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Refinance a mortgage at the right time and for right reasons

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:
Do it yourself!

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. [b]Example:[/b] 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 refinance

If 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.
  • You want to keep your name in home during divorce:
    In case of divorce, you may want to keep home and at the same time and want your ex-spouse to be clear from mortgage payments. For that you should refinance the loan into a new one in your name only.
  • When to refinance a 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.
      Related Readings
      Related Forum Discussions
      [b][/b][b][/b]

Are you burdened with rising monthly payments and seeking better terms and conditions on your mortgage? Or, are you looking to consolidate your unpaid debts and get rid of them faster? All these mortgage scenarios and many more can be accomplished by mortgage refinancing. To get the basic idea on refinancing, go through these topics:

Do it yourself!



What is mortgage refinance?

With mortgage refinancing, you can replace your original mortgage with a new one with better terms and conditions but the new mortgage should be within your affordable limit. The same property that you used as collateral to secure the original mortgage is used to secure the new loan also. The new loan proceeds are utilized to pay off the existing mortgage. In case there is any remaining money after paying down the original mortgage, that amount can be used to meet other financial obligations.

Example: Suppose each of the two borrowers A and B took out mortgage loan worth of $500,000. Again, say after 5 years, both A and B paid down $250,000. So, for both these borrowers, remaining unpaid mortgage amount is $250,000.

Borrower A then took out another loan worth of $250,000, so as to repay the remaining balance on the existing mortgage. This depicts a case of simple refinance.

Borrower B then took out another loan worth of $350,000. Out of this new loan amount, B used $250,000 to pay down the original mortgage. B could use the remaining $100,000 to meet other financial obligations. This describes a case of cash out refinance.

The first scenario is a simple refinance while the second is that of a "cash-out refinance".


5 Reasons that make refinancing sensible

There are some strong reasons which make mortgage refinance a very sensible move. Here we delve upon 5 of those -
  • To reduce monthly payment:
    If the mortgage rate is lowered or if the mortgage term is extended, your monthly payment amount gets reduced. With reduced monthly payment, you can pay off your mortgage with more ease. In case the term of the loan is extended, you have to however pay more in interest during the whole life of the loan.
  • To switch from ARM to FRM:
    Fixed rate mortgage (FRM) offers you the certainty of making fixed payment over the term of the loan. Whereas, in case of adjustable rate mortgage (ARM), the monthly payment amount may rise or fall, depending upon the prevailing mortgage rate. So, in case of ARM, the monthly payment amount is not fixed; rather it is uncertain. If you are looking for certainty in payments, then you can convert your existing ARM to an FRM through mortgage refinance.
  • To repay mortgage faster:
    If you want to pay down the mortgage early, then you can shorten the term of the loan. However, here your monthly payment amount increases. Here, over the term of the loan, you save more in interest payments. You also attain property ownership early.
  • To combine two loans into one:
    If you have adequate equity in your property, you can then consolidate your first mortgage and the second mortgage into a single mortgage. The main advantage of this type of consolidation is that the monthly payment on the single loan is less than the combined payments on the 1st mortgage and the 2nd mortgage.
  • To pay off high interest debts:
    If you have sufficient equity in your home, you can opt for a cash out refinance. You can use the remaining money to pay high interest debts such as credit card bills, car loans, installment loans etc.


What is the best time to refinance?

