Using A Home Equity Line of Credit to Refinance
August 5, 2010 by · Leave a Comment
There are many options for homeowners to refinance their home from the types of loans they can use to how they wish to use them. One method of refinancing that some homeowners choose is to use a home equity line of credit to refinance. As with any business decision there are pros and cons that one needs to look at to determine if it is a worthwhile investment to make. The best way to determine is a line of credit refinance is right is to understand what a home equity line of credit is, how it is different from other options, and how it can be used to the best financial advantage.
If a homeowner has been in their home long enough to earn some equity in their mortgage then this kind of refinance should definitely be considered. When a homeowner gets a home equity line of credit they borrow a loan based on the amount of equity they own in the home. Technically it is a line of credit and not a loan. When a home equity line of credit is used, the funds for the equity they have are made available to use. A specified period of time is designated in which the homeowner can withdraw the available funds as they wish to. This is called the draw period and is followed by a repayment period when the homeowner must repay the money they took from the line of credit.
By following this definition is becomes quite clear that a home equity line of credit is different from a home equity loan. Both loans are based on how much equity is owned on the home but the way the funds for this loan are given to the homeowner is the main difference. With a home equity loan all of the funds are disbursed to the homeowner immediately. With a line of credit the homeowner has the choice of how much to spend and when they spend it. Of course with both methods the funds are limited to and will have specific repayment directions.
The biggest advantage to using a home equity line of credit to refinance is that the funds can be used for any purpose and does not have to be used just to refinance the mortgage. Other kinds of loans like first time mortgages and auto loans are very strict about how the money is to be spent. If you get an auto loan, the lender has very specific requirements that the funds be used in purchasing a car. But the home equity line of credit does not restrict the homeowner in this way. If the homeowner wants to open a business or pay off some student loans, even take a nice vacation, the line of credit will allow this.
Also, in some circumstances the interest paid for the home equity line of credit could possibly be tax deductible. This is especially true when the money is used to make improvements to the home. But because the situations that are tax deductible are very specific and can be complicated it is definitely best to talk to a tax expert before listing it on your tax form.
Interest Rate Lock-Ins and Refinancing a Home Mortgage
April 3, 2010 by · Leave a Comment
You have decided that you want to refinance your home mortgage. The next question is should you lock in the interest rate or not? Timing is of the essence when it comes to refinancing a home loan so always bear this in mind.
Refinance interest rates are at the whim of the economy so trying to guess what will happen next is a guessing game that many do not want to play at. The timing of when you should lock in an interest rate on a refinance home mortgage is not necessarily going to fit the ideal situation.
You can improve your odds of choosing the right time to refinance a home mortgage and lock in the best rate possible by taking an honest assessment of where you are financially. You then need to view the current trend when it comes to interest rates and then proceed to lock in a refinance interest rate that feels comfortable to you.
Waiting for the right time to lock in a refinance mortgage can keep it in a type of suspended state for a period of time. If you lock in the refinance mortgage in a hasty manner or if you do it for a long span of time, such as 60 days or more this can mean that you will end up paying a higher refinance interest rate.
The date of the closing on the refinance mortgage is important when it comes to locking in your mortgage. If it is your plan to close on refinancing a 2nd mortgage before 30 days are up then locking in the rate for 45 days should work well for you. This provides you with a little leeway if anything unforeseen happens such as a delay in the closing date or an emergency that takes you out of town.
One thing you might want to do is to lock in a selection of refinance interest rates for different spans of times with a variety of refinance lenders. The disadvantage to doing this is that you will have to pay application fees and some may be refundable while others may not. This method can become very expensive.
Lower Your Mortgage Payments When You Refinance
April 3, 2010 by · Leave a Comment
Refinancing a home mortgage is something that people decide to do for various reasons. The decision to refinance a mortgage might be related to current financial troubles or it might be because you wish to borrow money against the equity you have built up in your home in order to make home repairs or to start a new business. However the most common reason that individuals decide to refinance a home loan is in order to obtain a lower monthly payment.
