Refinancing your Mortgage – let’s get started!

April 20, 2010 by admin · Leave a Comment
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Mortgage Refinancing your loan or mortgage, or as also called Home Refinance is an option worth considering when the market rates and offered loans are lower than the rate in your running mortgage.
But! not every loan or mortgage is worth refinancing. sometimes the terms in your mortgage will make it unworthy for mortgage refinancing.

“Mortgage Refinancing” is a portal that will help you find the tools to refinance your mortgage in the American Home Refinance  Market. We will help you find articles regarding mortgage refinancing or home refinance. You will find calculators and refinance calculators, along with links to helpfull and objective resources.
Our experts and their knowledge are here for your free usage, hopefully it will help you performe your mortgage refinancing to the best!

Good Luck! - Mortgages Refinancing Staff

Which mortgage refinance type suits you the best?

February 22, 2012 by admin · Leave a Comment
Filed under: Home Refinancing 

by Melissa Grace

If you are unable to make regular payments on your existing home mortgage loan, you can think about mortgage refinance. This could be good alternative to your present mortgage; provided if it really makes any financial sense. However, before you rush to refinance the existing home loan, have required knowledge about it.

What is mortgage refinance loan?

A mortgage refinance loan is a fresh loan taken by the borrower to repay the original or existing loan.

Basic mortgage refinance loan types

There are different types of mortgage refinance loans available in the market. Some of the common types of mortgage loans are,

1. 15-year refinance loan – This type of mortgage refinance loan is preferred by the homeowners, who have already paid off a portion of their current mortgage loan, and don’t wish to take out a 30-year refinance loan. This loan is usually available with low interest rate, but with high monthly premium.

2. 30-year refinance loan – This is the perfect choice for the homebuyers, who prefer mortgage refinance with fixed rate of interest, but low monthly premium.

These are two basic types of mortgage refinance loans. If you are thinking about getting any of these refinance loans, you must calculate the exact amount that you need to pay towards monthly premium through a mortgage refinance calculator. Otherwise, you may be in trouble in future.

Other types of mortgage refinance loan

Apart from the aforesaid types of mortgage loans, there are some other types of loans too. Other types of mortgage refinance loans are mentioned below:

1) Cash-in refinance loan – Homeowners, whose houses are worth less than the mortgage amount they owe, generally opt for this type of mortgage refinance loan. Actually this type of refinance loan is needed to bring some cash to the closing. Borrowers, who want to refinance existing mortgage loan and at the same time, avoid additional expenses of mortgage insurance, also choose this option.

2) Cash-out refinance loan – This option is perfect for the homeowners, whose house is worth more than what they actually owe. This mortgage refinance loan helps them get access to some extra cash.

3) Government-funded mortgage refinance loan – The federal government of America offers Home Affordable Refinance program (HARP). Through this program, a homeowner may refinance up to 125% of actual value of his house. There are also state-based refinance programs funded and operated by the state-governments particularly for the residents of respective states.

If you have made your mind about refinancing your existing home mortgage loan, you must figure out which mortgage refinance loan suits you the best. Think about the pros and cons of that loan before you actually refinance your home. You can also get professional help for making better decision.

Mortgage refinance options a second before you lose your property

August 22, 2010 by Jon D., Senior Mortgage Consultant · 1 Comment
Filed under: making home affordable 

Refinancing your mortgage, while having bad credit, is very unrealistic. This situation is derived when the loaner’s mortgage balance exceeds his property value, or when the loaner has had mishaps and late mortgage payments.

As we well know, most lenders will require equity in order to refinance, nor will they be generous with good rates and terms for mortgage owners that have bad credit history.
Should we then give up and try to work our way through the current mortgage terms, possibly losing our house ?

The answer is no. The Government plan – making home affordable program – may assist us in 2 possible ways, which will be described in the following article.

HARP

The federal Home Affordable Refinance Program, or HARP, allows qualified borrowers to perform mortgage refinance for a loan that is 105-125% of a home’s value.
This program is eligible to the following:

  • The loaner owns a 1-4 unit home that is your primary residence;
  • The Loaner has a mortgage owned or guaranteed by Fannie Mae or Freddie Mac
  • The loaner is “current” on his mortgage payments and have not been more than 30 days late making a payment within the past 12 months
  • The loaner has sufficient income to support the new mortgage payments in such a way that he will not miss payments.
  • Refinancing will actually improve the long-term affordability or stability of the loan.

