Archive for home equity
5 Home Equity Loan Refinancing Tips
Posted by: | CommentsMany homeowners have accumulated a high rate home equity loan over the years and they need help finding a refinance loan solution. Home equity loan refinancing was much easier a few years ago, because there was so many second mortgage lenders ready to facilitate the refinance option. Since the subprime debacle and the housing crisis, homeowners have really had to do some researching to find a home equity refinancing solution. Nationwide has been originating home equity loan solutions for over a decade, so we understand the process of refinancing home equity loans very well.
Take advantage of the Home Equity Loan Refinance Tips listed below:
1. Keep Your Credit Score Above 680 – Do your best to keep your credit score above 700, but at least 680 because this will give you more home equity options.
2. Make Your Home Equity Loan Payments On Time – Home equity lenders want to see that you have a history of paying your equity loan without being late.
3. Get a Licensed Appraiser Who Knows Your Neighborhood – You want a licensed local appraiser to document your home improvement and maximize the value of your home.
4. Check with Your Home Equity Lender to See if They Will Convert Your Variable Credit Line to a Fixed Rate. – Most lenders have the ability to do a note modification that can specifically convert your adjustable rate home equity line of credit into a fixed rate home equity loan.
5. Consider Refinancing Your Home Equity Loan into a FHA Mortgage. – FHA lenders can approve rate and term refinancing to 96.5% and many homeowners have success refinancing their first and second mortgages together into one low monthly payment with a fixed interest rate.
Cash Out Refinance vs Home Equity Loans
Posted by: | CommentsOne of the best benefits of being a homeowner is getting the opportunity to get cash out. Borrowers can choose from a home equity loan or a cash out refinance loan. The home equity loan is a second mortgage lien and the cash out refinance is redoing your first mortgage. If a homeowner already has a low fixed rate mortgage at 5% or lower than an equity loan can be appealing because it allows you to get a cash out second mortgage without touching the mortgage you already have. If a borrower has an interest rate above 5% and/or it’s not a fixed rate mortgage, then cash out refinancing is an ideal opportunity for borrowers to reduce their interest rate while getting access to cash.
The fees and closing costs on refinance loans are typically higher than home equity loans, but in today’s competitive market you may be able to qualify for a no cost mortgage refinance, so discuss your options with your lender prior to jumping to conclusions. Another appealing option is the home equity line of credit. Like the home equity loan, it is a second mortgage, but with an equity line you only pay interest on the portion you access. So if you are doing a remodeling project that may take a year or two then, the home equity line might be the best solution. If you are taking out cash to consolidate debt then, a fixed rate home equity loan would make sense over a credit line, because the interest rate is fixed and the terms are set.
When looking at cash out loan guidelines for home equity and refinance loans, the following applies: FHA refinancing allows first mortgage refinancing with cash out options up to 85% loan to value. Conventional refinance loans enable borrowers to finance up 80% loan to value and VA refinancing enable veterans to get cash out up to 90%. Home equity lenders offer cash out loans and lines from 75 – 90% loan to value, but the credit scores must be excellent to qualify. The other factor to remember is that since equity loans are second mortgages, you have to calculate your present loan plus the second loan amount, divided by the appraised value to calculate your combine loan to value.
Is Mortgage Refinancing the Best Way to Consolidate Debt?
Posted by: | CommentsHomeowners seem to have the ability to accumulate more debt than non-homeowners. Maybe it’s because typically their housing expenses are greater than non-homeowners or maybe it’s because homeowners have been leveraging the debt with tax deductible mortgage refinancing for the last few decades. Credit card debt is the most common debt that homeowner look to refinance by they also like to refinance home equity credit lines, automobile loans and existing second mortgage loans. If the borrower has the ability to make their mortgage payments on time, then we recommend refinancing a large amount of debt if doing so doesn’t increase the interest rate of your first mortgage. If your job or income is unstable then we would likely not advise you to use your home as collateral for a loan you may not be able to pay back.
Second mortgage refinancing would be less of risk in this case, because 2nd mortgage lenders can rarely foreclose on a home if the borrower is current with their first mortgage. Home equity loans can also be used as a debt consolidation loan. All of these types of loans are considered cash out refinance loans and this form of financing is used as a vehicle for homeowners to consolidate debt and lower their monthly payments.
Before utilizing the cash out refinancing features, homeowner should consider the pros and cons of leveraging their debt with a secure mortgage loan that uses their homes equity to pay off debt. Debt consolidation refinancing can offer many benefits, but you should evaluate your financial goals before committing to another mortgage.
Refinancing Adjustable Rate Home Equity Lines with a Fixed Rate Mortgage
Posted by: | CommentsAt the end of the mortgage day, we know that one way or another, your variable rate home equity line of credit is getting refinanced. For a few years, every time the Federal Reserve sneezed the interest rates tied to the Prime Rate would go up. Your fun loving home equity line of credit rates increased almost 4% between 2006 and 2008. Yes the equity line rates started to drop again in 2009 but we all know when Mr. Inflation arrives in 2010, that the adjustable rates will go through the roof. Now that you can admit your maxed out line of credit has lost its luster it time to consider some fixed rate mortgage refinancing options.
The fact that this HELOC once helped you avoid a down-payment and mortgage insurance has long been forgotten. You need to convert this out of control credit line into a fixed rate FHA refinance loan that guarantees simple interest and fixed terms for loan repayment. If you want a cash out refinance or have high interest equity loans and credit card with compounding interest, now is the time to consolidate your debt.