You may not always be eligible for refinancing or the situation may not always be conducive for refinancing. You have to time your move correctly so as to reap its benefits. You need to check out these crucial things carefully before applying for mortgage refinancing -
  • If you have built up equity:
    You may be eligible for refinancing when you have built up equity of at least 10% in your home. However, for mortgages owned by Fannie Mae, the equity requirement is 5%. It is possible to get the refinance approval even with less than 5% equity, but in that case you may have to pay a certain sum of money to compensate for the deficiency in equity.
  • If the refinance rate is sufficiently low:
    If the current mortgage rate is sufficiently lower than the rate on the original mortgage, then it may be wise to opt for refinancing. Here, you need to follow the 2% Rule. As per the 2% Rule, refinancing is beneficial for you in case the refinance rate is 2% lower than the rate on the original loan. Here, the savings accrued from low rate outweigh the costs of the new loan after a certain period of time, which is called the break-even period. To get benefits of refinance, you have to stay in the house at least till the break-even period.
  • If you have removed negative items and paid off debts:
    Before plunging into refinancing, obtain your credit report from the credit bureaus and review it carefully. If you find some negative items such as collections or late payments, dispute those items immediately and get those items removed from your report. Prior to refinancing, pay down as much debts as possible. All these will work in your favor in getting the refinance approval.
  • If you have no late payments in past 1 year:
    If you have history of late payments in the past 1 year, then your refinance appeal may be rejected. So, before refinancing, make sure you don't have any late payments in the past 1 year.


When refinancing is not a good idea?

Despite the fact that refinance has several benefits, it is not always a good idea to go for mortgage refinancing. There are some cases when your refinance appeal is rejected by the lender or it may not fetch the desired returns. Here are some cases when refinancing is not a good idea at all-
  • If the property value has declined sharply:
    If the value of your property has declined appreciably, the remaining balance on your original loan may be higher than the refinance loan amount. In other words, with the new loan proceeds, you won't be able to pay down the original mortgage loan.
  • If you have already used up your equity:
    Your equity is the key to get approved for refinancing. If you have already used up your equity by taking out a home equity loan (HEL) or a home equity line of credit (HELOC), then going for refinancing would not be a good idea.
  • If you have only a few years left on the existing loan:
    It does not make good sense to go for refinancing if you have only a few years left on your existing loan. It is not rational to refinance the loan which you have almost paid off. If you have almost paid down a 30-year fixed rate mortgage, then it is unwise to opt for refinancing. After all, refinancing is just like taking out a new loan and all the costs associated with taking out a fresh loan are applicable here too.
If you have the right reasons and if the time is right, then you can surely seek for mortgage refinance. However, before making the final decision, do the necessary research, take quotes from different lenders, make a comparative analysis and choose your lender.
Related Readings
Related Forum Discussions
meta title: 
Refinance a mortgage at the right time and for right reasons.
adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Lola,

If you don't want to keep the property, then you can apply for a deed in lieu of foreclosure. As you're facing financial hardship in paying the mortgage dues, the lender might consider your request. However, it will reduce your credit score by 250 points. Also, you won't be able to buy a property in the next 3-4 years.

Like | Dislike | Share | Posted: Mon, 09/06/2010 - 00:31

bizcheers's picture
bizcheers | Joined: October 3, 2010 02:40 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Can My Mortgage Be Refinanced FHA's Revised Home Loan Modification Program?

With foreclosure bugging many of us out there, the government had previously come up with the Loan Modification Plan through the President's office to assist those facing this dilemma of how to salvage their homes. This plan however faced heavy criticism from almost all quarters for the lengthy application process attached to it, as well as the low approval rates for those applying for them, in addition to other complications.

The President and his office were quick to realize this issue, and rectified it by revising the Loan Modification Program to help struggling homeowner cope with foreclosure issues. The homeowners' bid to refinance home mortgage would in the future be approved more easily, and the program has also included newer features within it to help struggling homeowners further. Now even the unemployed are offered subsidies, and those who have borrowed more than the worth of their homes can also apply for subsidies to help them cope with refinancing.

The revised program would increase the amount of payment to creditors that modify or refinance second mortgages. This incentive is deemed to directly help homeowners as previously banks were reluctant to write down second mortgages, and this dampened the government's efforts to help homeowners fight foreclosure. Thus if you fall into this category, your [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] can now be refinanced as more banks would come forward to accept your application! The applications would also fall into the FHA guarantee programs, giving the bankers more confidence to deal with those with bad credit scores. This means those with bad credit ratings can also apply for these loans successfully, and these packages serve as bad credit mortgage refinance deals!