HAMP

HAMP, or the Home Affordable Modification Program is designed not only have an “underwater mortgage” but also for loaners that have a less than perfect payments history.

To qualify, you must demonstrate financial hardship showing that you are in real peril of losing your property. Although it does not say so specifically in the HAMP website, it is easier to apply when the mortgage is owned or by firms that have signed up with the U.S. Treasury to qualify for HAMP. (Fannie Mae, Freddie Mac goes without saying…)

The program provides government incentives of up to $1,500 to lenders to allow refinance equivalent modifications to the loaner’s mortgage, but the ultimate approval of the process still rests with the lender.

To qualify for HAMP, the loaner must:

  • Own a 1-4 unit home that is your primary residence
  • Have received his mortgage on or before January 1, 2009;
  • Show burdening mortgage payments: have a mortgage payment (including taxes, insurance, and homeowners association dues) that is more than 31% of his gross (pre-tax) monthly income
  • Owe an amount that is less than or equal to $729,750 on your first mortgage for a 1 unit property (2-4 units properties have higher limits).

Homeowners who will qualify will have to complete a trial period of 3-4 months in order to demonstrate that they will be able to pay the new and reduced monthly payments without mishaps or late payments, before their mortgage will be eligible for permanent modification. Under this program, the Lender will be able to lower the interest rate to as low as 2%, as well as extend the term up to 40 years, or forbear payments on your principal.

President Obama’s Mortgage Bailout Plan

July 24, 2010 by Jon D., Senior Mortgage Consultant · Leave a Comment
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Many struggling home owners look at the new President Obamas $75 billion housing stimulus plan as a source of hope to prevent them from losing their home. This article will help you understand how to benefit from this new and ambitious stimulus plan.

The Obama administration have put  a $75 billion housing stimulus plan that is designed to help homeowners save a lot of money on their monthly payments and even prevent them from losing their property.  This plan will give these loaners new mortgage refinancing options at no cost and with very low interest rates.
The participants in this program will get mortgage refinancing approved even if their credit score is relatively low.

The lenders and banks will be getting incentives from the government for helping struggling homeowners get a beneficial mortgage refinancing terms. Thus, loaners with bad credit that would not normally get approved, or would get very high interest rate – will now be eligible to low rates and will instantly be approved for refinancing.
the Obama housing stimulus plan will allow this banks and lenders to offer “no cost mortgage refinancing”, which is basically sponsored by these government funds.

So, the government offers financial incentives and subsidies to persuade lenders to ease up on lenders at risk of losing their homes. But the loaners themselves will have to sign affidavits attesting to their financial hardships – meaning that the credit score checkup will not be enough.

This program will be limited to first home mortgages with outstanding principal balances that don’t exceed $729,750, for single-family homes only, the loan-modification program will not aid loaners who bought property for investments purposes, nor for land-lords and renters.

The stimulus program will give each lender up to $3,500 from the government for each participate, meaning they will literally finance no costs refinancing, Plus, the government also matching a portion of the lenders’ costs.

Different Mortgage Refinance Loan Types

May 29, 2010 by Jon D., Senior Mortgage Consultant · Leave a Comment
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All through this website we have discussed each mortgage refinance option on its own or as oppose to a different alternative. In this article, I will briefly examine the different and most common mortgage types we can take when performing mortgage refinance.

Fixed Rate Mortgage

As we saw, a fixed rate mortgage freezes the interest rate according to the current market conditions, for the entire loan’s period. This is a suitable instrument for loaners that do not wish any changes or surprises with the monthly payments for the entire loan.
Some lenders don’t to make new payments or to redraw on additional funds, while selecting a fixed rate mortgage.
This mortgage will not change but will definitely give the loaner peace of mind throughout the loan.