If your monthly payment is causing you some grief and you have decided that refinancing a mortgage loan is in your best interests then read on for two important suggestions to get those lower monthly mortgage payments that you desire.
By extending the terms of your mortgage after refinancing, you can stretch it over a longer period of time. This will lower your monthly payments for sure. Take this example- if you bought a home five years ago that cost $300,000 and it was at a seven percent interest rate, you might decide to refinance the mortgage once your balance is $280,000. This would make your monthly payments $1,200.
But there is a better way to refinance a 2nd mortgage. Here is how- if you took the same home and refinanced at a 6.5% interest rate over a period of 40 years this would lower your monthly payments to $850. You would save yourself $350 a month. The downside to refinancing mortgage this way is that by taking longer to pay off your home you will actually pay more money to the mortgage lender. You must decide what is more important to you, the money you pay in the short-term or the money you pay in the long-term.
In the short-term if you choose to refinance your mortgage you might want to go with an adjustable rate mortgage. If you anticipate selling the house in a few years or expect your income to go up, then look at the option of a hybrid adjustable rate mortgage (ARM). This option for refinancing a home loan means that you will be at a fixed rate for as long a span of time as five years before the point at which the mortgage lender makes the necessary adjustment to the mortgage rate. This refinance mortgage option is attractive to many people because they can enjoy the positive side of having a lower adjustable rate loan and still have a cushion when financially the economy, and their own situation is unsteady.
Refinancing Mortgage Loans – Get the Facts
April 3, 2010 by · Leave a Comment
When it comes to refinancing mortgage loans the more you know the better off you will be. So what is it you need to know when it comes to refinancing a home loan? Read on and find out homeowner!
If doubt creeps into the equation then wait awhile
If you harbor reservations about refinancing your mortgage then don’t do it. Sit on the idea for awhile and wait until you feel more settled about the decision. Refinancing mortgage loans can be a wise move but it can also involve quite an expense.
Don’t let debt collectors bully you into refinancing
If you are in a considerable amount of debt then you may have collectors calling you constantly and putting the idea into your head that refinancing your home mortgage is the right thing for you to do. Collectors want their money as quickly as possible and are not looking out for your best interests. Don’t fall victim to this just because you are in a precarious financial state.
Using collateral to refinance unsecured debts is not smart
Being in debt is upsetting and stressful but being homeless would be infinitely worse! Your home should never be used as collateral for such things as medical debts, personal loans or credit card debts. It is rare that an unsecured creditor will be able to take possession of your home this way. On the other hand, if you refinance your home loan and put up your home as collateral, you can lose it if you default on the payments.
Use different lending companies for refinancing purposes
If you presently have a debt owing that is through a finance company then do not choose to refinance your home loan with the same company. You might want to instead ask the company if they would be willing to reduce your payments on the first loan. However, do not let this company refinance your mortgage for you. If you let them do this then you are likely to suffer the financial consequences in the form of a higher interest rate, new closing costs that are very expensive and hidden penalties. Don’t risk it!
Lowest Mortgage Refinance – Consider the Facts
February 15, 2010 by · Leave a Comment
Refinancing is becoming a common practice for many homeowners due to the fact that borrowers look favorably upon refinancing a home mortgage more so than ever before. Refinancing a home mortgage is also becoming very popular due to lower interest rates. Before you start your search for the lowest mortgage refinance, you should take the time to evaluate many elements such as the status of your mortgage, your financial situation, as well as your personal preferences. You then need to figure out if this is the right time for you to apply to refinance a home mortgage or not.
If you wish to refinance a home mortgage then you will want to negotiate for the lowest mortgage refinance possible. Bear in mind that the decision to refinance is a long term one that must be looked at from many different angles before a final decision is made.
Before you refinance a home mortgage you need to consider many important facts. Read on for what you need to know about penalty costs, monthly repayment savings and transaction costs.
