Archive for Mortgage Refinance Tips
Should I Refinance an Adjustable Rate Mortgage?
Posted by: | CommentsThe fixed rate mortgage is cherished more today than any other time in the last 20 years. The main reason for this is that so many homeowners got stuck with an adjustable rate mortgage that they were unable to refinance. One of the major reasons why there are so many foreclosures occurring since the economic downfall is the fact that a lot of the homeowners have adjustable rate mortgages. The interest rate on this type of loan fluctuates according to market conditions. When the market is good, homeowners enjoy the low interest rates. When the market is not so good, then the interest rate goes up. Even a 1% hike can increase your monthly mortgage payment by hundreds of dollars; something which has caused many homeowners to fall behind and get foreclosed on by the bank. If you have this type of loan, you may be wondering if you should refinance ARM into a fixed rate mortgage.
Fixed Rate Refinancing Provides Peace of Mind
The most popular solution to refinance adjustable rate loans is the 30-year fixed mortgage . A common reason why people get an ARM in the first place is because the interest offered is much lower than a loan with a fixed mortgage rate which translates into lower monthly payments. In fact, most people refinance ARMs because they are anticipating an increase in the interest rate which will cause their monthly payments to become unmanageable. If you are wondering when to refinance, that is as good a time as any. By switching to a fixed rate mortgage, your payments may be a little bit more but it will be the same amount each month. Additionally, your loan will be paid off on a fixed day. The pay-off date can fluctuate with the interest rate on an ARM loan.
Whether or not you should refinance ARM into a fixed mortgage depends on several factors. The primary one being the type of interest rate you will be able to lock in. If the interest rate is higher than what your ARM rate is scheduled to increase to then you’ll want to stick with your ARM loan. In fact, unless you can save 2% or more on your interest rate then you may want not want to go through the trouble and expense of refinancing. If you have little or no equity, we recommend that you refinance with FHA.
Another factor to consider is if you can pay off other debts by refinancing. If you find yourself with high interest credit card debt or an auto loan, it may be worth the savings in interest to refinance ARM into a fixed rate mortgage in order to get rid of your more expensive debt. By rolling all of your debt into one loan, you’ll only have to contend with one payment every month. To truly get an idea on whether you should refinance your ARM loan, you may want to speak to a financial planner to assess your options. The bottom line is that if you have an adjustable rate mortgage, the best time refinance is when you qualify to convert the ARM into a fixed rate mortgage that helps you sleep at night.
Weighing the Costs and Benefits of Mortgage Refinancing
Posted by: | CommentsWithout a doubt, mortgage refinancing can be one of the best tools for homeowners to save money. There are many responsibilities that a home owner is tasked with on a regular basis. Not only does an individual that possesses property need to make improvements and keep up the landscape, they must also consider the financing costs associated with the building. When it comes time to weight the costs and benefits of mortgage refinancing, care should be taken to consider all alternatives. The process of mortgage rate refinancing can result in substantial cost savings over the lifetime of the loan. A wrong decision could complicate an already straight forward mortgage loan package. Completely understanding all of the costs associated with undertaking this endeavor is required in order to make a sound decision.
Similar to the first time someone makes a home purchase, there are specific lending fees that need to be satisfied. Depending upon the amount of these various sums, the costs associated to get the best mortgage refinancing rates may be more harmful than beneficial. Find
out what the closing costs are before signing any official documents. This will lessen the impact of a hasty decision and save you money in the long term. Consult with a few different lenders to understand their fee schedules and find one that will offer the best value for the services that are being provided. In most cases, closing costs on refinance loans are tax deductible, but talk to your accountant for clarification.
Save Money with Low Rate Mortgage Refinancing
- Lower Monthly Payments
- Fixed Rate Refinancing Offers Security against Inflation
- Refinancing Offers Ability to Consolidate Debts
- Opportunity to Get Access to Cash from Home Equity
The nice thing about when it comes time to try and qualify for a no cost refinance, the process is relatively straight forward. Being aware of your current personal credit history can help generate favorable quotes from various lenders. Make sure to compare refinance rates between lenders before deciding upon a specific course of action. The Internet has simplified the ability for someone to conduct shopping for a refinance loan online from the comfort of their home. The availability of these services at all times of the day can be easily incorporated into a busy schedule.
While there are some small risks associated with refinancing an existing mortgage, the pros far outnumber the cons. Not only can a lower interest rate result in lower monthly payments, but it can also shorten the lifetime of the loan. The various refinance packages also allows getting access to cash out in order to perform needed home repairs or to pay off other debts that may be piling up. Instead of having to face additional obligations such as interest fees and taxes on these bills, tax deductibility with home refinancing is a major reason why people choose this route. Accomplishing the basic objectives of maintaining a home can be easily accomplished with a comprehensive refinance package.
Nationwide guarantees the best mortgage refinancing experience online. Take advantage of our low refinance rates and award winning service.
