Tag Archives: Refinancing

Mortgage Refinancing, a Big Decision Requires Proper Planning

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Buying a home is very important to many people the world over. Because houses are such a big-ticket item — for most people, the most costly item they will ever purchase in their lifetimes — the biggest hurdle they must jump over is getting a mortgage loan just to buy a house.

Once a loan is obtained however, it does not automatically mean the homeowner has stopped getting loans. Most homeowners refinance their mortgages from time to time, at least every 10 years if not much more frequently.

To refinance a mortgage is to replace it with a brand new loan, usually but not always from a different lending company. In so doing, the applicant (current homeowner) must go through a mortgage application process similar to the process of obtaining the original mortgage loan. Refinancing can be a very sound financial choice, if done for appropriate reasons.

There are good reasons and times to refinance, and there are also bad ones. Good reasons for home mortgage refinancing may include: reducing monthly payments by taking advantage of lower interest rates or extending the repayment period; reducing the interest rate by switching from an adjustable-rate to a fixed-rate loan or from a balloon mortgage to a fixed-rate loan; reducing the interest cost over the life of the mortgage by taking advantage of lower rates or shortening the term of the loan, and paying off the mortgage faster (accelerating the build-up of equity) by shortening the term of the loan.

It may be a good time to refinance a mortgage when it is possible to get a better rate or a better loan product to fit your needs, and when there is no current prepayment penalty that would eat up equity by paying off the original loan. A bad time to refinance a mortgage would be when rates are currently higher than the loan is already fixed at, and when paying off the current loan would mean incurring a prepayment penalty to the lender.

While it is possible, and many homeowners do it all the time, to use home equity to buy luxury items and finance vacations, it is not necessarily smart. The house is an appreciating asset, so its equity should only be used to buy other appreciating assets (such as other properties, or businesses) rather than items that are known to only lose value. It is not the best use of refinancing to get cash out to pay off credit cards that will only be spent up again due to out-of-control spending habits. It would be much smarter, for example, to use cash from a home to fix up the home and therefore increase its value, than to buy a luxury car that will depreciate as soon as it’s driven off the dealership lot.

Gaining equity in a home is a wonderful thing; a solid investment. However, mortgage refinancing should not be viewed in terms of using a house as an ATM, because of the risk of dwindling equity — a secure nest egg for the future — for short-term inability to curb the desire for immediate gratification.

Kathy Hildebrand is a professional writer who is easily bored with her “day job” assignments. So, she researches anything and everything of interest and starts writing. Writing about an extremely wide variety of subjects keeps her skills sharp, and gives her food for thought on future paid writing assignments.


More of her research and articles can be found at www.lasertargeted.com/mortgage and other sites around the internet.

Tips for Second Mortgage Refinancing to Save you Money

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Home loan refinancing has exploded in recent years due to the downturn in interest rates. People who were once paying 8%-10% in interest on home mortgages are now able to get financed at rates as low as 6%. This gives the homeowner a much lower house payment and more money in their pocket. Well, many others are also looking at second mortgage refinancing as well. Here are some tips to help you in this aspect of refinancing.

People get second mortgages on their homes for various reasons. Sometimes it is to get their hands on much needed cash to pay for expenses such as college or a new car, etc. Other times it is to used to purchase a second home. Second mortgages will generally always be much shorter in length than a first. In most cases they run 5-10 years.

Why refinance a second? Just for the same reason you would refinance your original mortgage you want to get a lower interest rate and save money on your loan. It’s a sound financial decision in most cases.

When you make the decision to refinance a second home mortgage, there are some things you should look for before signing any new contract.

- Look at several different lenders to find a good one

- Look online for more information and lending choices

- Always ask questions and if you feel you aren’t getting the right answers…scratch that lender off your list

- Know what closing costs, points and fees will apply to your second mortgage

These are only some of the major points to be aware of when looking to refinance.

You should be able to easily find a good lender if you just ask for referrals and look around. Most people you work with are happy to recommend a lender that they have had a good experience with. Just be careful, check them out, and ask questions. This will assure you that your second mortgage refinancing will go smoothly and quickly.

