Showing posts with label Refinancing. Show all posts
Showing posts with label Refinancing. Show all posts

Sunday, June 9, 2024

What to Know About Refinancing Your Home


Refinancing a home is a significant financial decision that can offer various benefits, from lowering monthly mortgage payments to accessing home equity. 

This guide provides an in-depth look at the refinancing process, its advantages, potential drawbacks, and essential considerations.

Understanding Home Refinancing


RefinancingRefinancing involves taking out a new mortgage to replace an existing one. Homeowners often refinance their loans to secure better terms, such as a lower interest rate or a shorter loan term. 

By refinancing, you can reduce monthly payments, save on interest over the life of the loan, or even cash out a portion of your home equity.

Benefits of Refinancing


Lower Interest Rates

One of the primary reasons homeowners refinance is to obtain a lower interest rate. Lower rates can significantly reduce monthly payments and overall interest paid, making the mortgage more affordable.



Shorten Loan Term

Refinancing to a shorter loan term can help pay off the mortgage faster. While this may increase monthly payments, it can save a considerable amount in interest over time and help achieve debt-free homeownership sooner.

Access Home Equity

Cash-out refinancing allows homeowners to borrow against their home equity. This option provides access to funds for home improvements, debt consolidation, or other significant expenses.

Switch Loan Types

Refinancing also offers the opportunity to switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. Fixed-rate mortgages provide stability with consistent monthly payments, while ARMs can lead to fluctuating payments over time.

Potential Drawbacks


Closing Costs

Refinancing comes with closing costs similar to the original mortgage. These costs can include appraisal fees, origination fees, and title insurance. It's essential to calculate whether the long-term savings outweigh these initial expenses.

Longer Break-Even Period

Refinancing to a lower interest rate might require extending the loan term. This could result in a longer break-even period, where the savings from lower payments equal the costs of refinancing.



Impact on Credit Score

Applying for a new mortgage involves a credit check, which can temporarily lower the credit score. Multiple credit inquiries within a short period can have a more significant impact.

Key Considerations


Current Interest Rates

Before deciding to refinance, it's crucial to research current interest rates. Monitoring the market helps determine the best time to lock in a favorable rate.

Home Equity

Lenders typically require a minimum amount of equity to qualify for refinancing. It's important to assess the home's current value and any outstanding mortgage balance.

Financial Goals

Clearly defining financial goals aids in choosing the right refinancing option. Whether aiming to lower monthly payments, pay off the mortgage quicker, or access cash, aligning the refinancing strategy with personal objectives is essential.



Loan Terms

Understanding the new loan terms is vital for making an informed decision. Comparing offers from multiple lenders ensures the most favorable terms and conditions.

Working with a Professional


Choosing to refinance your home can be a complex decision, and working with a professional can provide valuable guidance and insights. 

A mortgage broker or financial advisor like Lund Mortgage Team can help you navigate the options available, ensuring you make the best choice for your financial situation. They have access to a wide range of lenders and can compare different offers to find the most favorable terms. 

Additionally, they can assist in understanding the fine print, such as fees and potential penalties, so there are no surprises down the road. 

By leveraging their expertise, you can confidently move forward with your refinancing decision, knowing that you have considered all the relevant factors and opportunities.

Steps to Refinance


Evaluate Financial Situation

Start by evaluating the current financial situation, including credit score, income, and debt-to-income ratio. This assessment helps determine eligibility for refinancing.

Research Lenders

Research and compare multiple lenders to find the best refinancing options. Consider factors such as interest rates, fees, and customer reviews.



Apply for Refinancing

Submit an application with the chosen lender. This process involves a credit check and providing documentation such as income verification, tax returns, and bank statements.

Get an Appraisal

The lender will require a home appraisal to determine its current value. This step ensures that the home meets the lender's loan-to-value ratio requirements.

Review and Close

Review the loan estimate and compare it to the original mortgage. Once satisfied with the terms, proceed to close the loan, paying any necessary closing costs.

Final Thoughts


Refinancing a home can be a strategic move to improve financial stability and achieve long-term goals. By understanding the process, benefits, and potential drawbacks, homeowners can make informed decisions that align with their financial objectives. 

For personalized advice and assistance, consider consulting with a financial advisor or mortgage professional.


Saturday, February 17, 2024

Refinancing 101: Everything You Need To Know


As a homeowner, there may come a time when you consider refinancing your mortgage. Refinancing is the act of taking out a new mortgage to replace your current one. It can be a great way to save money, but it's important to understand the process before diving in.

In this post, we'll cover the basics of refinancing, including how it works and how it can benefit you.

Understanding Refinancing


Refinancing is essentially the act of taking out a new mortgage to pay off your existing one. This new mortgage replaces your old one. 