Tips for Mortgage Rate Refinancing
Posted by: | CommentsEvery few years, it is a good idea to pursue the idea of mortgage rate refinancing because your credit score may have improved and national mortgage refinance rates may have gone down since you took out your original home loan. There are several things you need to know about mortgage refinancing if it is to result in lower monthly payments for you or greater savings over the term of the loan. Here are the most commonly discussed issues regarding home refinance loans that you need to know.
Consider Every Refinance Option that Meets Your Needs
The first tip when it comes to successful mortgage rate refinancing is to know the current mortgage refinance rates in the country. There will be little purpose in pursuing home refinancing if the rates are identical or higher than they were when you signed up for your first home mortgage. Charts are available online that will show you the historical national average for a fixed rate 30-year mortgage. This will give you a good idea of whether mortgage refinancing will result in lower monthly payments for you at this time or not.
Compare these Popular Refinance Loans:
- * FHA Refinancing
- * Streamline Refinance
- * VA Mortgage Refinance
- * Cash Refinancing
- * Rate and Term Refinancing
- * Home Equity Loan Refinance
A popular reason why people pursue mortgage rate refinancing is for the purpose of converting adjustable rates into a fixed rate mortgage. If you notice a prediction of an increase in mortgage refinance rates, this could be the perfect time to lock in your current rate by adjustable rate refinancing into a fixed rate mortgage. Whether you currently have a 15-year mortgage or a 30-year mortgage, you will simply need to pay a fee to have your adjustable rate mortgage converted into a fixed rate mortgage. Unless of course you qualify for a no cost refinance in which the lender pays your closing costs for you.
Then, you need to consider how beneficial it could be for you to reduce terms on your 30-year mortgage and turn it into a 15-year mortgage. This will increase your monthly payments, but you will save huge amounts of money over the term of the loan. Many people sign up for a 30-year loan when they first buy their home because of the lower monthly payments, but if you are in a stronger financial situation now, deciding to reduce terms could be a great home refinancing method to prevent yourself from paying interest for twice as long.
Even if interest rates are up, or your credit score has not changed, you may still benefit from mortgage refinancing to lower monthly payments by extending the term or cashing out on some of your home equity to pay off higher-interest debts you may have on credit cards or in the form of student loans.
Comparing Conforming and FHA Refinancing Loans
Posted by: | CommentsLately we have received a lot of people are asking for advice about whether they should get a conforming refinance or a FHA refinance. With home loan rates on the rise many homeowners want to make sure that they choose the right refinance loan. Both the conforming and FHA refinance are good choices but you must first see which programs you are approved for because you only want to compare home refinancing options that you are actually eligible for.
For example, with FHA refinancing you only need 3.5% worth of home equity to qualify, whereas with conforming refinancing you need 10 to 20% equity depending on your credit score. If you want cash out you will need 15% equity in your home with a FHA loan, whereas with the conforming options you would need 20-25% depending on the size of the loan amount. The major advantages of FHA refinancing is that they require less equity and typically the underwriters are more forgiving when it comes to credit.
If you qualify for both refinance options, then conforming is the best option because there is no mortgage insurance to pay monthly. With FHA mortgages there is a charge for mortgage insurance monthly. Nobody likes paying mortgage insurance if they do not have to, but if you do not have enough equity, then FHA refinancing may be the best solution for you.
You also want to make sure that there is no pre-payment penalty, because you never know if you will need to move or even refinance again in the future. Most qualified lenders will not have a pre-payment penalty attached to conforming or FHA loans, but you never know so verify that with your loan officer. As far as closing costs go, both refinance options should have $2,000 to $3,000 in closing costs, but some lenders like Nationwide have the ability to offer a no cost refinance loan. We recommend the no cost refinance, if you meet the qualifications and it doesn’t increase your interest rate more than 0.125%. Both conforming and FHA mortgage rates remain nearly at record lows and usually the rates are the same.
Mortgage Tips to Maximize Home Refinancing and Savings
Posted by: | CommentsSomeone asked me the other day if there was an art to getting the best home loan rates when refinancing. I don’t know if I would call it an art, but maximizing the opportunity to get the lowest rates while paying the least amount of closing costs is definitely a wise financial move. Home mortgage refinancing usually looks great on paper, but if you make a few poor decisions during the process it can become very costly
Find the best mortgage lender. You should work with a reputable loan company that enables you to work with an experienced and accessible loan officer. Home loan programs can change while you are in the process of refinancing, so you need someone who is going to keep you in the loop. You need to work with a loan officer who will level with you about locking or floating the interest rate. If the refinance rates just dropped and you are happy with the interest rate published on your disclosures then it probably makes sense to lock the rate. In most cases it will only cost you .25 of the loan for a 45-day lock and usually you can roll the cost into the loan. I can’t over-emphasize the value of working with the best mortgage lender.
Compare the rate of a No Cost Loan to the Lowest Rate Mortgage Paying Fees. Often times there is not much of a difference in the rate (i.e .125% ). Chances are that you will move or do another mortgage refinance transaction in the next 5 to 7 years, so you must ask yourself this question —- Is the option for a .125 lower rate worth paying an extra $2,000 to $3,000 in closing costs? In most cases it is not, because the $15 to $20 you save per month only equates to a $1,000 after 5 years.