Penalty Costs
When you refinance a home mortgage you pay off the mortgage you already have and then receive another mortgage that boasts a different interest rate and a different loan term. Most of the time you receive the lowest mortgage refinance with an adjustable rate. When you refinance a home mortgage you will have to pay penalty costs due to the fact that you have chosen to pay off your mortgage at an earlier date than originally agreed upon. In some cases the penalties may be high enough that they override the advantages available to you in terms of refinancing a home mortgage. Check this out before you proceed!
Monthly Repayment Savings
In searching for the lowest mortgage refinance you have to figure out if you are really saving money by refinancing or not. Refinancing often involves making a transition to a new structure for a mortgage that will pay financial dividends down the line. For example, lower monthly payments are what most homeowners look for when they choose to refinance a home mortgage.
Adjustable rate mortgages may have interest rates that are far lower than what is offered on fixed rate mortgages. Before you immediately decide to refinance your home mortgage based on this, figure out what your interest rates will be in a few years, as opposed to figuring them out just in the short term. Do a comparison of what you are currently paying monthly and what you would be paying if you chose to refinance. Sometimes the savings are not worth it while other times they are. This is the time to speak to a qualified mortgage specialist to get some financial advice.
Transaction Costs
Any transaction you do with your money involves fees. This is as true with a lowest mortgage refinance as it is with any other mortgage transaction. Before you choose to refinance a home mortgage, take into account all of the fees that will be imposed upon you. These include points, appraisal fees, lawyer fees, prepayment penalties and inspection fees. All of these elements make the refinance of a home mortgage more expensive.
You then need to consider these factors and carefully balance them out with the cost savings that would occur if you went ahead and paid off your first mortgage to obtain another one. For those who plan to remain in their home for a relatively lengthy period of time, the transaction costs will be easily off set with the savings in regards to repayment over the long haul. This means that the choice to refinance a home mortgage would be a good one for you. For those who plan to live in the residence for brief period of time, the opposite would be true.
Factors To Consider Before Refinancing a Home Mortgage
February 15, 2010 by · Leave a Comment
In the world of refinancing a home mortgage there is a rule of thumb that states that refinancing is only a wise move if the interest rate can be lowered at least two percentage points (for example, from nine to seven percent). However other factors make a difference too when it comes to refinancing a home mortgage. How long will it take you to break even is a relevant concern as is how long you plan to live in your house. Refinancing a 2nd mortgage may appear to cause more negativity to your financial situation in the beginning and this is important to bear in mind.
While the stated annual percentage rate (APR) of a refinance mortgage is important, so are other things. Let us take a closer look at these other important refinancing variables.
The Term of the Refinance Mortgage
The term of the refinance mortgage is the span of time it will take to pay off both the principal of the loan as well as the interest on the loan. Be aware that short-term mortgages may have the advantage of lower interest rates but they will also come with higher monthly payments. Refinance interest rates must be low enough to make the refinance option a viable one for the homeowner.
Interest Rate Variability
Mortgages fall into two different camps- there are mortgages with fixed interest rates and those with variable rates (the rates will change after a certain length of time, such as anywhere from one year to five years). An adjustable-rate refinance mortgage (ARM) may seem like the better deal in comparison with a fixed rate mortgage that has a comparable term. However, when interest rates shoot up the rate for the ARM could rise as well. Discuss your options with the refinance lender and figure out what is the best deal for you at the present time.
Points
Also sometimes called discount fees or origination fees, points must be paid to the refinance lender once everything has been done in regards to refinancing your 2nd mortgage. Be aware that one point equals one percent of the value of the loan. Do an evaluation with your mortgage broker or lender to decide if the savings you could get from a lower refinance interest rate would be worth the points you would be expected to pay.
Refinancing A Home Mortgage With New Rules
October 20, 2009 by · Leave a Comment
It is now the best time to refinance your mortgage? Obviously, home mortgage rates have never been lower and a successful refinance at this point may net the lowest interest rate on a refinanced mortgage in years. It was only a couple of years ago that securing a mortgage was easy and if you could sign your name, you could obtain a mortgage.