Adjustable Rate Mortgage:

As suggested by its name – the ARM is a loan in which the interest rate changes periodically based on a certain the economic index it is linked to. This is a good mortgage refinance solution when the loaner think he is facing a declining interest rate period in the mortgages market. The initial rate in the Adjustable Rate Mortgage is normally lower than the fixed mortgages rate, and the interest itself can change throughout the loan’s life to a certain extent yearly.
Read more in the following article Mortgage Refinancing to an ARM.

Home Equity Loan:

These is a fixed rate mortgage-like that allows the loaner to tap into his equity and basically get cash for different purposes while increasing his debt-to-property ratio.
The annual percentage rate in the Home equity loans are usually fixed and very appealing.

Home Line of Credit / HALOC

This is similar to the home equity loans, but in a form of a  line of credit that allows the loaner to cash on his mortgage balance up to the original borrowed sum, just like a credit card.

With both of these loans – care is advisable, since they reduce the equity we have built up throughout the years. It is best to use them for home-improvement purposes and not for speculative ventures.
Read more in Leveraging Refinance: Cashing Out & Home Equity Loans

In a nutshell we also have the ability to refinance to a Balloon Mortgage, in which we take a fixed rate mortgage for a short period of time – normally 7 to 10 – while paying only interest. At the end of the balloon, we still have a rather large principal to repay in full. Caution while carefully planning is advisable when dealing with a balloon mortgage.

Now that your know your way around the different instruments, you can check if mortgage refinance is a good solution for your mortgage. Good luck.

When is Mortgage Refinance an Economically Right Decision?

May 5, 2010 by Jon D., Senior Mortgage Consultant · Leave a Comment
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This article will attempt to help you deciding right, economically, when to perform mortgage refinance. As usual – please advise that mortgage refinancing is a very personal decision that takes affect by your personal status, financial status, credit score and current mortgage and home conditions. All real decision should be done vis a vis your mortgage and personal status, while advising with professionals.

Economically, the best way to decide upon home refinance is not by using “rules-of-tumb” nor even to look at the “break even point” but to check your total costs in each alternative: How much overall payments will you eventually pay from this point forward with your current mortgage and how much will you overall pay if you refinance.

The period for examining the future costs for each mortgage should be one of two alternatives: either use each mortgage’s costs until it ends, or as long as you intend to stay in the property. If the total costs are lower with the new mortgage, refinancing is advisable.

To perform these tests your best option is to use a mortgage calculator or even a Home Refinance Calculator. But now, don’t forget about “break-even point period”, which is the minimum length of time the loaner needs to stay in the property in order for the refinance process to cover its costs.
I.e. if our costs for refinancing are around 8,000 $, and each month we will save 245$, then it will take us 8000/245 = 32 months to “break even”. This is very important since most people have no idea if they are going to leave the property or not – so the break even point can show you the indication to how long will the refinance process will cover its costs. in the example above, if there is a chance you will leave your home (for any reason) before 3 years have passed – than the refinancing is not worthwhile.

Also, be sure to compare the right amount of principal if you chose a No Cash Mortgage – a mortgage that will add the closing costs to the principal of the loan.

Another two factors that are sometimes overlooked are [a] the interest we could have gained from the amount we are saving each month. [b] the tax reduction lost from improving our interest rate.
I do not wish to get into tax aspects but to demonstrate point “A”, here’s an example:

We are saving now 150$ each month on a new loan for the next 8 years. Our breaking point will be in 2 years, meaning our closing costs were 3,600 $.
Let’s say that you can get a yearly interest of 2% in a bank deposit:
So we lost 1% x 3600 = 36 $ in interest since we paid closing costs, and gained 5 x 12 x 150 x 1% = 90$.
This example shows small amounts, but normally these sums can be much higher, especially since interest rates will fluctuate throughout the years. From this reason, taking 1% on the amount gained – is not very accurate.
Savings from insurances fees change or increased costs caused by state, government or other taxes and/or escrows should be also considered.
An example  to extra insurance fees that can happen due to refinancing we may see in No Cash Mortgages or No Costs mortgages where the principal becomes more than 80% of the property value, which causes for the lender to request loan insurance.

In conclusion, deciding whether mortgage refinance is a good choice has many factors to consider. We have seen some of these, but every loan and lender are different. Be sure to include all the costs and savings you may have.