Like | Dislike | Share | Posted: Sun, 10/03/2010 - 03:06 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

we have only 11 years left on our mortage and have been paying on a 22 year rate? Should we refiance to a 15 year mortgage to add years? We plan on selling the house in 4 years, after the kids move out!

Like | Dislike | Share | Posted: Mon, 10/03/2011 - 12:17

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Beachgoer,

If you plan to live in the manufactured home for the next 5-8 years, then it would be a good option to refinance the loan. While you refinance the loan, you will have to pay the closing costs. So, if you do not plan to stay in the property for long, I don't think it's a good option to refinance it. In that case, it's a good option to sell off the property.

Thanks

Like | Dislike | Share | Posted: Fri, 10/09/2009 - 01:21

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Private mortgage insurance, often referred to as PMI, is insurance that lenders require borrowers to pay for when they get a mortgage

Like | Dislike | Share | Posted: Thu, 07/29/2010 - 00:26 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Freddy,

You can refinance both the loans into one so that you will be liable for paying off only one monthly payment toward the mortgage. As far as the credit card debt is concerned, you will have to pay it separately as you cannot merge an unsecured debt with a secured one. Also, you should check out what type of closing cost you're being charged.

Like | Dislike | Share | Posted: Tue, 08/16/2011 - 21:16

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

it's pretty clear that your adjustable rate is likely to be going down this year. rates are low, and the indices on which arms are based are even lower. if you don't feel bad about your chances with the adjustable rates, then sticking with it may be worth your trouble.

when they offered you $128K, i gather that means that you'll have to pay down the difference between the loan amount and the current balance, along with closing costs - right?

honestly, if i were in your shoes, and i didn't have any difficulties in making payments, i have to say i'd sit still and let the rates take care of themselves. you'll presumably have another opportunity in a year, and of course, if the economy improves, your property value may stabilize at worst and improve at best.

Like | Dislike | Share | Posted: Sat, 02/20/2010 - 12:12

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi mlr!

Welcome to forums!

If you've equity in your property, then you will be able to get a home equity loan. Apart from equity, you should also have a stable income and a good credit score.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Wed, 01/12/2011 - 23:46

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Uessica, I own a home in Idaho and I am wondering if I could finance it to pay off other bills that I need to pay?

Kindest regards,

Like | Dislike | Share | Posted: Thu, 08/19/2010 - 06:49 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi anonymous,

Your disability income may help you in getting a mortgage refinance if you have a good debt to income ratio. Moreover, you need to meet the other required criteria of the lender in order to secure the refinance.

Thanks

Like | Dislike | Share | Posted: Tue, 06/15/2010 - 23:59

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I was almost finished with a $50,000 cash-out refi for my condo. My son lives in one room and the other 2 rooms are rented out. So it is a 'rental' for IRS tax purposes. It is a 1976 built building, 12 Units in bldg, only my unit is a 'rental' property (all others are owner occupied vacation units), 25+ buildings in project. Building is 'operated' by its own HOA which levies all operating and maintenance and improvements to the owners.
The 'last' glitch I ran into was that the Underwriter would not accept the risk because the HOA only has a $12000 reserve and they tell me the Freddie Mac REQUIRES the HOA have a 20% reserve based on the Appraisal. My unit appraised for $190,000 so the Underwriter will not 'do' the refi unless the HOA has a reserve of at least $38,000.
I don't understand this 'requirement' because that reserve only relates to 'my' appraisal. If they want the HOA to have a 20% reserve, I would think that would relate to 20% of all 12 units in the building, which should push about $400,000 (Bldg insured for $2.2M). That will not happen.
Is there some other information I should look for? or another Mortgage company to look to for refi? :(

Like | Dislike | Share | Posted: Sat, 03/16/2013 - 22:14 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We have only owned our home for just over a year and have paid less than 5% on the principle. Our interest rate going in is fixed at 4.25. With interest rates a few percent lower, is it worth it to refinance? Can we refinance so soon?