By the way, you can find out more about Second Mortgage Refinancing as well as much more information on everything to do with home refinancing at http://www.HomeRefinancingA-Z.com

Home Mortgage Refinancing – Finding a Reputable Lender

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If you are thinking about home mortgage refinancing, there are many things you need to study. Refinancing mortgage scams are out of control these days, and finding a trustworthy lender is as essential as the lower interest rates you are trying to acquire. Here is some essential information on how to select a trustworthy lender.

Selecting a good refinancing mortgage company is achieved by being vigilant and questioning every document that you sign. When shopping for a dependable lender that you can rely upon, the first and most critical issue you should consider is experience. How long has the company been in business? Do you know someone who has worked with them? Were they recommended to you by a relative or co-worker who you trust? Find a company that has been in business for numerous years, if not decades. The likelihood is that a relatively new company may be trying to “cash in” on the current economic downturn and resultant troubles with foreclosures. Their motivations may be suspect and therefore, they may not be the lender of choice for you.

The second factor you need to look at is the necessary application form. If the lender suggests that you say that you earn an inflated income, politely thank them for their time and exit the building. When you declare higher income you will qualify for different loan packages that may give you more immediate relief but almost always come with devastating interest payments. These are the sorts of deceitful practices that have resulted in homeowners losing everything they have. In addition, you need to know that serious businesses will require you to provide bank statements and proof of salary income. Your credit history will also be analyzed, so working with a company that does not investigate all these factors usually means you are working with a poor lender.

A good refinancing mortgage company never asks you to sign anything on the spot. You will be given an offer and given time to think about it. Do not sign with the first company you consult with, and do not let lenders hurry you in any way. Such techniques are linked with mortgage refinancing companies that insert additional fees and charges based on events or circumstances that are poorly explained or in some cases not explained at all. For instance, you might receive a very good loan package with a good interest rate and low monthly payments. This offer may seem to good to be true. In fact, when things seem too good to be true, they usually are. The lower monthly payments mentioned above might seem fantastic but you might end up signing for a balloon loan that will require you to pay the entire principle at the end of the loan period with only the interest paid on a monthly basis.

Reliable lenders will also sometimes create a variety of plans based on factors linked to an individual’s situation and not general guidelines. You must explain your state of affairs thoroughly to your prospective lender. Get advice from a trusted source- possibly an informed family member or a representative from your local bank. Know the current value of your property and keep your eyes on the real estate market in your area. Once you select a potential lender, do not sign anything until you are completely sure you understand what your monthly payments will be, now and in the future. Know your interest rates and remember, most of all, that brokers are in this business to earn a living. Listen to your ‘gut feeling’ and do not be rushed into any decisions, never mind of how dire your situation may seem.

For more info, check out the articles at Mortgage Refinance Today or Refinance Home. Ron King is a web developer; visit his website Authoring Articles.


Copyright 2008 Ron King. This article may be reprinted if the resource box is left intact and the links live.

Home Mortgage Refinancing : Why Do People Choose This Path

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Overview

 

A home mortgage refinancing is an option open to homeowners with equity in their home that is accessible in the form of cash. Homeowners can obtain a loan which essentially means the amount of equity that is in their property can be removed in the form of cash or payoffs of debts.  The additional equity funds are usually borrowed at a lower interest rate, similar to the interest rate paid on the home. This loan replaces the high interest credit card debt that would otherwise be paid. Another reason to refinance the mortgage is pay a lower monthly payment on the existing loan.

 

Pay off debts

 

Sometimes small debts add up. Maybe you purchased a new appliance on a store card when the old one broke down. You may have had to put a tooth extraction on your credit card. You took a trip to the Bahamas and spent more than you planned on food and entertainment while there.  Whatever the reason, you find that your credit cards are all maxed out and the penalties and late fees are costing you hundreds of dollars each month. Some home owners use a drastic plan called home mortgage refinancing in order to pay off a number of outstanding debts that create stress each month when the income won’t cover the outgo for these bills.

