Archive for home equity
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.
Is this the Best Time for Mortgage Refinancing
Posted by: | CommentsIs today the best time to refinance your mortgage? How is your credit score? What is the current estimated value of your home? Can you document your income with pay-stubs, W2, etc? What is the existing interest rate on your 1st mortgage? Do you currently have a FHA home loan? Are you seeking a cash out refinance or simply a rate and term transaction? Do you have a second mortgage or home equity loans as well? Have you been turned down recently by other lenders? How long do you anticipate staying in your present home?
These are a few key refinancing questions you should expect from your lender when applying for a new refinance loan. Remember, if you don’t qualify for a traditional refinance, ask your loan officer about the possibility of a mortgage loan modification?
Is it a Good Time to Refinance?
With the Federal Reserve continuing to drop interest rates, many homeowners are beginning to wonder whether it is wise to refinance their mortgage again. However, what is the best scenario in which to do this? Can a mortgage loan still be an avenue for wealth-building? Matthew Sapaula comments on Fox News and offers some mortgage refinancing tips and insight on how your mortgage management is a key to building lasting wealth.
Suze Orman Offers Refinancing Advice on Adjustable Rate Mortgages
Posted by: | CommentsHow long do you plan to live in your home. However if you plan on keeping your home for 5, 10 or 15 years or more and you have an adjustable rate mortgage loan above 6%…
Wake up and refinance…The Fed has lowered interest rates to record levels. Borrowers can refinance into fixed thirty-year mortgages at 4.5%. Whether you want a FHA loan or a conventional home mortgage, interest rates are the lowest level recorded since the Great Depression. Make sure that you can recover your closing costs prior to moving otherwise, Suzi believes that it may not be worth it. Consider refinancing your second mortgage or home equity loan into a one fixed rate mortgage if you have enough equity.
Home Equity Loans for Refinancing Credit Card Debt
Posted by: | CommentsMany Americans remain uneasy about taking out a home equity loan to refinance their adjustable rate credit card debt. “I understand the psychological basis for a homeowner wanting to minimize and ultimately pay off their mortgage loan,” notes Joseph Badal CEO of Thornburg Mortgage Home Loans, Inc, “but it makes no sense to sit on equity in a home while carrying high rate revolving interest.”
Credit card statistics indicate that American credit debt totals $785 billion and this comes to an average of nearly $9,000 per household. Revolving credit card debt will lower your credit score and drain your saving or monthly cash flow because the borrower is paying interest on top of interest. If your credit card debt is getting out of hand, now may be time to take a hard look at your spending habits and your options.
There are a several significant benefits to debt consolidation by means of home equity rather than simply making the minimum payments for your credit card payments. Credit cards are open-end loans, unlike home equity loans. Most home equity loans have fixed interest rates and are considered closed-end loans. Credit cards are revolving and credit cards have compounding interest. Home equity loans and lines of credit have mortgage interest that is tax deductible unlike credit cards where the interest isn’t tax deductible. Also credit cards are not secured by your home, which means higher interest rates and payments. The bottom line is that credit card debt ultimately costs you more money than a home equity loan.
There are many different second mortgage products available to consumers and with carefully consideration the right one may help you solve your debt problem. Find a reputable lender that you trust and discuss the available equity loan option that pertain to your credit score and qualifications. Refinancing and eliminating compounding interest debt with an equity loan or mortgage refinance can consolidate and reduce your payments. In most cases, this will put you in a better position to find the path leading to debt freedom.