The new mortgage typically has different terms, such as a different interest rate or monthly payment. Refinancing can allow you to save money on interest, shorten the term of your mortgage, and even consolidate debt.

Reasons To Refinance


There are many reasons to refinance your mortgage. Some common ones include lowering your monthly payments, reducing the interest rate on your mortgage, shortening the term of your mortgage, or consolidating debt. 



Each of these reasons can help you save money and improve your financial situation. It's important to note that refinancing may come with upfront costs, so be sure to do your research and make sure it makes financial sense for you.

The Refinancing Process


The refinancing process is similar to the process of getting a mortgage. You'll need to gather documents such as your pay stubs, bank statements, and tax returns. 

You'll also need to appraise your home to determine its current value. Once you've applied for refinancing, your lender will review your application and let you know if you've been approved. 

If you are approved, you'll need to sign the new mortgage documents and close on the loan.

Tips For Refinancing


When refinancing your mortgage, there are a few tips to keep in mind. First, shop around for the best rates and terms. Different lenders may offer different rates and fees, so it's important to compare your options. 

Second, consider your long-term goals. If you plan on staying in your home for a long time, it may make sense to choose a fixed-rate mortgage. 

Finally, make sure you understand all the costs associated with refinancing, including fees, closing costs, and points.




Refinancing can be a great way to save money on your mortgage. It's important to understand the process and your goals before diving in. 

By shopping around, understanding your options, and researching, you can make informed decisions about refinancing your home. 

If you're considering refinancing, contact a reliable mortgage broker or lender like Lund Mortgage Team for more information.

Final Thoughts


Refinancing can be a smart financial move for homeowners who are looking to save money on their mortgage. Whether you're looking to lower your monthly payments, shorten your mortgage term, or consolidate debt, refinancing can help. 

With the right information and a clear understanding of the process, you can make informed decisions about refinancing your mortgage. 

If you have questions about refinancing, be sure to contact your mortgage broker or lender for guidance.


Saturday, February 19, 2022

How Refinancing Your Home Can Benefit Your Future

When you purchased your home, it was without a doubt the single biggest investment you have made in your life. Now that you're a few years into making mortgage payments, you may be thinking refinancing your home is a viable option.

If so, you're not alone, since many homeowners choose to do this each year. Since refinancing your home can change your financial future for the better in numerous ways, here are some factors to keep in mind when mulling over the possibilities.

Lower Monthly Payments


When you refinance, you trade your existing mortgage loan for a new one that will have a lower interest rate. As a result, you will have lower monthly mortgage payments. 

Not only will this help you immediately, but in the future as well, since this will free up more of your money to be used for other things, such as home improvements, paying college tuition for your kids, or other things.



Building Equity in Your Home


When you speak with a mortgage company, such as Fairway PNW mortgage professionals, one of the biggest benefits you learn of regarding refinancing is the ability to build up equity in your home much faster than you anticipated, since you will now have a much shorter loan term. 

In doing so, this gives you the option to tap into your home's equity in the future, which could help to pay for unexpected expenses that may arise as you get older.

Paying Off Your Mortgage Sooner


If you refinance to a shorter loan term, this will let you pay off your mortgage much sooner than you anticipated. This lets you build up your savings for the future since you will save thousands of dollars in interest along the way. Best of all, you will own your home years earlier, giving you tremendous peace of mind.

Pay Off Other Debts


When you refinance, one important factor is being able to use an improved credit score to your advantage. If your credit score has improved since you took out your original mortgage, you should be able to refinance so that you get a lower interest rate. 

In fact, you may be able to choose a cash-out refinance, which will enable you to use the money to consolidate credit card debt and pay if off faster.

Since there are many details involved in getting the right refinancing deal for your situation, always do your homework beforehand and work with professionals you trust. By doing so, you could soon see lower mortgage payments and more savings.



Friday, November 19, 2021

4 Benefits of Refinancing Your Home Mortgage

You've probably heard of the word "mortgage," and you know what it means: a financial instrument that lenders, like banks and credit unions, use to make home loans. 

But did you know that your mortgage can benefit you in ways other than making debt payments? Below are the benefits of refinancing your home mortgage.

Convenience and Increase Home Equity


Many lenders offer refinancing home mortgage options. It's really up to you, but once you have decided on a lender, getting prequalified before visiting the lender is the easiest way to ensure that you are getting what you want. 

Many banks have pre-qualification tools on their websites. Just enter your information, and you get an idea about what you can borrow. 

Other terms of the refinance may include an increase in the value of your home, so you can borrow against this equity to take care of other debts. This is known as a cash-out refinance, and you can use it to pay off consumer debt or even finance home improvements.

