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.
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.
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.
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.
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.
Is It Worth It To Refinance a Mortgage
March 19, 2009 by · Leave a Comment
Your mortgage can be reviewed at any time during the term if you wish to explore your options. You do not have to wait until the mortgage has had time to mature. You can if you wish but you do not have to.
While a fixed term mortgage is a non-negotiable contract and will incur refinance penalties, it is still a smart idea to ask for a mortgage analysis. This analysis can help you to decide if refinancing a home mortgage in order to get a lower monthly payment or to pay off debts is in your best interest or not. The mortgage analysis can help you to better ascertain the penalties versus the payoffs that will form the bulk of your decision making process.
When it comes to refinancing a 2nd mortgage you can do one of two things. You can pay out the penalty that exists on your current mortgage and then start anew with a refinance mortgage or you can go with the “blend and extend” option.
Before you even begin to ask how to refinance a home mortgage you must be aware that the rewards that come from refinancing a home mortgage will not be seen in the short-term. Instead you will see some penalties when you choose to refinance your mortgage.
If you plan to sell your home in a year or so then you might want to rethink your decision to refinance a 2nd mortgage. Refinancing a home mortgage if you plan to sell right away will not allow you to reap any benefits whatsoever. Refinancing a home mortgage will only yield benefits in the long-term.
Ask the refinance lender to accurately assess for you what your payback period for refinancing a home loan would look like. A payback period is the length of time that it would take to see any savings come from the decision to refinance a mortgage. This is largely based on the penalties and the difference that would exist between what your existing interest rate is and what your refinance interest rate would be.
Penalties play a role in the decision of whether to refinance a home mortgage or not. The penalties you would have to pay to refinance a 2nd mortgage would be either the greater of three months worth of interest on your home or else the differential in the interest rate. The interest rate differential could be quite high. You will need to discuss all of this with the refinance lender in order to make the best refinancing mortgage decision possible.
Shopping for a Refinance Mortgage Lender
March 18, 2009 by · Leave a Comment
When it comes to shopping for refinance lenders you must do the most in-depth research possible in order not to fall victim to a crooked refinance company. The right refinance lenders can give you the best advice when it comes to refinancing a home loan and can help you find the best refinance interest rates.
There is a tremendous amount of refinance lenders out there so narrowing down your search can take some time. Expect your patience to be tested but rest assured that if it is the best refinance home mortgage that you are after, you will find it with perseverance and good investigating skills.
Understanding the difference between retail and wholesale mortgage rates is important as you begin to think about refinance rates. The vast majority of quotes you receive from financial institutions will be retail refinance rates. In order to obtain a wholesale mortgage rate you will need to get in touch with a mortgage broker.
Before you shop for a refinance lender make sure that you know why you wish to refinance your home mortgage. Do you want to switch from an adjustable rate to a fixed rate mortgage? Do you wish to get a better interest rate than you presently have already? Do you want to get some money from the equity of your home to pay off some debts?
Once you know your reason(s) for wanting to refinance home mortgage then you need to be aware of the different kinds of lenders that are out there and what products they can offer you. You can choose to refinance home loan through a bank, mortgage company or a credit union. Decide which one can give you the best refinance interest rates. You might even decide to go with a broker.
Once you have found a refinance lender who appears to fit your needs you then must negotiate for the best mortgage refinance loan possible. Look for the refinance terms that are most suitable. For example, look for refinance lenders who offer free appraisals and/or no closing costs whatsoever.
Be Smart When Refinancing a Home Loan
March 18, 2009 by · Leave a Comment
Refinancing home loans is something you hear about all of the time. It was once practically a taboo subject as it pointed to financial difficulties on the part of the homeowner. While this may still be the case, some people do it for a plethora of other reasons.
Whatever your reason for refinancing home loan, you first must understand what exactly it means to refinance. When you refinance a home mortgage, the “re” spells it out for you. You are doing something over again. Think of how the word refinance bears similarities to the words redo and repeat.
To refinance a mortgage you will be obtaining a new loan for your home based on how much money you presently owe. New terms will be drawn up in order to refinance mortgage and you will be able to pay off the pre-existing mortgage with the money from the new loan.
If refinancing home loan is a worthwhile option for you then be aware that while you can renegotiate for lower monthly payments, you will also have to pay new closing costs that are related to the refinancing transaction. Will you need mortgage insurance ? Closing costs are not just charged when you buy a home the first time around!
The refinance lender you go with can make a difference in the closing costs you will pay. Some lenders will expect the closing costs to be paid upfront while others might decide to include them in your refinance home loan and have you pay them off as you make your new monthly payments. This is something you should discuss with the mortgage lenders before you sign any documents or commit to anything.
Closing costs for a refinancing home loan can include the cost of a new survey, an application fee, a title search, an inspection fee and an appraisal fee. Those individuals who have less than 20 percent equity in their homes are sometimes required by law to pay private mortgage insurance, in much the same way they did when they applied for their first mortgage. Find this out from the refinance lenders before you make a final decision.
Due to the closing costs you might actually discover that a refinance 2nd mortgage will cost you more than the original mortgage. In order to not make a financial mistake that will burden you for years to come, carefully weigh out the advantages of the current loan and the refinance home loan to figure out which would put you in a better financial situation.
