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Archive for Mortgage Refinance Tips

Many people know they can save money with home refinancing.  Over the past five to seven years, people have been taking advantage of record low home refinance rates.  Home loan refinancing can lower monthly payments, consolidate higher interest debt, and shorten the pay-off time for a home owners overall debt.  Borrowers who have equity in their home will likely refinance with a conventional mortgage.  However, borrowers with no equity will likely use FHA for refinancing.  Compare mortgage refinance loans online and find out which loan meets your needs. So, what are the 5 top home loans for refinancing?

1.  Cash Out Refinance:  To save money with home refinancing and get out of debt faster, many home owners are choosing cash out home loan refinancing.  Taking advantage of record low home refinance rates, home owners refinance, increasing the amount of the loan to pay off higher interest debt or make improvements that will increase the value of the property.  Borrowers with no equity will likely use FHA for refinancing and getting extra cash.

2.  Fixed Rate Mortgage:  If you have been investing in your home for years, you can save money with home refinancing through a conventional streamline refinance.  Borrowers who have equity in their home will likely refinance with a conventional mortgage that offers low home refinance rates coupled with low fees and as little red tape as possible.

3.  FHA Refinance:  If they need cash for debt consolidation or home improvement, borrowers who have equity in their home will likely refinance with a conventional mortgage.  Home loan refinancing with a conventional mortgage offers low interest rates and the potential for no mortgage premium insurance.

4.  FHA Streamline Refinance:  Simple home loan refinancing to bring down your monthly house payment with as few hoops to jump through and as few fees as possible is the goal of “streamline” refinance options.  Borrowers with no equity will likely use FHA for refinancing, because little to no down payment is necessary to save money with home refinancing.  Record low home refinance rates have made refinancing very popular, but borrowers who have equity in their home will likely refinance with a conventional mortgage because they can avoid the mortgage insurance premiums.

5.  Adjustable Rate Mortgage Refinance: The least recommended of the top five mortgage structures, an ARM can offer the absolute record low home refinance rates in the beginning.  The monthly payment does not stay fixed over the life of the loan as rates move.  If an ARM is desired, borrowers with no equity will likely use FHA for refinancing.

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Economists, accountants and mortgage professionals agree that if you have the ability to save money and ensure security that home refinancing is a smart financial move. Right now, it is time to refinance. The market is lower than it has ever been and inflation is slowly rising again. After the mortgage crisis and the recession, it took some time for the economy to get back on its feet. It has, however, and that makes the Federal Reserve likely to raise interest rates very soon. You don’t want to have to risk losing the opportunity to get such low rates for refinancing because you don’t want to deal with the ‘hassles’ of getting your home appraised only to be turned down by your bank or a fast talking lender. Get in now, before inflation makes the record low rates disappear.  The chances of rates improving any more are very slim, while the rates the chances for refinance rates to rise in the next twelve months are very high.

 The 5 Best Loans for Home Refinancing

  1. Conventional Loan with No Mortgage Insurance
  2. 15-Year FHA Refinance Loan
  3. Refinance with a 100% VA Mortgage
  4. Cash Out Refinancing to 85%
  5. No Cost Mortgage

Figuring out how to refinance is your first step. You need to contact a lender and discuss your situation. Then, they will be able to give you the options that you have for refinancing your home, no matter what your situation might be. You can get a lower mortgage refinance rate in most cases, which will allow you to save money on your mortgage payments. Of course, being able to lock into a fixed rate for 15 or 30 years is another reason to consider refinancing. It just makes sense because there is not going to be another time like this when rates are so low. The 30-year fixed rate mortgage is the safest bet if you are not sure whether or not you will be moving anytime soon.

Refinance and Get Approved with Mortgage Rates as Low as 3.375% (APR 3.477%)

Save money with a lower rate, get the money that you need out of your home, or just refinance to get better terms in your mortgage. No matter your reasons for refinancing, you will be able to find low home refinance rates that are sure to suit your needs. Even people who have been turned down recently by a lender or bank should try again, because there is several new bad credit refinancing options. Talk to refinancing lenders as soon as possible about the loan approval process and figure out exactly what you need to know so that you can make the best decision.

Refinance Your Home Now Before Rates Go Up

You’ll obviously get lower rates if you have good credit to begin with. However, if your credit score is lower, you shouldn’t be discouraged because you do still have options. Whatever it takes, you can easily get the financing that you need so that you can lock in low rates with a refinance today. Never settle or assume that you are getting the best rate without doing a little comparison shopping, either. 5.25% might be good, but 4.5% would be better because it would lower your monthly payment and save you money. If you look, you can find great deals on refinance loans to lower your payments, get money for improvements, or just get on top of your mortgage for once and all.