Lower Interest Rates


The first thing that homeowners consider when refinancing or selling their homes is how much they can save in interest payments. For example, if you pay 5 percent interest on your current loan, you can refinance a new loan with a lower rate. 



Even if the new rate is higher, the savings will be greater. Moreover, the lower payments will leave you with more to save for retirement or other expenses.

Turn Investment Property Into Owner-Occupied Property


If you own an investment property that you want to turn into an owner-occupied property, refinancing a home mortgage may allow you to switch from an investment mortgage to a conventional mortgage. 

This will allow you to sell the investment property and make a profit. If the new mortgage is an FHA loan, you can still keep your investment property and rent it out.

Lower Your Mortgage Payment


You probably pay more than the amount on your mortgage each month. You might also regularly make extra payments on interest or principal, such as when you first move into the home or take out a 30-year mortgage. 

If you decide to refinance, your new lender may agree to lower principal payments to pay off any outstanding balance. This is known as a principal-reduction refinance.

Refinancing your mortgage is a good way to save money on interest, get a lower payment, or even sell your home with little to no down payment. 

It's also a good option if you need money to pay off debts or make home improvements. You can use the money from a cash-out refinance to make some of these improvements.



Saturday, January 18, 2020

Considering Refinancing? Here’s How to Know When You Should



Good financial management means more than just watching every penny. It also means taking an occasional step back and looking at the big picture in the context of the world around you. An area where many people find a way to save money is by refinancing their homes. 

Here are four ways to know that it’s time to look into refinancing.

Market Rates are Better


Interest rates are almost always in motion, headed either up or down most of the time. At the time of your last refinance or the initial purchase, you may have taken a rate that was pretty solid. Since then, though, rates may have dropped, and a refinance could save you thousands of dollars in interest.


Your Credit Has Improved


One of the most important factors in the interest rate you get is your credit score. Over time, you should be able to see that figure gets better and better. Once you’ve reached a significantly better credit score, you will probably qualify for a better rate, making it worth your while to refinance. 




A home buying loan service can review your situation and see if there may be options for you.

Your Situation Has Changed


Since you took out your current mortgage, you may have encountered many changes. You could have had a job change that resulted in a lower salary, making your mortgage a bit of a strain. You may have experienced marriage, divorce, or the arrival of children. Each of these events can change your financial needs and make it beneficial to investigate refinancing.


You Need Cash Out


Your home is not just your residence. It’s also an investment. The dollars you put into it can someday come out if needed, even if it’s for upgrading the house itself. During a refinance, you can cash out some of your equity to take care of other expenses, such as tuition for the kids, debt consolidation, or even just a great family vacation. Instead of racking up student loans or credit card debt, look into a refinance that will cover the expenses.

When you think about it, very few mortgages should ever go the full term without being refinanced at least once. Changing interest rates and personal needs are a given when you’re considering a time horizon of up to 30 years. Check your situation periodically and be prepared to refinance when the right circumstances develop. You could easily save yourself thousands of dollars in interest.


Friday, April 20, 2018

Compare and Contrast Mortgage Proposals to Choose the Best One – Wise Tips



There’s no denying the fact that shopping around and comparing the rates on a mortgage loan will let you find the best deal. Regardless of the type of mortgage, whether you’re taking it out for buying a home, refinancing or a home equity loan, it is just a product like a car and hence the terms and conditions are all negotiable. 

Unless you compare the costs that are involved into obtaining a home loan, you won’t end up with the best one. Read on the concerns of this post to know more on comparing rates of mortgages.

Gathering information from multiple lenders


Mortgages are available from different kinds of lenders, commercial banks, thrift institutions, credit unions and commercial banks. You may be quoted different prices from different lenders and this is why it is recommended that you get in touch with multiple lenders in order to juggle between the best ones. 





Brokers are also there to arrange transactions and deals with lenders in lieu of a commission. Here too you should contact more than one broker so that you don’t end up choosing the first deal that you come across.

Gathering all information related to costs of mortgages


Make sure you receive all important information on mortgages when you work with the lenders and brokers. There’s more to it than just knowing the total monthly payment and the interest rate. 

Here are some more details that you should know about a mortgage loan before finalizing the deal.

RATES

Ask every broker and lender for the list of the interest rates and whether the rates that are being quoted are the lowest

Enquire whether or not the rate is adjustable or fixed. Ensure that the interest rates on the adjustable rate mortgages move up and also the monthly payments

Enquire about the APR of the loan. The APR includes not just the interest rate but also the broker fees, the points and other credit charges which you need to pay

If you get quotes for an ARM, make sure you ask how the rates and the monthly payments are going to fluctuate with time

POINTS

If you don’t know what points are, they are fees that are paid to the broker for the loan and they are often related to the interest rates. The more is the amount that you pay on points; the lower will be the interest rate.

