms or a better rate. While no one can accurately forecast where rates are headed, there are some steps you can take that will help you decide whether to refinance your mortgage now:First: How much lower are the rates than what you are paying on your existing mortgage? Keeping in mind, especially if you are writing off some mortgage interest on your taxes, that a slight drop in rates may not make it worthwhile to refinance.Second: If the rate is significantly lower, you may want to check what your monthly savings will be. When doing this, make sure you calculate the new mortgage payment after your refinance without factoring in any years you are adding on to the end. For example, if you owe 27 more years on your current mortgage, calculate your new payment using the new rate and the amount you are refinancing only over 27 years. Otherwise you might think you are lowering your payment more than you actually are, when you are really just adding years onto the end.Third: So now you know how much you’d save each month on a refinance, but how much are the closing costs going to be for your refinance? You need to be sure that paying any closing costs (including points) are worthwhile. Here’s some simple math: If you are paying $2500 in closing costs, and the reduced rate saves you $500 each year, you’ll need to stay where you are for five years to reap the benefits. For many, closing costs are worthwhile, but for others who know they will need to upgrade, or have a job situation that can mean having to move, closing costs may eliminate any benefit of the refinanced mortgage.Fourth: If you’ve arrived here, you have probably figured that you are saving enough over time to make your new rate and the closing costs worth moving forward. One last consideration: Do you think you will refinance again? This one may be close to impossible to answer easily, because who knows where rates are going. But, if you think they might go down, make sure you know what your lender’s terms are as far as refinancing. Some lenders will not refinance a mortgage for 90 days after the close of the one you are doing now. Make sure you are getting enough savings to not worry about that.Fifth, and finally: One last word of caution: Once you lock you may have to pay fees (e.g. for an appraisal) that might not be recoverable if the loan does not go through. One of the biggest issues you could run into is that your appraisal is not high enough to qualify you for the mortgage. You may want to carefully look at comparable sales in your neighborhood, or, even better, talk to someone who is aware of the real estate market in your area, to be sure that your home will be appraised at a high enough value to meet the criteria of your loan.If you’ve made it this far, you may be inclined to go forward and refinance. Best of luck! Information in this article should not take the place of a conversation with a finance and possible tax professional who is aware of your unique situation.

5 Points to Consider When Refinancing Your Mortgage

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.