 

Put your child through college

 

Another great use for the cash you can obtain by a home mortgage refinancing is to educate your children. College bills are overwhelming today and in order to avoid starting off a career with thousands of dollars in college debt, many homeowners are accessing the equity in their homes to pay for the education of their children. The interest rates are equivalent between a student loan and a home equity loan, so either method is a benefit to your education debts. 

 

Take a vacation

 

Sometimes you have planned a scrimped for a vacation of significance for years and it just hasn’t come together for you. If the children have all left the nest and your business is doing well, a month long cruise in the Bahamas may be just the thing to start on the new phase of your life.  Obtaining home mortgage refinancing through borrowing against the equity in your house to pay for your vacation is certainly less expensive than putting the costs on a credit card.  If you shop for a better interest rate, you can even end up with a lower monthly payment than you were previously paying.

 

Remodel your home

 

Another good use for the cash you obtain through home mortgage refinancing is to remodel or renovate your home. Perhaps you need new carpets or a better room. The kitchen may look dated or you might have your heart set on adding a pool or a 3rd bathroom off the family room. If you use the equity in your home, you can often access the cash to do these projects with very minimal effect on your mortgage payment.

  

The wise borrower reviews all the available options before settling on a home refinancing package. The best web site for obtaining resources is found at Home Mortgage or Home Mortgage Refinancing.

Commercial Mortgage Refinancing

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There are many pitfalls that can eliminate or create problems on a commercial mortgage refinance.  Whether or not your particular situation will qualify, depends on several factors.  Understanding your potential loans strengths and weaknesses will save you time and ensure your best chance of a successful commercial refinance.  Below are some basic questions and concepts to keep in mind regarding your commercial mortgage refinance.     

Commercial Mortgage Refinancing – Ownership  

First, how long have you owned the subject property? Has it been less than 12 months?  The lender will use the purchase price plus any documentable improvements you’ve put into the property – not the appraised value.  Many borrowers are often surprised by this, and this rule is getting more and more prevalent as the credit crisis continues.  It’s often referred to as a seasoning issue.

For example, if you bought the subject property 9 months ago, and put down 20%, you will not have sufficent equity, even if you’re convinced you “stole” the property.  The banks will look at your loan request at 80% and most will only consider commercial mortgage refinances at 75% loan to value or less.    

Commercial Mortgage Refinance – Value

Related to above, value or more specifically to commercial mortgage refinancing, loan to value is becoming more and more important.  Obviously most banks have increased their loan to value standards.  For example most banks wouldn’t go beyond 80% -75% on a commercial mortgage refinance a year ago.  Now 65% – 75% is the norm.  For example if you purchased a property 5 years ago with 85% financing and now you can only get 70% financing on your commercial refinance AND the value has decreased, you’ve got a problem.

In addition, the problem is dynamic in that commercial real estate values are tied to financing.  For example the debt coverage ratio (which is a measure of the properties/business cash flow) has a direct impact on the level of debt that can be placed on the property.  Most buyers for example (on a purchase) are only interested in putting 20 -25% cash into a property as their down payment.  If they have to put more into the deal, just so the property cash flows, many buyers will just come to the conclusion the property is overpriced.  So the seller will have to drop the price in order for buyers to be interested and in order to get financing. 

If the current owner has a 30 year amortization schedule, and the buyer can only find 20 year financing, there will be a cash flow issue and the only way to overcome this is by 1. The buyer brings in a higher down payment or 2. The seller reduces the price.  This sale will be registered with appraisal companies and have an impact on the general commercial real estate values in the properties city.

Commercial Mortgage Refinance, Current terms

What are your current mortgage terms?  Are you refinancing because you want a lower rate?  Longer amortization and or fixed period? Want to pull cash out? Or do you have a ballooning loan? One of the biggest questions to ask yourself is, “what are my prepayment penalty?”  This clause can kill your deal. 

Prepayments come in a couple of different forms.  Some are fixed or declining but all are tied by a percentage to the existing loan balance for a certain amount of years.  For example a 5% flat, 5 year prepayment is common.  Another example is a 5% declining.  Meaning 5% in the first year, 4% in the second years… down to zero.