Check your newspaper to know about the points and rates which are presently offered

Points can be quoted to you in dollar amounts instead of points. Then you will know how much you have to pay
.

When it comes to taking out a home loan, there are many fees involved, some of which are underwriting fees, loan origination fees, broker fees and settlement costs. All lenders and brokers should give you a clear estimate of the fees. Most of these fees are negotiable and some are paid when you apply for the loan or during closing.

Therefore, it is only after taking into account all the above mentioned costs that you should select a home loan from a loan company. If you’re considering companies like iselect, make sure you compare home loans at iselect before choosing the final one.



Wednesday, June 10, 2015

First Time Buyer? 7 Things You Need To Know Before You Purchase A Home

Are you a first-time home buyer ready to get into the market? Between advice from friends or family, loans, closing costs and more, it can be overwhelming. Here are seven important things you need to know that can help alleviate your anxiety: 

Examine Your Credit


A poor credit score, or no established credit, can alter your home-ownership plans. Get a free credit report and read through it for errors. If you find any mistakes, contact the credit reporting bureau to ensure they are corrected. This can greatly affect the loan you may get. 

Collect Documentation


Gather pay stubs, W-2 forms, bank statements, filed income tax returns for the past two to three years, and any other documentation you may feel is necessary. Have them available to show to the lender. You may need to provide this paperwork to a few different people, so it's important to have them readily available. 

Pre-approval


Getting pre-approved for a mortgage is important when you are house hunting. Your current bank or local credit union, like Saginaw Medical Federal Credit Union, are good places to start your search. You can also search online to find lenders offering the best rates in your area. Applying to multiple lenders helps increase your chances of getting a loan approved at the best rate possible without having a negative impact on your credit score. 

Create Your budget


One of the most important steps is to establish your budget. It’s necessary to determine how much you plan to pay for your house. It is recommended that buyers spend no more than one third of their income on housing. Your monthly payment can also vary depending on how much you plan to use for a down payment. 



Find Out Closing Costs


Closing costs usually contain origination charges, settlement and title fees, taxes and items like homeowners' association fees and homeowners insurance. Sometimes, they are often higher than expected, so it's important to budget accordingly. 

Choose A Real Estate Agent


It is ideal to find and choose a real estate agent to assist you with the process. Utilize local ads or the internet to research and assemble a list of local agents and start finding out more about their experience. Look for realtors with a lot of experience, especially in the area and price range where you intend to buy. These realtors will be familiar with the current housing market and the history of the market in your preferred area, and they can help you distinguish between good and bad options.

Be Patient


First-time home buying is time-consuming and stressful. Many first-time home buyers become disheartened due to rising property prices and increasing interest rates. There's also chances that there may not be enough properties available that suit the buyers needs.

Taking important necessary steps before the home-buying process can save you time and money. It's important to do your research and talk to different professionals before you decide to make an offer on a home. These tips can help you to be prepared to buy your first home.


Monday, June 1, 2015

Why Refinancing your Home can be Beneficial to your Financial Health



When executed correctly, refinancing a home mortgage can save families significant amounts of money over many years by cutting sharply their interest expense. Of course, understanding if refinancing is the right path to take depends upon a borrower's specific situation. 

Generally speaking, refinance mortgage rates make sense when a family can reduce its interest costs enough to more than offset a new loan's settlement costs.


Closing Costs and Expenses


Refinancing a mortgage with an above market interest rate can yield instant benefits for your family's financial well-being. Refinancing too frequently or without consideration of associated settlement costs can have the opposite effect. 


Ideally, refinancing should be undertaken when it is abundantly clear that sufficient interest savings can be realized over the life of the loan. Other good reasons for refinancing include debt consolidation and the funding of important financial obligations such as a child's education or tax payments. 

These important things cannot be done by the average homeowner with most bank loans or credit products because the interest rates, terms and tax-treatment can never be so favorable.



Managing you Credit


If you are having problems with debt and bad credit, then this is another reason why you might want to refinance. However, this is kind of contingent upon whether or not you have been able to keep up on your mortgage payments. If you have, this helps improve your credit score. This might help you refinance into a loan with a much lower interest rates and decreased payments. 


Government Agency Mortgage Programs


Today, the U.S. government through the Department of Housing and Urban Development (HUD) provides the mortgage money market with significant amounts of liquidity with the goal of promoting home ownership. The government does this through two agencies, the FHA, and the VA (U.S. Department of Veterans Affairs). 