When should you consider mortgage refinance?

April 22, 2010 by Jon D., Senior Mortgage Consultant · 1 Comment
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Refinancing your mortgage or Remortgage not always the right call:  refinancing a loan has its costs. There are cases in which remortgaging makes sense, in this article, we will try to find these cases and help you in this process.

Before deciding about refinancing, let’s examin our goals:

  1. Reducing the interest payed as a mean of reducing our monthly paymeny, is the most common goal.
  2. Reducing the monthly payment by extending the mortgage period is the second.
  3. Also, Consolidating debts : joining  both a mortgage and a home equity mortgage.

Consider your Loan Closing costs !
Considering your loan or mortgage closing costs is the first thing that need to be done. In average, every 200,000$ loan will cost 3,000$ + TAX to close (data from 2008). Plus you will need to consider pre-paid insurances or pro-rated interest.

so, let’s take an example:
Our riginal loan is 400,000$ and we have antoher 10 years. Our costs for closing the mortgage are 6,900 $. we should save on our monthly payment for the next 10 years at list 57.5 $ per month. Preferably, we should save even more than that and see that we do not extend our mortgage so that the overall cost will be greater than the anount saved.

Use acctuall market data before going to Refinancing your Mortgage
Find your Current loan rate and closing costs – does your loan has a Prepaying Panelty. if so, how much is it?!
Find your Credit Score - this will be a relevant factor  for the interest you can get today!!
With our help, Find the actuall market rates. we will also help you with calculators and tips, so that you will know exatcly whether refinancing your mortgage is the best solution for you.

For more information regarding when should i refinance my mortgage ?

When is Objectively the Right Time to Refinance ?

April 22, 2010 by Jon D., Senior Mortgage Consultant · 1 Comment
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One of the main issues with refinancing your mortgage, is not understanding the right time to refinance it. Meaning that even if it’s right for you to refinance your loan, maybe it is the wrong time to do so market-wise.

Before advancing on this article, please read “Rules of Thumb for refinancing a mortgage“, an article that will advise you when is mortgage refinancing right for you.

Now, that you decided upon refinancing, let’s check the General conditions, in which refinance can be a viable option.
Remember! refinancing a mortgage is very personnal. Although we are suggesting solid guidlines – it is improtant to do a complete checkup of your own mortgage and refinancing terms before proceeding with refinancing you loan.

Lower Interest Rates

Home refinancing or mortgage refinancing can be most rewarding when interest rates drop. Lower interest rate may result in a major difference in our monthly poayment – that is even if we pay a prepayment penalty or closing costs, which makes us burrow a bit more.
the rule-of-the-thumb is that the difference between our mortgage’s interest rate and the market’s interest rate should be approximately 2% and more.

When deciding to refinance we should see that the closing costs associated with the process do not exceed the overall savings that will be gained by the lower interest rate. Check out our webpages to find the appropriate calculator for you – that will help you determine wether or not you should refinance, plus check out the section about mortgage refinancing fees.

refinance you loan?Better Credit Scores

Poor credit (which is decided based on your personal data and income) results unfavorable mortgage terms, usually meaning higher interest rates. The paradox is that when a loaner is considered “riskier” than his ineterst rates goes up, thus resulting with hurting his ability to pay the loan…
Fortunatly, credit ranking can be raised with time: bakruptcies are overlooked after a couple of years and if we maintain a good monthly debt repaying balance our credit score will definitly go up.
Plus, after several years we normally have higher status in our job meaning higher wage.

When our credit score improves,  refinancing our mortgage may result with significantly lower interest rate. Thus we can save tousands of dollars annually, as explained in the previous section.
With the credit scorde better – our current lender may consider offering us better mortgage terms, that in order to keep us with him and avoid the refinance to take place in a different institution. Take advantage of such cases and work on lowering your mortgage’s interest rate based on your better credit score.

Market financial conditions

There are certain market conditions or economical climate that favore refinancing. For example when credit is given generously, we may get better interest rates, better conditions or even more money for our property.
Even today President Obama urges banks to give loaners credit in order to boost up economical growth.
Times  like this should be favored and we should avoid refinancing when times are rough and credit is scarce, since we seek better mortgage conditions.