It is hardly a secret that the best refinance loans  have been government inspired programs that the Obama administration has spear-headed. People are not really quite sure what Obama mortgage programs lie ahead for the President’s second term. Harp 3.0, principal reductions programs that target the middle class? Only time will tell…

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As millions of homeowners contemplate refinancing their mortgage, it is important to consider potential factors for home refinancing loans going forward in 2012.  In many ways, the loan refinance has helped assist homeowners with affordable housing solutions by extending opportunities for increased cash flows and offering the ability for people to get quick and cost effective access to money.

1. When will the Federal Reserve begin raising key interest rates? Economists all seem to agree that it is just a matter of time before the Fed starts hiking rates to curb inflation. Consumers in the U.S. have grown accustomed to record low rates.  Millions of homeowners will be astonished when the refinance rate climb to 5% and 6% on the 30-year terms.  Presently, qualified borrowers can get a thirty-year mortgage refinance at 3.5% (APR 3.5%)  with no closing costs.  When the Fed begins raising rates it will have a negative impact on affordability and likely the housing recovery because consumers will be less motivated to invest in higher cost housing..

2. Will FHA continue to raise insurance premiums for FHA home loans? Every time HUD increases the insurance premium it has a profound impact on the monthly payment for borrowers refinancing or purchasing a new home.  This could have a negative impact on homeowners who do not have equity, because FHA is the most aggressive loan programs for non-military borrowers seeking mortgage refinancing assistance.

3. Do lenders continue to tighten refinance guidelines in 2012? If we examine the trend over the last 5 years it would be hard to argue against tighter loan guidelines for mortgage refinancing in 2012. Each of the last five years we have seen underwriting guidelines get more restrictive for government and traditional refinance mortgages.

4. Will private money reappear and replenish the mortgage industry in 2012? Rumors have been swirling the home financing sector this year that private money investors are poised to return as a viable option for mortgage lenders.  Loan companies have relied heavily on government loan programs like FHA and VA for mortgage refinancing programs. The fact that private lenders like Cash Call have reintroduced 125% loans recently is a good sign that investors should be reviving the private money portals soon. The fact remains that consumers in the U.S. want fixed refinancing loans because at the end of the day they know what to budget for their housing expenses.

5. When will the housing crisis end?  It’s no secret that he housing sector has been battered over the last six years. Nearly a quarter of the country is strapped with an underwater mortgage. That rivals the housing woes of the Great Depression. If foreclosures and short sales continue to drive the house market then it is unlikely we will see any rebound in the housing sector in 2012.  Realtors and politicians can dress it up however they want, but with millions of homeowners behind on their mortgage, growing fears of a double dip global recession and tight lending guidelines, the housing sector will get worse before it gets better.

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Refinancing your mortgage is an excellent way to save money, get access to cash and to increase your cash flow.  Next time you are in the market for a home refinance, we recommend taking a few moments to evaluate the proposed refinance loans from several perspectives. It is wise to consider several refinancing options and really do the math before committing to another home loan for thirty years.

1.    How much will mortgage refinancing cost you?

When you first begin the home refinancing process, we recommend that you get quotes from a few credible mortgage lenders.  When you get the Good faith Estimate from the lenders you need to do a thorough, side by side analysis. Compare the refinance rates, closing costs, types of interest and the terms of the refinance loan.  Make sure you are comparing apples to apples. You will want to compare the total costs for refinancing including title insurance, escrow, appraisals, origination, notary, underwriting, processing, etc. Negotiate with the loan companies and see who is going to reduce and eliminate lender fees without raising the fixed mortgage refinance rates.  Compare the total cost with interest of a no cost mortgage loan and a loan that has lender fees.