The mandate of the VA is to guarantee repayment of mortgage loans granted to U.S. service men and women. These loans are issued by qualified lenders such as Low VA Rates, one of the many lenders that active and retired members of the service rely on for VA home loan financing.


The Adjustable Rate Mortgage (ARM)


An adjustable rate mortgage may be exactly what your family needs if you plan to sell your house within in the next few years. ARM loans will commonly provide the borrower with a significantly lower start rate than what they currently have. 


If a new ARM loan's accumulated savings surpass the total closing costs by the time your house needs to sell, then refinancing with an ARM can be beneficial to your family's present financial position.



Fixed-Rate Mortgage


For some people refinancing into a fixed-rate mortgage is the better way to go. The reason for this, is that if you are already struggling financially, a fixed-rate mortgage takes away of any risk of your mortgage going up and making you more financially unstable. It will stay at the same rate the entire life of the mortgage.

Before refinancing your home, you must make sure that it is right for you. You only want to do it if it is actually going to save you money in the end. Refinancing without proper consideration of the long-term costs and effects can be an expensive mistake. 


So can cashing out home equity for the sake of financing consumer spending that does nothing to enhance one's personal balance sheet. On the other hand, saving tens of thousands of dollars over the life of a twenty or thirty-year loan by replacing it with a new loan makes all the sense in the world if it can be justified after examining the economics of the situation.

Wednesday, March 11, 2015

Is There a Minimum Required Down Payment for Mortgages?

The minimum amount required for a down payment of a mortgage is 5% of the cost of the home when less than $1 million. For homes worth more than $1 million, the minimum increases to 20% of the home’s cost.

This amount will be modified by your debt levels and income, so by simply having 5% of your home’s price in cash doesn’t automatically grant you the mortgage you need to afford your home.

Your Debt Service Ratios Limit Your Mortgage


The Gross Debt Service Ratio and Total Debt Service Ratio limit how much of your monthly income can go towards mortgage payments. Your GDS is limited to 32% while your TDS is capped at 40%. Even if you’ve saved a significant portion of your down payment, your bank will not allow you to take on so much debt to severely limit the remainder on your income after making your mortgage payments.

The GDS is calculated by adding up mortgage principal and interest, taxes, heating expenses, and condominium fees if applicable. These monthly payments should not exceed 32% of your gross monthly income. The TDS adds up housing costs, credit card interest, car payments, and other loan expenses, which should leave 60% or more of your gross household income.

If you’re buying a home with a down payment of less than 20%, you will be required to purchase mortgage default insurance since you now have a high-ratio mortgage. It’s worth noting that additional costs required to close a home isn’t part of the cost of a mortgage, so having funds available to pay for them is important.

What to Do In Case Your Mortgage Falls Short



There are a number of ways to address the limitation your bank has placed on the mortgage they will lend to you.

● Save enough money to increase your down payment. Although this doesn’t change your GDS and TDS ratios, you will require less of a mortgage with a greater down payment. If your debt-service ratios are too restricting, it may not be feasible to simply increase your down payment.

● Pay off your debts to reduce your TDS ratio. Prior to signing a mortgage, take steps to aggressively reduce your existing debt. It may seem appealing to let low interest rate debt sit around, but it’ll cut into how much you can afford to spend on a home.

● Increase your income to give yourself more room for your GDS. Reducing spending is easier than increasing income, and depending on your local economy and job availability, finding a higher paying job may be difficult.

Apply for a full service mortgage with your partner, or ask someone to be your guarantor. Parents, employers, or anyone with a good credit history could co-sign your loan. 


Why are the GDS and TDS Used by Lenders?


In the case of sudden job loss, having to repay a large mortgage puts you in a financially risky position. This is good for neither the lender nor the consumer. Consult your bank or a professional in personal finances for more information.

Author Bio:

I am Eric Jones, a businessman by profession. Business and entrepreneurship are my passion and I love researching on the various aspects of those areas. I make sure that I don’t miss out any updates and for this reason I read quite a lot. Law is yet another area which I am passionate to know more about.

Tuesday, January 20, 2015

When Does Refinancing Your Mortgage Make Sense?

We keeping hearing about how rates are going to go up any day, month, or year now. However, every day, month, and year that goes by I see rates sticking around at all time lows. Let’s not get into the media frenzy of predicting mortgage rates, but if you are seriously looking at refinancing then there are several question and key points for you to consider. First, how long do you plan on staying in your home? Second, what sort of rate do you have right now, and how much can it really be improved? What are the fees and costs associated with the refinance? Can a NPBS fixed rate mortgage be your solution? These are all questions to ask before refinancing your mortgage.

