Are you stuck with increasing monthly payments and looking for favorable rates and terms on your loan? Or, do you want to consolidate your debts and pay them off faster? All these and more can be done by refinancing your mortgage. If you want to know what refinancing is all about, check out the following topics:What is refinancing?Refinancing replaces your current mortgage with a new loan that has a more favorable interest rate and terms that you can afford to manage. The new loan is secured on the same property as your current loan. The new loan funds are used to pay down the current mortgage while any remaining money can be used to your best advantage.
Example: Mr. X and Mr. Y both took out a mortgage loan worth $400,000. After 4 years, both of them paid off $200,000. Mr. X then took out another home loan worth $200,000 in order to repay the existing loan balance.
On the other hand, Mr. Y took out another mortgage worth $300,000 in order to repay the unpaid loan balance which is $200,000. Mr. Y could use the remaining balance in order to fulfill other financial obligations.
The first scenario is a simple refinance while the second is that of a "cash-out refinance". 5 Reasons why you should refinanceIf you're thinking of refinancing your house, check out these 6 reasons why a mortgage refinance might be right for you. - You want to save more:
Your monthly payments will be reduced if you get a lower interest rate or when the term of the loan is extended. However, with an extended term, you will be paying more in interest during the life of the loan.
- You want to pay down your mortgage quickly:
You can shorten the length of your mortgage by reducing the term of the loan. Your Monthly payments will go up, but you will be able to save more in interest payments. Moreover, you'll be debt free sooner.
- You need extra cash to pay off credit cards:
If you have enough equity in your home, you can refinance and borrow more than the current loan balance. With the extra money, you can pay off high interest debts such as credit card balances or installment loans. This refinance loan may be tax deductible under certain conditions.
- You wish to consolidate 2 loans into one:
If there's enough equity (due to high appreciation), you can consolidate a 1st and 2nd mortgage into a single mortgage. The monthly payment on the new loan might be lower than the combined payments on the first loan and the second mortgage.
- You want to convert an Adjustable Rate Mortgage (ARM) into a Fixed Rate Mortgage (FRM):
A FRM prevents the lender from increasing your monthly interest payments over the life of the loan, unlike with an ARM. This means your monthly payments will remain the same.
When to refinance mortgage"Should I refinance my house now?" – This is what most people ask when they're looking to reduce their mortgage payments by taking advantage of low rates. To find the answer, check out the mortgage refinance tips below:
- Build up equity:
You can refinance when you have built up at least 10% equity in your home (Fannie Mae owned mortgages, require 5% equity). It is possible for you to refinance if you have less than 5% equity, but you may have to pay a certain amount of money in order to make up the difference in equity.
- Check if mortgage refinance interest rates are low:
It's better to follow the 2% Rule. The 2% Rule allows you to enjoy the benefits of home refinance if the refinance interest rate is 2% lower than your current loan's interest rate. The savings in interest will help you recoup the costs of the new loan, provided you aren't planning to move soon (the break-even period). However, there are no-cost as well as low-cost refinance loans where the costs of getting the loan are included. However, these loans have comparatively higher rates than loans that do not include the refinance costs and your options are limited when the credit market is experiencing a slump. Learn more about the when to refinance rule of thumb.
As always, compare mortgage refinance interest rates offered by different lenders in order to get the best interest rate. This will help you save more over the life of the loan.
- Pay off any late payments:
There is no such limit on the number of times you can go for home refinance loans. Most lenders prefer that you have no late payments in the last 12 months before you refinance.
- Remove negatives and improve your credit score:
Get your credit report from the bureaus and review it for any negative items (late payments, collections, etc) and inaccurate items. Dispute any inaccurate items and remove them from the report. Pay off as much of your debt as you can. Otherwise, you won't get a low interest rate and may not even qualify for a refinance loan. Of course, there are lenders in the subprime lending market who may offer you a mortgage refinance loan, but it's better to avoid them as they'll charge higher interest rates and fees and could be fraudulent.
