Archive for home equity
Secrets to Refinancing a High Rate 2nd Mortgage
Posted by: | CommentsIf you have a first and second mortgage, you may be thinking about savinf some money by reducing the intererate rate from 2nd mortgage refinancing. It just makes sense to refinance 2nd mortgages that have a high interest rate. With rates at record lows, there is no reason to take a risk keeping an equity line with a variable interest rate. The best option is to try to roll your second mortgage into a new first mortgage that has a lower rate that is fixed. However, make sure you have good credit if you want to refinance the 2nd mortgage with another fixed home equity loan because interest rates are lower with good credit and more companies are willing to refinance. When you refinance adjustable rate credit lines for lower interest, fixed rate loans, you can lower monthly payments and overall cost.
Make sure you have good credit if you want to get a refinance loan with another equity loan rather than try to roll your second lien into a new first mortgage that has a lower rate that is fixed. Prior to 2nd mortgage refinancing, it is a good idea to take a good look at your finances. There is wisdom in the decision to refinance a second mortgage that have a high interest rate or to refinance adjustable rate credit lines, so wisdom should be applied in getting your credit in order prior to the application process.
Solutions for a 2nd Mortgage Refinance
2nd mortgage refinancing can create a chance for you to pay off all your debt faster if you plan properly. Choosing to refinance adjustable rate credit lines or refinance 2nd mortgages that have a high interest rate can lower interest rates and monthly payments. You should try to roll your second mortgage into a new first mortgage that has a lower rate that is fixed to facilitate paying down the principal by adding a little (or a lot) extra each month to your payment. If you can’t roll them together because of a lack of home value, make sure you have good credit if you want to refinance the 2nd loan with another home equity mortgage.
When you refinance adjustable rate credit lines through mortgage refinancing, you can drastically lower your monthly bills. When you refinance 2nd mortgages that have a high interest rate, the same result can occur. For the best results, try to roll your second mortgage into a new first mortgage that has a lower rate that is fixed. For the second best option, make sure you have good credit if you want to refinance the 2nd mortgage with another subordinate financing solution.
A Home Improvement Loan May Help Increase Equity
Posted by: | CommentsAlthough the economy is slow and everyone is tightening their belts to save money, now is probably a good time to get a home improvement loan so you can increase the value of your home with needed repairs and updates. With the construction industry competing fiercely for work all around the country, you could end up getting expensive repairs done on your home for a fraction of the cost. A home improvement loan can provide you with access to funds whenever you need them. There are a couple of ways you can tap into the equity in your home for financing a home remodel or repairs.
Increase Home Equity by Financing Home Improvements
You could get a home equity line of credit based on the equity you have available in your house. The credit line would function much like a credit card. Each payment you make on the loan frees up credit for you to use when you need it. It is usually set up in such a way that you can access the funds by writing a check, using a debit card, or transferring money into your checking account if you have your accounts at the same bank as your loan. A home improvement loan, on the other hand, is basically a second mortgage on the home. The lump sum amount you receive is equal to the equity you have in your home. When you make payments, you are actually paying the loan off.
Home Equity Line of Credit vs. Home Equity Loan
There are a few benefits and disadvantages to using a home equity line of credit vs. home equity loan. Home equity lines offer flexibility because you only pay interest on the amount of funds you actually use. Additionally since it is revolving credit, you can use the money over and over again. Since it is a revolving line of credit, you may not get as much money as you need based on your credit and ability to pay.
You may be able to get more money with a lump sum home improvement loan for home remodeling. However, both types of equity loans typically come at the cost of high interest rates. However, simple repairs and updates can add thousands of dollars to the value of your home. This is particularly useful if you are trying to sell your home. Take the time to crunch the numbers to make sure you will end up coming out ahead. Look around for the best rates you can find for financing your home remodeling.
How to Refinance a Home Equity Line of Credit
Posted by: | CommentsIt wasn’t too long ago that homeowners were taking out home equity credit lines, using their house like an ATM machine to access cash. Americans utilized home equity loans and credit lines to consolidate debt, finance home remodeling and some people even financed extended vacations. Homeowners did not need any equity in their home and second mortgage lenders often approved credit lines without even requesting a formal appraisal. In many cases, borrowers would convert their variable rate equity line into a fixed rate home equity loan once they used all of the funds.
Eliminate Compounding Interest & Refinance Credit Lines into a Fixed Rate Mortgage
Everything continued to go great for homeowners as property values continued to rise nationally and lenders continued to extend 2nd mortgage options. In 2007 the mortgage debacle evolved into a full-fledged housing crisis that we still have not recovered from yet. All of a sudden millions of homeowners found themselves stuck with a variable rate home equity line of credit or an equity loan that had a rate the borrowers were uncomfortable with as the economy started sinking. Second mortgage refinance options started dwindling as lenders began cutting and eliminating their home equity programs. The few lenders that were left offering home equity lines tightened the guidelines significantly and now required more equity, higher credit scores. If that wasn’t enough, the home equity lenders started requiring full income documentation and full URAR appraisals.
Many borrowers turned to the FHA refinance loans because they continued to approve cash out loans up to 95%. These FHA mortgages enabled borrowers to consolidate debt and refinance credit lines and 2nd mortgages into their new 1st mortgage. Still even with the more flexible FHA guidelines, many homeowners were unable to refinance home equity lines because their property values were declining rapidly. With the adjustable rates contributing to higher monthly payments for the credit lines, many people could no longer afford their second mortgage and thus many homeowners defaulted. Today, we recommend refinancing your credit line into your first mortgage. However, if you do not have the equity or credit scores needed to qualify, consider a second mortgage modification.
Tips for a Home Equity Loan Refinance
Posted by: | CommentsMany homeowners have learned the hard way that a home equity loan refinance can be complicated. Before the subprime mortgage crash in 2006 millions of Americans took out home equity loans between 2000 and 2005. At the time it was easy to take out a second mortgage. Most borrowers were able to qualify for an equity loan, whether they had good or bad credit and equity or no equity. Basically borrowers with poor credit and good qualify for a 100% home equity loan. Many of these borrowers defaulted on these loans, but many of these borrowers continued to make their home equity loan payment and find themselves stuck with a 2nd mortgage. Since then, interest rates have fallen to record levels, home values have depreciated nationally and home equity loan refinance guidelines have tightened significantly. In 2011, lending rules for home refinancing have become more complex.
When borrowers took out their equity loans, property values were rising so it was easy to roll the 2nd mortgage into a 1st mortgage. It was also easy for a home equity loan refinance because lenders had access to many 2nd loan products. When the default rates increased and property values decreased, these home equity refinancing options disappeared.
- Maintain a good credit – Having high credit scores will always give you more options and the best opportunity for a home equity loan refinance.
- Consolidate your equity loan – If you are under 97% loan to value, there is a good chance you may qualify for a FHA refinance that enables you to consolidate your equity loan into a low rate 1st mortgage.
- Negotiate paying off your 2nd mortgage – Chances are your home equity lender will entertain a discounted buy-out of your equity loan. Since the default rate is so high, lenders are accepting pennies on the dollar for borrowers will to pay off their equity loan or line of credit.
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.