You really need to consider how long you plan on staying in your house before going through the refinance process. Chances are you have no idea the number of years you will require your mortgage to be without first considering how long you want to live there. If you know that you employer plans on transferring you out of the country sometime within the next ten years it may not make sense to refinance into a 30 year loan. Rather, you can look at rates for a 10 year loans, which are considerably less in interest. Or perhaps you know you have found your dream home and plan on living there the rest of your life. In this case I prefer to err on the side of caution and take out a full 30 year term loan. Rates may go down over that time period, but they could go up as well, I’d prefer not to leave my finances to chance. 


The rate you currently have right now is very important, as are the costs and fees associated with refinancing. You didn’t think that mortgage companies refinanced for free, did you? A general rule of thumb is that you should save at least 0.25% off your current interest rate for a refinance to be worth it financially. If you have to spend a couple thousand dollars on a refinance then it will take you some time to recoup that money, and anything less than 0.25% might not be worth it. You will often hear of zero cost refinances, and this is sort of true, but misleading at the same time. Zero cost really means deferred cost. Rather than paying for the lowest rate upfront, you are saying you are willing to accept a slightly higher rate than necessary in order to offset the loan costs. I have actually done this myself, three times to be exact. It’s a good thing because I sold my house shortly after the refinance, so I was able to pay down a little extra principal on the loan without paying costly refinance fees.

Friday, June 20, 2014

Why Now is the Time to Refinance

I know you hear those commercials on the radio and television all the time about why “right now is the best time to refinance”. It’s amazing because it always comes from the same people, and they play the same ad every week of every year. This tells me that they think anytime is the best time to refinance. I actually think that now be may the best, and one of the last times that many people will have the want and ability to do so, and let me explain why.

People have been carrying their toxic interest-only loans for a long time now, those that were fortunate enough to weather the storm and not have to file for bankruptcy. Those loans have come with rising interest rates and payments that have become downright unmanageable. Makes you wonder why they haven’t refinanced already, huh? Well most of them were underwater on their mortgages, until now at least. We have seen home prices steadily rising since last year, and the trend continues even more this year. This means that people actually have the required home equity to refinance whereas in the past they simply did not. Those that still lack the home equity may have additional cash saved up, and improved confidence in the home market, that they are now willing to sink more money into their house in order to pay down their loans more.

Ok, so we know home values are rising, but what about interest rates? Well, interest rates really did reach historic lows last year, and I may never see them that low in my life time again. While rates are up about a point over last year they aren’t quite at a point where it is pricing people out of the market. After all, it’s been a long time since rates were even at this level. While I’m sure you would’ve loved to refinance your home loan last year at those super low rates it probably just wasn’t possible based on your home value. This is exactly why we are now in a the middle of the perfect storm of rising home values and still very low interest rates. In fact, many people can refinance their loans and use the additional money to continue to aggressively pay down their principal loan amounts.

While I don’t think purchasing a house is necessarily for everyone, I do think that refinancing is right for any homeowner who is paying a higher rate than what is available now. There are many low fee refinance options available that will allow homeowners to payback the closing costs within months. There was a point a couple years ago that I refinanced my house three times in a year alone. I was fortunate enough to buy at the downside of the market and have the required equity, but it still shows just how beneficial refinancing can really be. At the very least there are plenty of loan calculators available to you online, and plenty of loan officers willing to help you decide the right path for you.


Thursday, December 19, 2013

The Top 5 Tips to Refinance Your Mortgage

In efforts to improve lending in the struggling U.S. economy, the government has begun to reduce the federal interest rate by buying bonds. This has created a lending environment which is very favorable towards the borrower. Since it has become less expensive to borrow money, lenders can provide great interest rates for home owners to refinance. In addition to taking advantage of the currently low rates, there are a few other things a homeowner can do to reduce their interest rates, reduce cost and fees, and save time overall.

Here are the top 5 ways to reduce your costs and expenses when refinancing: 


Reduce Closing Costs - there are a bevy of "fees and expenses" that can be tacked on when you apply for a mortgage or refinance. Closing costs usually amount to about 2 - 5% of the total cost of your home. These expenses include things like appraisals, title search fees, pest inspections, origination fees, broker fees, etc. In your GFE, or good faith estimate of fees (when you apply for your refinance), brokers or lenders will include an itemized list of these expenses. 

This list will include all the necessary fees as well as extra expense which pay the broker or lender. It is possible to reduce closing costs by negotiating with your mortgage broker or lender. Ask a lender to explain the fees and see if they can "waive" application fees, underwriting fees, and processing fees. Buyers may negotiate with the sellers to absorb some of the closing costs. You can also opt for a no closing cost refinance. Sometimes this type of mortgage does pass the costs and fees into the mortgage at a higher interest rate. 