In conclusion, we have tried to check some elements that makes refinancing or remortgaging a strong option.
While market condition’s  are good and interest rates are down we should look into refinancing. Having a better credit score will definitly help.
But refinancing should be a pure economical decision so we must not take it before checking the terms and conditions and unless we make sure that the remortgage process can save us cash…

Credit Score and Refinancing

April 21, 2010 by mortgage wizard · 2 Comments
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Refinancing your home used to be a lot riskier prior to the internet. The fact that today you can see al the rates and all the mortgage lenders online makes your job to refinance your loan maybe harder but much more reawaring.

The reason I started of with this statement is to emphasise that with today’s mortgage world – even bad loaners, or Bad Credit Score loaners may benefit from refinancing.

Credit score is how the lenders distinct between loaners. If you have a good steady income, small or no debts, good mortgage payment history, etc. – Your cresit score will rank higher.
Those with poor credit should carefully look into refinancing since they will most definetly get worse deals (or interest rates) that those with good credit score.
Bad credit can sometimes result in lenders offering you subprime rates – which can make all the remortgaging process irrelevant.

Nonetheless, there are a few options that will help Low Credit loaners:

  • Refinance as soon as your credit score improves. switching from a high rate mortgage to a Prime loan can make a worls of difference in overall money saving.
  • Consult a mortgage broker who experts in Poor Credit loans- he can sometimes help you find lenders that are willing to take “high credit risk”, thus making refianncing your mortgage more appealling.
Some advices for Poor credit loaners:
  1. If you decided to use a mortgage broker or advisor – diclose all your credit history so he will have no surprises trying to secure a better loan for you.
  2. Each citizen is entitled to one free credit report per year from each of the major credit reporting agencies. These reports you can obtaine for your use. Take advantage of this fact when you want to show improvement in CREDIT SCORE.
  3. Bankruptcies, missed payments and other transgressions do not remain on the credit report.
  4. ARM – Adjustable Rate Mortgage can be better choices for bad credit loaners, since the rate in these mortgages are determined for short period of times, unlike the Fixed rate mortgages that are signifacntly higher. By using ARM even Subprime loaners can save much on their monthly payment.

In conclusion – use your Bad Credit to your advantage: find our where you can benefir from remortgaging, by using ARM, by waiting for the Score to increase, by consulting an advisor that can track different lenders and by being constantly alert to your situation, your mortgage, and the market considition.
Don’t let the Bad Credit discourage you!

When does the Fed urges to refinance ?

April 21, 2010 by mortgage wizard · Leave a Comment
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In the Federal Reserve official refinancing guide – A Consumer’s Guide to Mortgage Refinancing, you may find several “official advises” for Home refinancing.

Amongst other advises which were covered in length on these pages, the Fed clearifies who is eligible to a mortgage:

Eligibility for refinancing a mortgage is exactly like the approval process for your first mortgage. The Lender will consider your credit score, your personal income and your other assets and debts. The current value of the property being mortgaged is also a key factor, as well as the amount you have to borrow in order to close your old mortgage.
In cases, where credit score has improved, you may get lower IR (intrest rate) which will make the refinancing more appealling.

Attention: you may have to borrow a smaller/bigger sum than what originally taken* in order to cover the running mortgage or your propety value may have increased/decreased. These factors will also affect your loan-to-value (LTV) ratio - which can make the refinancing more/less worth-while.

* Bigger sums are more common for loans that includes negative amortization (when the monthly payment is less than the interest owed).

The Fed recommends that you will ask your lender for your settlement cost papers (the HUD-1 form) in advance the loan closing. This will help you know your closing costs.

In conclusion – the FED urges you to check for the new mortgage costs, while showing 2 alternatives for “no cost refinancing”:

  1. The new lender covers the costs but include them in the IR. This way you will eventually pay them over-time  throughout the mortgage “life”.
  2. Rolling the refinancing fees in the new principal, in which again you will pay the fees throughout the mortgage life.

In coclusion, the FED urges you to get all the information you need prior to refinancing your mortgage. You may also download the FED’s guide in PDF from their site.