2. How much are you really saving with a refinance loan today?

Unfortunately homeowners often just assume that getting a refinance mortgage will automatically save them money. Ok, your monthly mortgage payment is reduced but how many more years will you be paying this new mortgage?  A simple solution is to take your current monthly payment and multiply that by the number of months you have left on the loan. Then you multiply the new mortgage refinance payment by the number of months in the term. (ie. 30-years would be 360, 15-years would be 180, etc.) If your current mortgage payments equate to a less when you multiply the term, then you know this refinance loan you are considering is not actually saving you money in the long run.  If you recently purchased the home and you don’t plan on staying there for very long, then lowering the monthly payment and increasing your cash flow may meet your needs and accomplish your goals for the best mortgage refinancing.  Another factor to consider is mortgage insurance. Sometimes homeowners will refinance into a new loan that has monthly mortgage insurance. It is imperative that you add the monthly insurance payment to the new monthly payment for the refinance loan if you want to do a fair, side by side analysis. Recently I have seen borrowers who are so happy to be able to refinance and lower their mortgage an entire percentage point (ie. From 5.75% to 4.75%), but when the borrowers factors in the monthly insurance to the refinance payment the suddenly the monthly savings vanished.  FHA has raised the monthly insurance premiums several times in the last few years, so sadly in some cases borrowers are not saving money when refinancing with FHA.

3. Are there risks with increasing a mortgage balance if you are saving money?

There are times when consolidating debt and 2nd mortgages make sense financially.  However, when you increase your mortgage balance you often lose future leverage because by decreasing your home’s equity you potentially could be hindering your ability to refinance in the near future.  When housing markets are robust and property values go up in value annually it’s easy to lose sight of potential pitfalls because at the time the risks may appear minimal.

Let’s consider a borrower who bought their home in 2003 for $300,000 at 6.25% and in 2006 his home is appraised for $400,000 and he or she decides to finance some home improvements and consolidate a few credit cards, so they take out a tax deductible home equity mortgage, because they are happy with their existing rate on their first mortgage. At this point the borrowers appear to be making wise decisions financially and taking advantage of homeownership. In 2008 interest rates fall to record lows and these borrowers decide they want to refinance a first and second loan together for a lower monthly payment with a fixed rate.  The borrowers are excited because refinancing $375,000 at 4.875% would save them thousands of dollars a year. When these borrowers get their house appraised for the refinance they learn their home value has declined from $400,000 to $310,000 and their loan application is rejected from the lender because their mortgage is underwater.  Does this situation sound familiar?  According to Core Logic currently nearly 11 million homeowners are strapped with an underwater mortgage. In this case, these borrowers had great credit and solid income but because of the lack of home equity they were unable to qualify for refinancing because of the depreciated home value. When refinance rates fall to record lows it may look like the best time to refinance, but there are factors involved in home financing that are beyond the borrower’s control.  Things like property value, there is very little a homeowner can do to impact when the real estate market is on a downward trend.  Don’t misunderstand me though, in most cases, consolidating revolving debts by refinancing it into a tax deductible simple interest mortgage is a wise move. However if you are going to leverage your mortgage to the value of your home make sure that you are committed to the mortgage for the long term.

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When it comes to home refinancing, no equity is required in many cases. The home affordable refinance allows refinancing to 125%, but you must have a mortgage that is guaranteed by Fannie Mae or Freddie Mac. Additionally, you can get 100% refinancing with VA and refinance with FHA up to 96.5% loan to value. In order to get approved with these loans, you really have to have good credit and be able to prove that you’re worth the risk. Refinancing your home without equity is tricky business but it can be done if you are prepared and know what you are getting involved with. In general, guidelines for home loan refinance products have been tightened across the board, but refinancing without equity is especially difficult. The 2nd mortgage loan to value requirements have changed frequently over the last few years, so talk to your loan officer if you are interested in refinancing a home equity loan.

When you need to refinance your home without equity, you will need to explore these different lending options and see which one works best for your needs. The Home Affordable Refinance Program and FHA funding are great options because they are usually very flexible and provide people with the money that they need with fewer restrictions. The VA program is great for veterans who need to refinance without equity. It doesn’t matter what your situation is because these are the primary ways that you are going to be able to get 100% refinancing with no equity required.

If you don’t qualify for any of these programs, you are unfortunately out of luck. Because of the mortgage market situation, banks and lenders are trying to help but getting more cautious about just handing out loans to people who can’t really afford them or who don’t have the credit reputation to support their application. You will need to do some research and see what all of your options are so that you can get the perfect loan every time, no matter what you need.

Take the time to talk to qualified lenders to learn more about these refinancing options so that you can get your home refinanced without the hassles or waiting until it builds some value. There isn’t much in the market today that does have value, so it is going to be easy for you to find solutions that are tailored to your needs. Make sure that you take advantage of the resources that you have so that you can learn all about VA, FHA, and other lending options for refinancing to get the results that you deserve. You don’t have to have equity to refinance but you do have to know the guidelines and what you’re eligible for in terms of no equity refinancing options.

Nationwide offers multiple refinance options at a discounted rate.  Get a free quote from one of our experienced loan professionals today with no obligation.