Refi to get rid of Private Mortgage Insurance - PMI or private mortgage insurance is required if you have lower than 20% equity in your home. PMI can be expensive and can cost in the range of $50 per every $100,000 borrowed. For many homeowners, this amount can mean the difference between buying and renting. If the expense of PMI is too large, a borrower can refinance in order to get rid of it. A lender can get rid of your PMI by re-appraising your home and determining whether or not you have 20% equity in it. If you believe that your home values have improved, and that your equity position is 20% or better, refinancing to get rid of PMI might be a good step to take. 

Improve Credit to get Better Interest Rates - having pristine credit will always improve your access to loans and cheap money. There are ways that you can actively improve your credit score. Ways you can improve your credit include pulling your own report and clearing any mistakes which may be pulling your credit number down. 

Experts estimate that over 30% of credit reports contain inaccurate data that could negatively affect a borrowers ability to get a loan. Since all U.S. citizens get access to 1 free credit report per year at annualcreditreport.com, it is very easy to pull this report and check for any bad data. If you see anything that look inaccurate, you can write a letter disputing the inaccurate information. 

If your report seems up to date and accurate, but your score still needs help you may need to take a more active role to improve your score. In this case, you may consider a "credit builder loan" from a credit union. This type of loan is a small easy to re-pay loan, designed specifically to improve a borrower credit score. It usually takes around 6 months to repay and can improve a borrowers credit a number of points. 

Shop Online For The Best Interest Rates - since the online marketplace for loans is one of the easiest ways to find rates, you can compare multiple lenders fairly easy. There will still be a fairly large difference in rates and expenses from lender to lender. Some lender costs ranges from $100's - $1000 for the fees that compensated to each broker or lender. By searching online, you can quickly determine which lenders are charging the most in fees. You should also contact multiple lenders to let them know you are working with other companies to get the best rates. This will give you some leverage and you may be able to negotiate to get the best rates possible. 

Reduce the Amortization Period (shorten loan term to save) - most mortgages come with a repayment (or amortization period) of 15 to 30 years. The simple fact is that, the longer the amortization period, the more money you will repay in interest. Even though a longer repayment term will come with a lower monthly payment, you will still end up paying more money in the long run. 

By reducing this repayment period, you will end up paying SIGNIFICANTLY less interest on your mortgage. The difference of 5 years on a $200,000 mortgage (at 4%) can amount to as high as $25,000 in total interest payments. You need to decide whether or not a lower monthly payment or less in the total amount of interest payments is better for you.


Friday, November 8, 2013

Golden Tips for Refinancing your Mortgage

Interest Rates
Interest Rates (Photo credit: 401(K) 2013)
Mortgage rates are going through a good phase now. The interest rates for thirty ear mortgages are at a low end. This means that it is good news for all those who are looking to refinance their mortgages in the hopes of getting a better rate of interest. Many financial experts have opined that if you are looking for a good time to refinance your mortgage then that time is now. Low interest rates mean that you will be able to save more money. So if you have around 20 per cent equity on your house and a credit score of at least 740, then a creditor could give you a good refinancing package. 

If you are a homeowner looking for a refinance then here are some things that you should do and consider before taking the plunge. These are some of the things that experts recommend home owners should do.

Look around


The funny thing about mortgage interest rates is that they can shift really drastically from place to place. So don’t despair and lose hope if you a creditor is offering you a high rate of interest. Do a lot of research into different places before you make a choice. There are quite a few financial websites where you will find reviews of lenders. Also remember not to blindly go in for the interest rates alone. Look at things like customer support, fees, etc. Experts say that interest rates can differ by 1 percent or even more from lender to lender. That can translate into a huge difference in your monthly payments.

Don’t jump for a low rate


It is vital to remember that when you are refinancing a mortgage, there are many costs like closing costs which you will have to pay. These can be quite high. So if you already have a mortgage with a low rate of interest like 5 percent and the rates have dropped to 4 percent, it might not be an excellent idea to refinance. Think of how many months you will take to cover the closing costs and so on. Don’t go in for a refinance if you are not able to cut the rate of your mortgage by at least 0.5 percent or more.

There’s always a closing cost


Many refinancing offers will come with the tempting “no closing costs” line. Don’t fall for it. There will always be some costs for the loan. Even if it isn’t called “closing cost”, companies will charge you something or the other in some form. If they don’t call it closing costs, they could call it “up front charges” where you will be asked to pay an amount to cover certain expenses. It could be added to your new loan principal, instead of being charged separately as closing costs. In case you do happen to find a no or low cost refinancing, you will notice that the rate of interest is slightly higher than the others. They will find some way or the other to recover the money from you.