That may seem like an exaggeration, and it may be, but it’s not that far off.To refinance your home today requires much more effort. To refinance home mortgages today you must provide documentation and the standards for approval are much more strict than they have been in the past.
Home mortgage refinance rates can be expected to settle in around 5 1/2% for the rest of 2009, on a 30 year fixed-rate. The 15 year fixed-rate is about a half a point lower than the 30 year rate at 5%. Do people still use adjustable rate mortgages? Yes they do and a 5/1 or a 7/1 ARM might make sense if you plans to move or refinance again before the end of the initial fixed rate. In the event that you cannot make the move make sure you can handle the higher monthly payment in the future.
The lowest refinancing mortgage rates are the mortgages that are backed by the government, Fannie Mae or Freddie Mac. If you are trying to qualify for a conforming loan, meaning that the mortgage falls within guidelines and certain limits can also obtain the lowest refinance mortgage rates.
Credit scores matter when trying to qualify for a home mortgage or a refinance mortgage. You should have a credit score of 720 or more at equity in your home in excess of 20%.
You can save a lot of time and a lot of effort if you provide your FICO score to a prospective lender. You will need to provide pay stubs, bank statements and other financial statements for the past two months. You will also be required to provide W-2 statements for the last two years. If you are self-employed, you can expect to have to provide two years worth of tax returns showing a self-sustaining income. As we stated documentation is required for any home mortgage these days.
Filling out an application and paying for an appraisal ahead of time helps you to determine the value of your home. Essentially you can get a pretty good handle on what kind of interest rate you can obtain based on your property value and credit score.
Choosing a lender for your home refinance mortgage should include credit unions, regional banks and local banks in your area. It may be helpful to enlist a mortgage broker. Mortgage brokers generally represent multiple lenders and can be creative and may help if your qualifications aren’t within guidelines.
With interest rates on refinance mortgages so low, you may want to ask if you should lock in your rate. For most people it is a good idea to lock in the rate for your mortgage. Generally the deal that you agreed to for your refinance mortgage is the best deal you can strike. You would not want a higher interest rate or a interest rate bump to disqualify you from a mortgage. The risk at the rates will change before your lock. Expires is Heidi’s days because loans are taking longer to process. The best refinance rates in years are available for those who are willing to take the time and exercise diligence in obtaining a refinanced home mortgage.
How much equity must you have in your home to refinance ? To get a mortgage through Freddie Mac and Fannie Mae you are required just 5% equity in your home. However you must get private mortgage insurance if you have less than 20% equity. That rule essentially has not changed. PMI protects the lender not the borrower. The creative feedback mortgages that helped homeowners avoid PMI have essentially disappeared. Adding the PMI could disqualify you from refinancing your mortgage. Fannie Mae and Freddie Mac generally set the limit for mortgage loan payments at 36% of your monthly pretax income. FHA standards since its limit at 31%.
You can refinance your home mortgage. Expect to jump through a few more hoops, provide much more documentation, and be prepared for the process. The mortgage process has changed dramatically and the truth is that it’s probably a good thing
Finding The Very Best Refinance Mortgage Rates
October 15, 2009 by · Leave a Comment
Refinance lenders are in multiple places if you take the time to look. The Internet is an excellent place to start your search for the best refinance interest rates. The Internet allows for ease of convenience and comfort.
What must you do as you search for the very best refinance interest rates out there? Read on for some helpful ideas …
To begin, compare as many refinance interest rates as possible. This is a key point when it comes to refinancing a home loan. As a rule of thumb compare the rates for at least four refinance lenders.
To find the very best refinance interest rate you must look in enough places. Check online to find out what local refinance lenders have to offer consumers. Then you should create a comparison chart. Make sure the chart contains not just potential refinance interest rates but also the potential closing costs.
Do you know the differences between one mortgage and another? In order to refinance a home mortgage loan you have to know what you are dealing with. Knowledge really is golden when it comes to matters related to a refinance home mortgage rate and refinancing a home mortgage in general.