Mortgage Loan-Modification Plan Revised for Home Equity Loan Relief
Posted by: | CommentsMany mortgage servicing companies have refused to modify second mortgages and many homeowners have defaulted on their home equity line of credit because their variable rate payments rose beyond their affordability. In a recent article Ruth Simon considers the implications for a new loan modification designed for second mortgage loans. The Obama administration announced new home loan guidelines for its foreclosure-prevention program aimed at offering mortgage relief for borrowers who have a high interest rate equity loan that they have been unable to refinance because of lack of equity or late payments since their second mortgage rate rose after becoming adjustable. Thousands of homeowners tried to qualify for mortgage refinancing that would roll their 1st and 2nd mortgages together into one affordable home loan payment.
The new mortgage loan modification program looked to address a critical component in its efforts to stem the foreclosure crisis. According to Credit Suisse Group nearly 50% of delinquent borrowers have a home equity loan. Many mortgage executives complained to the administration a few months ago because their $75 billion mortgage bailout program had no plans to re-work equity loans in 2nd position. Investors, who include pension funds, insurance companies and hedge funds, say that rewriting the first mortgage without touching the second violates their rights, because second mortgages are supposed to be repaid second. Critics also pointed out that Obama’s first plan had a conflict of interest, because many mortgage loans are serviced by big banks that also hold home equity loans.
Under the revised home equity loan relief plan, mortgage-servicing companies that participate in the loan modification program for second mortgage liens must automatically renegotiate the2nd mortgage when the 1st mortgage was reworked. The US government will share in the cost of reducing the interest rate on second mortgages for five years. As an alternative, it will pay holders of home equity loans to relieve their unpaid debt.
Mortgage-servicing companies that modify second mortgages will receive an upfront payment of $500 and additional payments of $250 a year for up to three years for successful modifications of home-equity loans and other second mortgages. Homeowners who do not fall delinquent on the modified equity loan would receive payments of $250 a year for up to five years that would be used to pay down the balance of their first mortgage. The revised plan also encourages the use of the federal Hope for Homeowners program, which allows borrowers to refinance into a more affordable, government-backed loan, provided the investor who holds the mortgage agrees to a principal write-down.
Conventional & FHA Mortgage Rates Drop
Posted by: | CommentsMortgage loans look good as interest rates dropped again this morning, after the stock markets were lower on Friday. We expect mortgage rates to rise slightly on Tuesday as the financial markets continue to recover on Monday. Mortgage loans continue to be attractive with rates still available at extremely favorable terms right now with A-paper and FHA borrowers people qualifying for 5% or even lower, so if you’ve been waiting to refinance, or waiting to lock your mortgage rate, do it now. When 30-year mortgage rates are lowered this much, you must seize the opportunity and take advantage of the reduced home loan or second mortgage payments that are available only for a limited time.
If you are negotiating a lower rate with your lender on a loan modification and they come back with a proposal featuring fixed interest rates under 5% on your delinquent mortgage, we strongly recommend considering accepting these loan terms. Like mortgage loan modification expert, Jeff Morris said in a recent article, “The low rate loan modifications won’t be around forever.” Morris continued, “With inflation and foreclosure losses, at some point the interest rates will jump significantly.”
The average rates on thirty-year conforming fixed rate mortgages came down to 4.84 % from 4.95 %. FHA mortgage rates dropped to 4.875% from 4.95% the previous week. The FHA home loans remain a popular loan for borrowers looking to purchase or refinance into a lower rate home loan. While jumbo thirty-year fixed rate mortgage loans were only down 0.05% to 6.12% from 6.17%. Fifteen-year conforming fixed rate mortgages came down to 4.55% from 4.62%. The average rate on fifteen-year jumbo mortgage rates was pretty much unchanged at 6.01% from 6.02%.
Average interest rates on a home equity line of credit went unchanged at 4.74%. The average home equity rate difference between a 10-year and fifteen-year home equity loan is still over 3 %. Average rates on ten-year home equity loans were also unchanged at 4.6%. The average rate on a fifteen-year home equity loan was also unchanged at 7.81%.
A record low of 4.78% for a thirty-year fixed-rate mortgage was first recorded on the week of April 2nd and again on the week of April 30th. Freddie Mac’s mortgage rate survey dates back to 1971. Mortgage interest rates fell significantly over the winter. The rates declined again after the Federal Reserve said in March that it would buy $1.2 trillion in mortgage-backed securities and $300 billion in debt, which in most cases impacts rates for 30-year home loans significantly whether refinancing or home buying.
Home Equity Loans & Second Mortgage Rates
Posted by: | CommentsIn this current credit crisis, it become imperative to have high credit scores, at least if you want to qualify for a home equity loan. In addition, most home equity lenders will require that you still have a minimum of 25% home equity left in your home after adding the new second mortgage to calculate the combined loan to value (CLTV). It doesn’t stop there, because the lender will need to verify your income documentation so they feel comfortable that your income and liabilities are not too high of a risk for loan default or foreclosure.
Take advantage of record low home equity rates and consider an equity line of credit that lets you access cash as you need to. If you do not have emnough equity in your home, consider a FHA loan, because they still allow cash out refinancing to 95% LTV.