Archive for Second Mortgage Articles
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.
Should I Take Money Out By Refinancing My Home?
Posted by: | CommentsIn the end, only you can answer that question. However, there are some situations when cash refinancing makes sense. Some people have a second mortgage or a HELOC that has a higher interest rate. You can take money of refinancing your primary mortgage and pay off that second mortgage or HELOC. You will get lower payments at a better interest rate. Not only that, you will have the full ability to claim the mortgage interest you pay on your income taxes. It offers many benefits when you use a cash out refinance to get rid of a second mortgage or a home equity line of credit.
Some homeowners have accumulated a ton of debt from credit cards and car loans. If the amount of your debt payments is overwhelming you, using cash refinancing makes sense. It will help you consolidate your debts into a single payment that is lower than what you are paying now. You will be in a better financial position in this situation. However, it comes with a big caveat. Many take the opportunity to clear their slate with a cash out refinance. However, if you go back to spending money like crazy, you are defeating the purpose.
A medical emergency is another reason. Some people find themselves in a situation where they need cash in hand to pay for a critical medical procedure. Medical insurance will cover only certain procedures. In addition, even with insurance, there can be large co-pays and coinsurance requirements that can overwhelm you easily in the financial arena. Using a cash out refinance is one way to clear up that cash deficit. Now, a plastic surgery procedure usually does not qualify as a medical emergency, but again it is completely up to you.
Look at the reality of taking out a fixed rate 30-year mortgage on a short term purchase. Do you want to pay for the next thirty years on a vacation you take and forget about? Do you want to pay for that high end sports car for thirty years but only drive for maybe three or four years? Use a cash out refinancing for the right reasons. It is the responsible thing to do with your mortgage and for your financial future. You can make a real difference in your present financial position with a cash refinancing. However, make sure you do not end up in the same position again. You will not be a happy person.
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.
Refinance or Second Mortgage?
Posted by: | Comments
One of the most common questions I get from consumer looking for cash is whether they need a refinance loan or to take out a second mortgage. Every situation is different, so there is not a simple “canned answer” when it comes to cash refinancing. In order to offer educated advice on a first or second mortgage I need to understand the big picture. In an effort to responsibly address this financing scenario, I need answers to the following questions below:
What’s your loan to value (LTV)? We need to determine how much equity you have because you may not be eligible for a credit line or second mortgage.
How is your credit? Whether your fico score is 580, 680 or 780 this will enable me to understand further what cash out options are available to you. Cash out refinancing guidelines range from 75 to 90% loan to value depending upon what type of borrower you are. It also matters how big the mortgage loan is that you plan to take out. Some lenders will allow good credit borrowers to go to 90% LTV on a credit line or fixed home equity loan if it is only for $35,000.
Do you have pre-payment penalty on your first mortgage? Sometimes borrowers will have pre-payment penalties that equate to thousands of dollars. When a homeowner has a large pre-pay on their existing mortgage, it can make a second mortgage option more attractive.
What are you doing with money? It is important to know why you are considering a cash out refinance. For example if you are consolidating debt then we would always recommend a fixed rate loan that featured simple interest. Whereas, if you are remodeling your home and you are not sure how much cash you will be borrowing or when you will need the money, then a home equity line of credit may be the perfect solution.
Do you have a second mortgage or equity loan already? If you already have a 2nd mortgage, we will have to refinance it and roll the balance into the new loan.
Interest rates remain at record lows and the guidelines for cash out financing appear to be expanding a bit in 2011, but it is important that you discuss you goals and situation with an experieinced loan officer so you can make the best financial decision.
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.