When not to refinance
Refinancing is not a good idea if:
- Your property value has gone down:
If your property value goes down and you refinance up to 80% of the appraised value, your original mortgage amount may be higher than the amount you borrow. Therefore, the new loan will not be enough to pay down the existing one.
- You have been paying off the first loan for a long time:
If you are almost finished paying off a 30 year fixed mortgage, then refinancing is not a good idea. You will lose equity in proportion to the amount you borrow over and above the remaining loan amount.
- You have used up enough equity:
Refinancing is not a good idea if you have already reduced the amount of your equity by taking out a 2nd mortgage or a home equity loan. Refinance loans for 100% of the loan are rare, and with the mortgage market currently in a crisis, are hard to find.
- You have a few years left on the current loan:
If there are only a few years left on your current loan, then refinancing is not a good idea. Taking out a new loan will only put you deeper into debt just when you were about to become debt free.
Refinancing makes sense for the right reasons and at the right time. You need to decide whether to opt for a simple interest rate adjustment refinance or a refinance that will provide you with extra money. If you'd like to check out what mortgage refinance rates and terms are currently available, request a no-obligation free mortgage refinance quotes from our community lenders and brokers.
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Caron
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Joined: 19 Jul 2005
Posts: 1519
Location: florida
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Post subject: Pay Option ARM dominates the California Refinance Market |
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A large number of borrowers in the California mortgage industry seem to refinance their mortgages using a Pay Option adjustable rate mortgage (ARM). With this kind of an ARM you can get full control over your monthly mortgage payments.
The Pay Option ARM provides you with the choice to make low monthly-deferred interest payments or an interest-only option along with the 15 year amortized payment and 30 year amortized payment options. It benefits all kinds of borrowers, especially self-employed or commissioned borrowers and those who are in such a financial position that does not allow them to go after huge payments. The program is specially meant for those who have fluctuating income and can support high payments on a monthly basis.
The California refinance Pay Option ARM is such that the monthly payments cannot increase more than 7.5% above the previous year for the initial 5 years of the loan period. There is also the option to convert into a fixed rate mortgage after the first 3 years.
With this kind of a refinance home mortgage loan, you get the chance to make fully amortized payments when you are financially strong and then shift to the low deferred interest payment scheme if required. You get the flexibility to make payments depending upon your monthly cash flow. And, in case you are a first time buyer or looking for a new home, then this can be the best option to fulfill your dreams with the lowest payment possible. All you need to do is find out the best refinance home mortgage loan rate. |
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helping_user 123
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Post subject: Discount Points in refinance |
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You can refinance your existing mortgage loan with some discount points to get a lower interest rate. A portion of the loan paid should be deductible on that financial year and the balance must be deducted or amortized throughout the loan period.
For example, Kathleen has a mortgage loan balance of $60,000. She decides to refinance the original loan borrowing $80, 000 so that she has an additional $20,000 to conduct repair work on her principal residence. She paid $3,000 in points.
Since, she actually paid the points so she will be allowed to deduct 25% of the total points (i.e, 25% of $3,000 = $ 750) in the year and the remaining $2,250 in points would be deducted (amortized) over the life of the loan. |
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Elizabeth Lennox
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Post subject: reverse mortgage for disabled 52 year old? |
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| Is there a program for a 52 year old permanently disabled single parent as of Dec 1999? I am prevented from making additional money to continue making my monthly payment to Colorado Housing and Finance Authority as a hardship loan due to multiple operations. I have lived here 24 years. I have considered bad credit home loan mortgage refinance wih CHFA but concerned they might say no and request sign off of my loan because my financial income has recently changed due to the operations and inability to earn more money as the loan was originally set up with. Reverse mortgage or any similar program for "non senior" but permanently disabled would help. |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 808
Location: OHIO
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Post subject: RE: |
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Hi Elizabeth,
Welcome to the forums.