Like | Dislike | Share | Posted: Fri, 03/02/2012 - 14:10 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Kay,

You will be able to refinance your mortgage provided you have equity in your property. Also, while you refinance, you will be liable for paying the closing cost. You won't be able to offset the closing cost unless you stay in the property for next 4-5 years. So, unless you plan to stay in the property for the next 4-5 years, you shouldn't refinance the mortgage.

Thanks

Like | Dislike | Share | Posted: Sat, 03/03/2012 - 00:15 | Post subject:

petekolackovsky1's picture
petekolackovsky1 | Joined: September 14, 2011 12:05 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

The general rule of thumb for refinancing is 2%. If your current interest rate is higher than the market interest rate by 2% or more, you should consider a refinance. However, in the time you wait for that much of a difference to happen, you could have already spent thousands waiting.

If you're unhappy or unable to keep up with your current mortgage terms and the rates are at a stand still, talk to your lender about a loan modification.

Like | Dislike | Share | Posted: Wed, 04/18/2012 - 09:41 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

:?

Like | Dislike | Share | Posted: Sat, 05/26/2012 - 13:35 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi billy!

Welcome to forums!

I guess you're asking this in respect to refinance. If there is no equity in your property, then you won't be able get a refinance.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Mon, 05/28/2012 - 23:41 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I will suggest you to look out for other lenders in order to get a mortgage refinance.

Like | Dislike | Share | Posted: Mon, 03/18/2013 - 02:03 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Divorce to remove spouse off title

Like | Dislike | Share | Posted: Mon, 07/09/2012 - 12:12 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Anne!

Welcome to forums!

You don't have to file for divorce in order to remove your spouse from the property title. You can negotiate with your spouse so that the person signs a quitclaim deed and transfers the property to you.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Tue, 07/10/2012 - 00:22 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

currently i have a tx [url=http://www.mortgagefit.com/home-equity.html]home equity loan[/url] at 8.375%. have been trying to do a va refinance and no one will tough me with a 50 foot pole. am told that a va refinance of a tx home equity loan is not possible in texas. they say, one a tx cash out, always a tx cash out. i spent 42 years in the army and yet i cannot get a va loan to refi my home? kow why or suspect why? thanx...

Like | Dislike | Share | Posted: Mon, 07/16/2012 - 13:52 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

As far as I know VA refinance is possible in case of a Texas home equity loan. It is quite surprising as to why you're not getting such a refinance.

Like | Dislike | Share | Posted: Tue, 07/17/2012 - 01:57 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

how does the CHFA's statewide Hardship Refinance program work thanks

Like | Dislike | Share | Posted: Mon, 06/18/2007 - 17:18 | Post subject:

colin's picture
colin | Joined: June 30, 2006 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Mon, 06/18/2007 - 17:26 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

what are the conditions/requirements for streamline refinance of fha loans and can a streamline refinance possible without going for a appraisal?

Like | Dislike | Share | Posted: Tue, 07/10/2007 - 17:58 | Post subject:

miller_st's picture
miller_st | Joined: January 17, 2007 04:47 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Tue, 07/10/2007 - 18:15 | Post subject:

pan_kul's picture
pan_kul | Joined: March 13, 2007 03:10 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

benefits of mortgage refinancing

Like | Dislike | Share | Posted: Tue, 07/24/2007 - 22:59 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Wed, 07/25/2007 - 17:55 | Post subject:

blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Wed, 07/25/2007 - 18:07 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Sun, 07/29/2007 - 01:26 | Post subject:

helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Mon, 07/30/2007 - 02:48 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

[quote:4f7b63307d]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[/quote:4f7b63307d]

If she is on the loan then a [url=http://www.mortgagefit.com/quitclaim-deed.html]quit claim deed[/url] 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.

Like | Dislike | Share | Posted: Tue, 07/31/2007 - 12:40 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I had taken a mortgage few years back and now want to refinance. I am not sure whether my credit will be checked again or not as I had already had a credit check when I applied for mortgage previously. Will that be sufficient to get approval for the refinance as I was okayed that time to get a mortgage?