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Do you need home refinancing for cash or simply a reduced interest rate for a lower monthly payment? Have you recently been rejected by a lender because they said your credit scores were too low?  Would it help your financial state if you were approved to get a home refinance for bad credit? Nationwide is a lender that offers a wide variety of home loan refinance solutions including, conventional, jumbo, VA and FHA home mortgage opportunities.

1. Make Sure There Are Tangible Benefits to Refinancing: Many people look into home refinancing because they want to reduce their monthly payments. However, you must make sure that you will be trimming off a significant amount to make the time, effort, and cash investment worthwhile. There are costs associated with refinancing to lower interest rate on your loan. If you find you are spending thousands to save pennies, you may want to wait to refinance when interests rates are better.

2. Shop Home Refinance Loans from Reputable Lenders: You want to make sure you are getting your loan from someone you trust. Dishonest lenders will lure you in with too good to be true interest rates but may tack on fees and add language in the contract that can cost you thousands in penalties. Always check the reputation of any financial institution you choose to do business with.

3. Compare the Loan Disclosures and the Good Faith Estimate: It is always a good idea to shop around for the best rate. However, don’t stop there. Make sure you read the fine print of the loan disclosures. A bank that seems to have a great rate may have language in their disclosure that allows them to charge you an exorbitant late fee if you don’t make your payments on time. Not only do you want the best fixed mortgage rates and lowest monthly payments, you want to make sure you won’t end up paying more than you need to.

4. Avoid a Pre-Payment Penalty: Reducing years on your home loan can save you thousands of dollars in interest. Therefore, it is important that the bank you get your loan from does not charge a pre-payment penalty fee. Banks add this fee to discourage you from home refinancing or paying your loan off early so they can get the full amount of the interest payments due to them. If your loan does include a pre-payment penalty see if you can negotiate it out altogether or at least a reduced amount.

5. Avoid Mortgage Insurance: Private mortgage insurance is type of insurance that banks will try to force you to get which basically guarantees the mortgage will get paid if you default on the loan. It may sound like a great idea on the surface. But it can add up to $1,000 per year per $100,000 borrowed to your loan. Do everything you can to avoid having this insurance tacked onto your loan.

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Since the housing and financial crisis erupted a few years ago government mortgage programs have supported refinancing for homeowners with low credit scores and insufficient home equity. With the economy still struggling to correct itself, millions of homeowners continue to strain under the burden of paying their mortgage every month. Millions more are contemplating whether or not they should try to save their homes from foreclosure especially when they are upside down on their loans – owing more on the property than its market value. If you want to save your home but are having trouble getting your bank to work with you, you may be able to get help from the government with a FHA refinance loan insured by the US government.

Consider New Government Mortgage Relief Programs that Won’t Last Forever

Many homeowners have been unable to refinance their adjustable interest rate because they do not have enough equity in their home to qualify for a traditional refinance loan. In an effort to assist these struggling homeowners in addition to reducing the foreclosure rates nationally a new loan relief option became available in the Home Affordable Refinance Program (HARP). This is one of the Obama mortgage programs set up to help the American homeowner refinance their home loans so they can stay in their home. This FHA refinancing program is specifically targeted to homeowners who have been limited in their options by their inability to qualify for a bank refinance through their lender. One of the main criteria for qualification for the program is that your loan must be owned by or guaranteed by Freddie Mac or Fannie Mae. If you are not certain you have a loan through them, you can use the online tool available at the Making Homes Affordable government website to determine if you do.

Get Approved for Low and Affordable Rates with FHA Refinancing

Other qualifications that need to be met in order to take part in the government mortgage refinance program include being underwater (not more than 125% of current market value) on your home and being current on your mortgage payments. You cannot have been more than 30 days late on any of your payment within the previous 12 months. People who have FHA, VA, or USDA loans are not eligible for the program. Last, but not least, you must be able to make the new payments every month. Typically this means you will have a job or some other type of regular income coming in.

In order to get the process started, you will need to contact the company that services your mortgage and ask about the HARP program. They will either take your information over the phone or send you a packet of information to fill out and return to them. It is important that you carefully consider the percentage rate and associated costs of refinancing to make sure you are getting the best deal. Lastly, the government refinance can negatively impact your credit as the lender will report your participation in the program to the credit agency. However, being able to stay in your home and make your monthly payments is certainly worth the temporary hit to your credit score. We suggest comparing loan offers from several experienced government mortgage lenders that have access to all of the FHA loan programs.

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