To get you started down the refinancing road here are a few essential things that you should know about mortgages:
· While 15 and 30 year mortgages are always popular with consumers, many homeowners are looking to the option of adjustable-rate mortgages (ARMs). An ARM will have an up-front interest rate that is very desirable but after a specified period of time it will be adjusted and will be higher.
· Refinance lenders will calculate the annual percentage rate (APR). The APR includes both closing costs as well as the note rate for the mortgage.
Refinance interest rates go up and down and there is nothing that consumers can do about this other than cope with it. The government sets the rates whether we like it or not. With this knowledge in hand, the smartest decision to make is to choose the mortgage interest rate that is most appealing to you and then down the line refinance your mortgage if you feel the interest rates make it worth your while.
It is always the most strategic move to wait to refinance your home mortgage loan when the absolute best refinance rates make themselves available to you. To do this you must check the Internet regularly and do your financial homework.
Refinance Mortgage Rates in Florida
May 15, 2009 by · Leave a Comment
The lowest refinance mortgage rates in Florida can save you thousands of dollars over the entire length of the loan. There are plenty of lenders that can offer you low interest rates and lower monthly mortgage payments. This can then help you to have more cash in the bank and less worries swirling around in your head.
Owning a home in Florida is an excellent financial investment in yourself and your family’s future. The reason for this is simple- the real estate market in Florida is constantly evolving as more and more people seek the beautiful weather and sandy beaches that the state of Florida has to offer.
Other companies you may wish to look into when it comes to searching for the lowest refinance mortgage rates in Florida include:
· Amban-First Mortgage- Jacksonville
· American Mortgage Link- Tampa
· Constitution Mortgage Company- Tampa
· MHI Mortgage- Jacksonville
· Mortgage Stop1 Inc.- Jacksonville
· Nationwide Mortgage- Miami
· North Florida Mortgage- Jacksonville
· United Capital Trust- Tampa
When it comes to the lowest refinance mortgage rates in Florida the more quotes you can get, the better. There are a selection of online lenders that can offer you multiple quotes and help you come up with the best refinancing deal possible.
When it comes to refinancing in Florida it is important that you are well aware of what the fair market value is on your home. To learn more about the current selling prices of homes in the area you live in visit the NAR website www.Realtor.com. Once you get there, look for the section that reads “About the National Association of Realtors.” From there you should click on “State and Local Associations” and choose Florida. Once there you can then choose the county you live in and locate the information you require.
Refinancing a Home Mortgage – What is Right for You?
March 20, 2009 by · Leave a Comment
It was once a general rule that putting 20 percent down on a mortgage was the acceptable amount. Anything less than that was not acceptable. Things have changed and now there are more options than ever. Putting 20 percent down is still a good idea and often advisable, but there are other factors to consider when you decide to refinance a home mortgage.
Only borrow enough money as you can realistically afford to pay back. In most instances, refinance lenders will only allow homeowners to borrow in the area of 33 to 38 of their gross income calculated on a monthly basis. Before you move forward with your plans to refinance a home mortgage, sit down and figure out what you can afford that will not put you in the red.
If you are unable to put 20 percent down on your home then be forewarned that you will be required by the refinance lenders to purchase Private Mortgage Insurance (PMI). The reason for this? PMI is essentially a way to lessen the risk to the refinance lender. You can expect to pay in the area of $100 a month or thereabouts as part of your monthly payment for this insurance. For this reason, if you can come up with the 20 percent you need for a down payment then you are better off doing so.
There were closing costs when you first bought your home and the same can be said the second time around. Closing costs are a part of every refinancing of a home mortgage. You cannot escape them unless you decide not to refinance your home loan at all.
If you are refinancing a home mortgage loan after only a few years of buying your home then you might be able to use some of the original documents and save yourself some money. For example, your first appraisal could still be used in order that you would not have to get another one.
As you set about the task of refinancing a home mortgage make sure you factor in all of these extra costs. Remember that they add up. Refinancing a 2nd mortgage is not a cheap endeavor!
If you have questions then there are qualified refinance lenders who can answer your questions and give you all the information you need in regards to refinancing a home mortgage loan.