The best thing to do is to as your creditor to show you all the options available. Ask for a clear breakdown of all the costs you will incur if you do go in for a refinancing. Then, you can choose the one best for you. The main thing to take away from all this is that there will always be costs involved in a refinancing, and if you are aware and are able to handle it, then you can go ahead.

About the author

Jon has been working as a senior loan officer for a bank since the last eight years at RateZip. He advises homeowners on the kinds of mortgage options available to them. In his free time, Jon loves to read graphic novels.

Sunday, August 11, 2013

When Is It Worth it to Refinance Your Car? 4 Situations You Need to Consider Today

When it comes to getting your newly refinanced car loan, it is usually rather difficult to time these kinds of things perfectly. Having said that, there are still certain situations when it would definitely make sense for you to put yourself into a new car loan. You need to know when these situations arise because you will only get a certain amount of time to take advantage of them. Here are four different situations where refinancing your car loan could definitely make sense for your financial future. 

Interest Rates Have Gone Down


Any time interest rates go down, you should usually think about refinancing your car loan. Even if there is only a slight difference in the current interest rates when compared to the interest rates of the past, it is important to realize that the smallest difference can mean everything over the long term. If you are someone who is locked into a long term car loan, then you should always be on the lookout for a lower rate of interest.

An Improved Credit Score


An improved credit report is not really something that should catch you off guard. The fact of the matter is that you will have a higher credit score when you are able to pay off your debt and pay your bills on time. If you have been rather financially responsible over the past few months, then you may want to see if there has been an improvement in your credit score. Even a small improvement in your credit score can have a dramatic impact on your available interest rate.

You Didn't Shop Around


Whether you are trying to get the best car loan or trying to find California car insurance quotes from Worldclimate, it is important to remember that it always makes sense to shop around. If you did not take the time to wait for the best rate of interest when you were getting your new car, then you may want to backtrack a bit and do your shopping around now. Even if you think you got the best deal that you would be able to get, it still makes sense to take a look at what kinds of other offers are available right now.

Go Long Term


One last situation where it could make sense to refinance your car loan is if you need to lower your monthly payments. If you have found yourself in a situation where you cannot make your monthly payments, then lengthening your loan may be your only option.


Sunday, January 6, 2013

Finding a Mortgage Refinance Advisor

Finance
Finance (Photo credit: Tax Credits)

A mortgage refinance advisor is known by several names. In some places, the said profession is also called as mortgage broker or mortgage loan officer. When finding a mortgage refinance advisor, you can use the internet to make the search much easier.

The rates charged by an advisor may vary greatly, so it is highly advised that you shop around. Interest fees and closing costs can affect the price that you have to pay for professional services. However, if you’re dealing with head injury claims, or perhaps you want to purchase a new car and repair some areas of your house, you will need all the money you can get. The best refinance advisor can help you get through and solve your problems right away.

Steps to Follow


When finding a mortgage refinance advisor, there are important considerations. You can follow the steps below to find the best in the industry:

  • Use the internet to locate a local refinance advisor that lives within driving distance. By doing so, you can easily schedule for an appointment and meet with the mortgage refinance advisor.
  • You have to pick one whom you’re comfortable with. You can create a list of recommendations and references. From there, you can check their credentials. You can even conduct a background check since that is very easy these days.
  • Make comparisons especially in terms of fees and charges. The lowest or highest rates do not necessarily mean that you’ve found the best deal. You have to make sure that you’re getting the best services at the most reasonable rate.
  • Make sure that you settle all your financial obligations on time to avoid problems. Refinancing should only be considered when there is a dire need for it.


As long as you follow these steps you can never go wrong. You will find a professional you can trust and one that will be able to help you obtain refinancing.

It is best to choose at least four refinance advisors. They will assess your current situation and determine the best solution to your financial problems. Whether you have good or average credit, you can easily obtain refinancing if you have a knowledgeable advisor to help you out.

Some things are better left to professionals especially if it concerns finances. Many people are going through rough times these days. Refinancing with cash is possible or you can also refinance the home or property at a lower rate. Either way, you can address your financial issues.

If this is your first time to consider refinancing and you don’t know the process, a mortgage refinance advisor is all you need to back up your efforts in making the most out of your financial situation.

Why don’t you ask for references from friends or colleagues that may have used the services of a mortgage refinance advisor in the past? These people can help you out. If you are unable to get references, you can always shop around online. Don’t pick the first professional that you find, be sure to look around and compare.

Author Bio:  Barlow Robbins is one of the larger law firms in the South East region with a thriving portfolio of private and commercial clients. We provide a full range of legal services to clients ranging from Commercial Property Contracts, Corporate Tax, Dispute resolution, Insolvency, Mergers & Acquisitions, Notary Public, Family Law, Head injury claim and Personal Injury & Clinical Negligence.




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