Lockouts are another issue.  They are a form of prepayment penalties but are normally harsher.  For example on a 3 year lock out you would owe the lender 3 years worth of interest if you were to sell/refinance the property.  Which often, adds up to hundreds of thousands of dollars or more depending on the loan amount.    

 Commercial Mortgage Refinancing, Property Charteristic

What type of commercial property are you refinancing?  Different building types get of vastly different terms.   75% loan to value on a restaurant refinance will not fund, while a 75% loan top value on an office building will. 

If your business occupies some of the space, what percentage?  Is it more than 25%?  Is it more than 50%?  Many lenders will consider it an owner occupied deal if you’re in more than 25%.  Virtually all lenders consider it owner occupied if your business occupies more than 51% of the subject building, which will often give you better terms.

Despite the credit crisis commercial mortgage refinancing is still viable.  Take your time and work with experienced professional to make sure you get the best terms available.   

Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan a national commercial mortgage brokerage firm. 248 885-8797. He also has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $5. Check it out commercial real estate loans or commercial mortgage refinance or commercial loan rates

Idaho Mortgage Refinancing

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The Idaho mortgage refinancing system makes it easy to use the already present equity in your home to serve whatever purpose you need it for. Fortunately for most homeowners there are a variety of ways to get more money out of your home.

Once you have decided on the best method for you and your needs, the process of home mortgage refinancing usually isn’t a long one. Always check around for the best interest rates and find a bank or company you are comfortable working with.

Lines of Credit and Home Equity Loans

One option for an Idaho mortgage refinancing that many people take advantage of is a line of credit, which allows the borrower to only pay back what they actually use from the home’s equity. While you also will be issued checks like from your checking account, a line of credit works like a credit card does. Before signing on the dotted line you will have the opportunity to agree to the interest rates, then you only make payments on the amount of money you spend and the appropriate interest.

With an Idaho mortgage refinancing that involves a home equity loan, you are responsible for the terms that tend to go along with a traditional loan. You will once again agree to certain interest rate and terms. Many people find this the best arrangement for them due to knowing in advance what their monthly payment will be.

What to Do With the Money

Once you complete your Idaho mortgage refinancing option, you may be left wondering what to do now; vacation, home repairs, or paying off other high interest rate credit cards or loans. It is completely up to you how you spend the extra money. Many people use it as an opportunity to make a fresh financial start for themselves and get out from under the overwhelming debt.

Another option a lot of people go with is education either for themselves or their children or grandchildren. Higher education, trade schools, or online learning all have benefits and it is only natural to take advantage of the opportunity to better your or a loved ones greater learning and earning potential.

With an Idaho mortgage refinancing process you are in the lead and have the responsibility to make sure your possible future lender meets your needs effectively and cost efficiently for you. Make sure you know the terms and policies before signing and an Idaho mortgage refinancing can work out wonderfully for you.

Since 2000 Ron has been on a mission to help people continue their dream. He helps people refinance from an adjustable rate and the uncertainty that brings to a solid fixed rate,as well as refinancing to help people get cash out for a variety of reasons. Mainly he enjoys helping people KEEP their dream.

Mortgage Refinancing – Mortgage Calculator – Mortgage

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Mortgage

Mortgage refinancing is the method of replacing a mortgage with some other financing. Often, this involves acquiring the necessary financing from some other financial institution at better terms than the current. But mortgage refinancing can also mean getting a new loan from the same financial institution at better terms.

In general, the purpose of refinancing a mortgage is to lower the cost of it.

Interest rates, as you know, change all the time. If you hold a mortgage with a higher interest rate and the interest rate changes and becomes lower, a refinancing might become favorable. Small interest changes can often mean large savings if an effective refinancing can be made.

Changing values of property

One interesting situation arise if your property has gained in value and you have a combination of mortgages at different interest levels. Typically, the more you borrow the higher the interest rates will be at “the top” of the value. For example, you might get up to 85% of the value at 5% interest rate but eveything you borrow above that will be at a higher interest rate.