Compare Conforming and FHA Loan Programs – It is very important when you that you compare the total cost of monthly mortgage payments before deciding which type of refinance loan to go with. For example the home mortgage rate on a FHA refinance is likely the same as a conforming rate. However with FHA mortgages, there is insurance that is paid when you close the loan and then a monthly insurance premium you will also be paying. So in many cases FHA borrowers are paying an extra $100 to $200 for mortgage insurance. Whereas with a conventional mortgage if you are under 80% Loan to value (LTV) you will not be required to have mortgage insurance. So verify with your loan officer what your loan to value is and then compare the loans that you are eligible for. Article was written by Bryan Dornan.
5 Home Refinancing Tips for 2011
Posted by: | CommentsThe home refinancing market has been on a roller coaster the last few years, but 2011 could shape up and more borrowers could qualify to refinance than did in the last few years. I get a lot of emails from homeowners asking me for home refinancing tips so I wanted to make some suggestions.
1. Take advantage of VA refinancing if you qualify for the VA loan programs. Veterans continue to have a significant advantage when it comes to home buying and mortgage refinancing. The VA refinance loans are more aggressive than conventional and FHA lending so take advantage of this great resource.
2. Streamline Refinance if you have a government loan. If you are having difficulty getting approved for a refinance loan because of income documentation because you your debt to income ratio is too high and you presently have a government mortgage like a VA or FHA , then consider the streamline refinance. Both the VA and FHA loan programs offer the streamline refinance loan that does not require pay stubs or W2′s for salaried and hourly employees. You still have a job, because the lender will verify with your employer that you still have a job. Government insured home refinancing continues to dominate the finance market in 2011.
3. 5/1 ARM offers low rates that maximize affordability. If you are having trouble fitting your mortgage payment into your budget and you want to keep your house, consider the 5/1 because you get a 3% rate fixed for 5 years. This gives you another five years to increase your income before you lock into a 15 or 30-year fixed rate mortgage. For example a $300,000 mortgage payment would be in the $1,000 a month range with the 5/1 ARM at 3%.
4. Don’t rule out a mortgage loan modification. If you have been late on your home loan payments or you have been unable to get approved for a bad credit mortgage because of poor fico scores, consider a loan modification or forbearance from your lender. Many loan companies are extending modifications to borrowers if they can demonstrate that they have the ability to make the reduced mortgage payment.
5. Re-Apply for a refinance loan. Many borrowers were turned down for a refinance loan in 2010, but that doesn’t mean they won’t qualify to refinance in 2011. Many loan professionals anticipate that some of the home refinancing programs will be more flexible with credit guidelines.
Best Home Refinancing Loans
Posted by: | CommentsI get a lot of emails from homeowners wanting to know what the best home loan programs are at the moment. It is common for most consumers in the U.S. to want the inside scope, but homeowners in particular want the road map to the best mortgage rates for refinancing and home buying. I uncovered some interesting statistics from the Lead Planet, a mortgage marketing company that generates mortgage leads online. The company said that in 2005, nearly 7 out of every 10 loan applications online qualified for a purchase or refinance loan. In 2010, less than 2 out of 10 home loan applications led to loan approvals from bank or lender underwriters. Home loan refinance transactions were in high demand, but lenders expected more from borrowers who wanted to qualify for record low rates.
Simply put, times have changed — Credit scores are way down, loan delinquencies have exploded and home equity has evaporated. Not to mention unemployment continues to surge and incomes as a whole are way down. These days, borrowers should throw a party if they are approved for a mortgage refinance, new home purchase or home equity loan. Second mortgage products have almost completely vanished and refinance guidelines are requiring significantly more equity. Unfortunately most homeowners are rejected from their lender when applying for a refinance online.
In most cases conventional programs allow borrowers to refinance mortgages to 80% loan to value but if borrowers need cash out the LTV are restricted to 70 or 75% depending on the credit score and debt to income ratios. FHA refinance programs are a bit more flexible as they allow borrowers to refinance to 96.5% and if they need cash out the loan to value limit is set at 85%. VA refinancing continues to have the loosest guidelines as they allow 100% refinancing for rate and term loans and 90% for cash out mortgages. Streamline refinance transactions provide the most loop holes for homeowners as they require no appraisal, so borrowers who have underwater mortgages can still refinance. The streamline program also waives income documentation, so if a borrower’s job can be verified no pay-stubs, W2′s or tax returns will be requested.
Best Refinance Mortgages in 2010
VA Streamline - refinancing beyond the value of your home. (stated income and no appraisal)
FHA Streamline Refinance – FHA customers can lower their interest rate with very little documentation needed.
VA Mortgage Refinance – 100% refinance loan for veterans that have their VA loan eligibility.
FHA Rates and Term Refi - The average borrower can get approved for a low rate refinance with only 3.5% of home equity.
No Cost Mortgage Refinance – If you have a good credit score, take advantage of the lender incentives. The loan companies pay all the closing costs and the borrower refinances into a record low rate.