Let me tell you that a reverse mortgage is not generally offered to those below 62 years of age. We can obviously try and help you regarding any other loan program. But for that please request for quote with us and let us know about your loan requirements so that we can forward all the details to the Customer Care Department. They will do their level best to help you and contact you as soon as possible.
Regards,
Jessica. |
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heggelund
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Post subject: |
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| how does the CHFA's statewide Hardship Refinance program work thanks |
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colin
Moderator
Joined: 30 Jun 2006
Posts: 582
Location: Waltham, Massachusetts
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Post subject: |
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Hi Heggelund,
Welcome to Mortgagefit forum.
Colorado Housing and Finance Authority (CHFA) has a statewide Hardship Refinance program which is used to provide financial assistance to borrowers facing foreclosure due to unforeseen & temporary financial crisis. It provides opportunity of paying off the existing delinquent mortgage and start a new 30 year mortgage.
Please go through this page to know more about the eligibility requirements to qualify for this loan as well as the procedure to apply - http://www.colohfa.org/documents/hf_hardship_factsht.pdf
Colin |
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Knauss
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Post subject: Streamline Refinance |
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| what are the conditions/requirements for streamline refinance of fha loans and can a streamline refinance possible without going for a appraisal? |
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miller_st
Joined: 17 Jan 2007
Posts: 918
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Post subject: FHA streamline refinance |
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Hi Knauss,
A streamline refinance mortgage would be possible if the mortgage is a fha insured mortgage and is not in default plus the refinance is to result in lowering your monthly mortgage payments. You can get useful information on fha mortgage insurance refinance home loans from internet. Another thing is that it cannot be a cash out refinance.
Second thing you asked is about appraisal. Yes streamline refinance mortgage is possible without appraisal but one condition should be met. The condition is that the new loan amount cannot be more than the original principal amount. If you are going to refinance for the same amount then appraisal will not be required.
Miller |
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pan_kul
Joined: 13 Mar 2007
Posts: 12
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Rundgren
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Post subject: when to refinance home loan |
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| If I were to refinance my condo and know that HOA is presently in litigation with developer. is it possible that I would be able to refinance my present mortgage? Also is it the right time to refinance? I would also like to know how much does it cost to refinance a house |
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blue
Joined: 21 Oct 2005
Posts: 1131
Location: MARYLAND
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Post subject: |
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Hi Rundgren,
Welcome to Mortgagefit discussion board.
Homeowner's Association can be venerable to legal action if it does not act on genuine problems in the building & disclose them to all unit owners.
Your chances to obtain financing can be affected by the fact that association is suing the developer. But you should inform your lender beforehand if development is in litigation.
Usually, obtaining finance is possible in such situations but the number of lenders willing to provide finance would be limited. Some lenders can ask for higher interest rate than current mortgage refinance rates and require higher equity percentage.
Do let me know if you have any other questions.
Thanks
Blue
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james the retard
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Post subject: when should I refinance my mortgage? |
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| me and my wife want to divorce , if she quit claims the house to me does that release her from that debt and would i have too refinance then? I don't even have a single clue regarding how to refinance a mortgage. |
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helping_user
Joined: 31 Mar 2006
Posts: 806
Location: Hawaii
158.49 Dollars($)
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Post subject: should i refinance mortgage |
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Hi James,
If your wife quit claims the house to you that means she is quitting her interest from that house. If her name is not on the loan, then you are completely free to refinance home mortgage after quit claim process will complete.
Thanks |
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Niicss
Joined: 03 Oct 2005
Posts: 4770
Location: New Jersey
499.28 Dollars($)
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Post subject: |
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| Quote: | | me and my wife want to divorce , if she quit claims the house to me does that release her from that debt and would i have too refinance |
If she is on the loan then a quit claim deed will not release her from mortgage responsibility.
She will remain on the loan.
And as title ownership will change because of the quit claim deed the lender would require you to refinance the mortgage in your name.
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Good is the Enemy of Great. |
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