Now imagine that your property has gained in value over the last couple of years and that you when you bought it borrowed let’s say up to 90% of it’s value. Since the property has now got a higher valuation, it is likely that your full mortgage falls below the 85% that carries the lower interest rate. So what you could do is go to your financial institution and ask them if you can refinance the part that was earlier above 85% since your full mortgage is now entirely below 85%.

Early payoff penalty

If the mortgage you wish to refinance is fixed, there might be an early payoff penalty. This varies with different financial institutions and mortages so it has to be checked for each situation. Still though, even when an early payoff penalty is considered it might be worth to refinance.

In some cases, though this might not be the case in your country or with your financial institution, the institution that refinances your mortgage for you might be willing to pay parts of your early payoff penalty. This is of course always given that they see some kind of profit from you as a customer higher than the penalty.

In the US, mortgages are more common to be fixed at longer terms (could be for example 30 years) while in for example many European countries it is much more common with a floating rate mortgage. This, and more, makes the conditions for refinancing different depending on where you are from and what your situation is.

Home Mortgage Refinancing – Choosing a Broker

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Even if you have a friend or brother-in-law who is a mortgage broker, they may not be the best choice to handle your home mortgage refinancing package.  The true test of a good broker is one who works with you during the entire process and one who is not willing to push you into a loan that is not right for you just in order to gain the commission off the deal.  Yet, it is difficult to know how a broker will operate until after it is too late.  Here are some tips to help in your decision about the loan broker you want to represent your interests in the financial package associated with your mortgage loan.

 

Reputation

 

When looking for a broker to handle a home mortgage refinancing package, one of the first things you should review is the reputation of the broker for honesty, integrity, professional standards and fair dealing with customers.  Make certain you understand who the broker is working for.  Typically that is the lenders.  The broker receives a commission for placing loans.  His or her income depends on selling a loan.  Some brokers will attempt to fit you into a particular mortgage loan or refinancing package even though it may not be the best suited for your financial situation.

 

Referral

 

If you are looking for a broker to prepare your home mortgage refinancing package, a referral from a trustworthy friend, neighbor, co-worker, or family member is a good recommendation for the broker. You can also look online at such sites as the Better Business Bureau and at forums where complaints against businesses or individuals can be registered. In this instance, no news is good news.  The due diligence you do before selecting the broker to represent your interests can mean the difference between a positive experience and a financial disaster.

 

Total costs

 

A number of elements roll into the total cost of the home mortgage refinancing package.  Your broker should be prepared to list and explain each of those costs, including those that are broker related.  Beware of costs are appear to be different names for the same type of service.  Ask for explanations of those you aren’t sure of. Some of the costs included on the loan documents may be negotiable, so ask if you are so inclined.  If something looks odd, you always have the option of selecting a different broker and starting over.

 

Experience in Local market

 

When you are putting together an application for home mortgage refinancing, be sure you look at local experience in selecting your broker. Although the big city brokers may be very good at what they do and may have extensive experience in putting together mortgages for residential housing, they may not be at all equipped to deal with a refinancing package on a rural farmhouse located on 140 acres of land.  Even if the advertising and the rates sound great, you may be better off to look at a local loan broker who is familiar with the idiosyncrasies of the local geography, economy and growth patterns. 

 

When you visit the web site located at http://www.homemortgageloan-refinance.com, you will not only find information about brokers, but about many other subjects related to Home Mortgage or Home Mortgage Refinancing.

Mortgage Refinancing for Starters

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In the financial world, several percentage points, usually, spells major economic shifts. This is the fact that refinancing hinges on. You might mistakenly think that it is designed to change an old mortage; but it is in truth a new mortgage taken to pay the previous one.

If you compare your old mortgage with any refinancing program, you will see that interest rates in the latter are lower. In fact, they are down by around two percentage points from the company standard. When you translate this into monetary terms, you could end up saving a significant sum.

What is another loan for? Often, the reason why people get into refinancing offers is because it is less costly to pay off the newer loan (due to lower interest rates) and because the processing period with the latter is speedier. But while all these sound very simple to perform, you must also realize that you won’t be able to exploit it without enough know-how about how it works.

Should I refinance my mortgage?