Like | Dislike | Share | Posted: Sat, 08/04/2007 - 19:42 | Post subject:

miller_st's picture
miller_st | Joined: January 17, 2007 04:47 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Kompenhans,

Its right that you were approved for the mortgage based on your credit profile when you had taken a mortgage. But that won't be sufficient when you go for a refinance now.

Refinance is like paying off the earlier loan and taking a new one. All the checks that were made that time will be made this time too. The lender is not aware whether your credit profile has improved or deteriorated from the time you had taken the mortgage and would check your credit now when you will apply for refinance.

Miller

Like | Dislike | Share | Posted: Sat, 08/04/2007 - 19:49 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Can someone provide name of few sites where refinance calculators are available so that I can compare if refinance will be right for me or not. I am not able to find any good calculators online. thanks

Like | Dislike | Share | Posted: Fri, 08/10/2007 - 18:39 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

You can try out the refinance calculators provided by this community. I hope you will be able to find out if refinancing is a good choice by using the calculators.

Like | Dislike | Share | Posted: Fri, 08/10/2007 - 18:48 | Post subject:

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a 30 yr fxd mtg at 8.25% for $300,000 and I want to refinance it. But it has a prepayment penalty which will be $5000. I consulted one broker and he offered that I take a interim 30 yr with rate of 8.5% for an amount of $305,000 to include an extra $5000 towards coverage of prepayment penalty. It would cost me $2600 from my own funds and reduce the gain to $2400. Then I will again refinance after three months for a better rate. Payment on this interim loan would be $2345, which would have been $2100 if I had directly taken the final loan at 7.5% and 0 points. I would be losing $245/month for three months and it would reduce my gain to $1665. But still I would gain in this transaction. Should I follow what broker is suggesting?

Like | Dislike | Share | Posted: Tue, 08/21/2007 - 16:13 | Post subject:

colin's picture
colin | Joined: June 30, 2006 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Naylor,

Broker is making you feel that you would be able to avoid paying for the prepayment penalty which is not so and you won't gain from taking an interim loan.

What you would be doing is merely borrow an amount which is equal to the PP. It will not be costing you anything out of pocket to borrow but you will be paying it back along with interest on it.

Suppose you refinance for the rate which will be offered on the final loan at 7.5% without taking the interim loan for an amount equal to the balance on the existing mortgage ($300,000). It would then cost you a prepayment penalty of $5000. So the total cost for the new mortgage would be $305,000.

In case where you take an interim loan, you pay $2600 from pocket, in addition a total of $735 in 3 months as extra monthly payments & get a loan for $305,000. So, total cost comes out to be $308,335.

By taking the interim loan you are not able to avoid paying for prepayment penalty. So whatever costs are associated with it, you are going to pay for them from your pocket.

These interim refinance mortgages which are explained to borrowers as a way of avoiding prepayment penalty are scams. These scams are used against borrowers who are more interested in how much they are paying out of pocket or receiving today & what their monthly payments are.

Colin

Like | Dislike | Share | Posted: Tue, 08/21/2007 - 16:38 | Post subject:

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If I refinance my mortgage after 5 years which is a 8% mortgage for a 30 yr term, without starting the 30 yr amortization period again and to pay off the loan in the period that was for the original loan (meaning after 5 years I want to pay off the new loan in the rest 25 years even if the loan term would be of 30 years). As per my understanding one way is to borrow an amount equaling what was the original balance and then immediately prepay a sum equal to difference between what was the original & current balance. Is this is correct method or a good method? Please help me out.

Like | Dislike | Share | Posted: Fri, 08/24/2007 - 18:22 | Post subject:

blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Baldacci,

Welcome to Mortgagefit discussion board.

There are other ways by which it can be accomplished.