The concept of a new loan to replace an old one sounds inviting. But it should be noted that it’s not as simple as 1-2-3. For example, you will still have to pay the fees necessary to transfer your mortgage to the new one. Just like your original mortgage, you will be facing all sorts of charges and costs at the onset.

Do you really get save more than you shell out? Use the free refinance calculator at http://www.refinanceright.com to find out.

One of the issue that haunt loans are the payment terms. Your old deal must have been difficult to follow that’s why you opted for a new one; but don’t think that things would change. It is, thus, advised that you only agree to refinance your mortgage if the interest rate is lower by at least two percentage points, to be safe.

This is a hard choice, for sure, but, currently, lenders have introduced no-cost refinancing deals that derive profit from either slightly higher interest rates or passing some of the cost to the amount lent. This is a new savings technique that deserves closer inspection. A no-cost refinancing plan that only has a slightly higher rate than the current but still significantly below your initial mortgage is still a good strategy.

There are three major things you will benefit from taking a refinancing program. One is speedy equity, which means you can pay off your loan early if you suddenly become ready with enough money. Another is, as said earlier, lower interest rates. Also, you are given the option between an adjustable mortgage rate and fixed rate mortgage.

As a conclusion, while mortgage refinancing allows for greater flexibility and offers more convenience, it is not something that you should just jump into without careful consideration. No matter how you look at it, it is still a loan, and you are still compelled to stick to your payment agreement. To find out if you can qualify for mortgage refinancing, feel free to check out the refinance calculator at our site.

Michael Burns is the home refinance expert behind the website refinancingright.com. Feel free to visit our site to get the latest home loan interest rates, use our refinancing calculator or just stay up to date with the latest mortgage refinance.

Advantages of Mortgage Refinancing

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The basic concept of mortgage refinance is that it acts as a second loan availed of on a property or home substituting any previous loan on the same property. Mortgage refinance offers low interest rate, also cuts down the loan repayment term by refinancing the house or property and in turn lowers the mortgage payment. For many people, mortgage refinance provides an opportunity to improve the monthly cash flow by helping them get back on their feet.

Mortgage refinancing can be an advantageous move financially as many home owners benefit out of refinance for the purposes of either cash out or to change from an adjustable rate mortgage to a fixed rate or debt consolidation to lower their interest rate if they are either locked into an adjustable rate mortgage or fixed rate mortgage. Even though the refinancing option does not always help a person save more money, it provides a good opportunity for improving the loan terms and the benefits of debt consolidation making it an option worth considering.

When the interest rates drop drastically, people think of refinancing their loans got towards a car or home. It is worth to consider mortgage refinance or refinance loan when a person is paying high interest rates. The mortgage refinancing option can be very enticing as the interest rates are lower than when the person originally got his mortgage loan.

The person needs to know if he plans to live in the house which he is refinancing for more years or even for the rest of his life. This will help him come to a conclusion regarding the type of refinance loan he would like to go with. Before going for a refinance it is good to be sure of it first.

The person should be aware of his budget. Before going for a refinance he needs to know how much he can afford. He should have a realistic monthly payment plan so that he can be sure of paying it without any problem on time every month. The fine print of the refinance loan needs to be read in a detailed manner especially when it offers a very low interest rate. There may be a catch as those who are eager about getting a lower interest rate may not read the fine print carefully. Such persons end up paying a huge amount at the end. They should look for any penalties levied if the loan is paid early as the lender is assured of getting more interest rates and in turn more profits.

Understanding the loan is very important. In case any queries required to be clarified, there is no harm in asking questions, as it will only make the process smooth. If required, the help of a legal professional can be had to review the documents on the behalf of the borrower. This saves both money and time. Only after careful review, documents need to be signed. Apart from all these things, the credit history or credit score should be known to the borrower, as it will determine the money got through refinance loan and the loan terms.

Lesley Lyon is an expert in dealing with finance related matters. He has written several informative articles on topics like credit card, debt consolidation, building a good credit score, mortgage, home refinancing, loan and insurance. He regularly contributes articles to web guides on mortgage and home refinancing http://www.fundsleader.info and http://www.financialdeals.info