We assume that you have a $250,000 frm of 30 yrs @8%. The mortgage payments are $1834.42. If you do not make any extra payments, five yrs later balance on your mortgage will be $237,674. At that time suppose you have the opportunity to refinance for 7% with a new 30 yr mtg, but you are looking to pay this new loan off in 25 yrs instead of 30 yrs., then some options you have apart from what you have learned are:

Shorten the term:

You may make the term short for the new loan to be of 25 yrs instead of 30. Your payments will be $1679.84 instead of $1581.25, as increased payment schedule because of the shortening of the loan term. But even then the payments would be less than your current payments. Some lenders offering 30 yr term loans would allow 25 yr term at the same rate applicable for a 30 yr mortgage.

But negative to this type of approach is that most often the lender will not customize the loan as per requirement of the borrower. Like someone with a 30 yr mortgage which is 3.5 yrs old, the new loan can't be for a 26.5 term.

To borrow what was the original balance & prepay:

This option is what you have read about. In this method, you will borrow original loan amount, $250,000 for a term of 30 yrs and then prepay $12,326, which will result in shortening of your loan to a term of 25 yrs & 8 months.

This method has also some drawbacks. As you will be borrowing than what is the current balance on the loan, it will be considered as an cash out refinance and some lenders would price is higher. Additionally refinance costs would be higher because of the higher loan amount.

The last option - add to the payment:

A better alternate method is to increase the payments by the exact amount which will be required to amortize the loan over the period you want (25 yrs.). For the example that I mentioned, it would be $1679.84 payments instead of the normal payment of $1581.25. Using this method you can pay off the loan exactly in the time duration as you require.

Do let me know if you have any other questions.

Thanks
Blue

Like | Dislike | Share | Posted: Fri, 08/24/2007 - 18:52 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Will refinancing go against my credit report or credit?

Like | Dislike | Share | Posted: Sun, 08/26/2007 - 08:08 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Momkim,

Welcome to the forum.

If you go for refinancing, it will not affect your score negatively. Refinance is not listed as a negative item on your credit report. Only if you default on a loan, file bankruptcy or foreclosure, then it will be reflected on your credit report.

Like | Dislike | Share | Posted: Mon, 08/27/2007 - 00:51 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Suppose we refinanced six months ago into a frm of 30 yr term of say 6.125. Now if loan officer is tells that it is possible to get even lower rate of say 5.75, what should be correct for me? I would have already made payments for five months, would it be right to give that up now & refinance my mortgage with this new rate?

Like | Dislike | Share | Posted: Sat, 09/01/2007 - 18:14 | Post subject:

miller_st's picture
miller_st | Joined: January 17, 2007 04:47 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

As you would be getting lower rate by refinancing, it would be beneficial to accept this offer. But you need calculate & compare how much would be the refinance costs with the savings you would be able to make from the reduction in rate. Also check if there is a prepayment penalty clause in your mortgage and how much it would come to. Refinance costs plus prepayment penalty amount compared to savings gained from reduction in payments because of the rate reduction, this is what you have to look at before making the decision.

Like | Dislike | Share | Posted: Sat, 09/01/2007 - 18:40 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am staying in my current home for 5 years and I'm paying for a 30 year fixed rate loan. I will be moving out and thereby selling in the next 3 years. So do you think it is feasible to refinance with a 3/1 year ARM now?

Like | Dislike | Share | Posted: Mon, 10/15/2007 - 02:10 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Timberly,

If you can manage variable payments and a higher rate of interest (because rates on ARMs have gone up), then only you should go for the 3/1ARM. But hey, just a moment, you said you're moving out within the next 3 years right? Then I don't think it is the right decision to switch to an ARM now.

Like | Dislike | Share | Posted: Mon, 10/15/2007 - 02:15 | Post subject:

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coloradoloans2007 | Joined: August 14, 2007 12:51 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)



[size=9:ac0218e143][color=Red:ac0218e143]
[System detected duplicate content; converted into image][/color:ac0218e143][/size:ac0218e143]
_____________________
Francoise
Mortgage Specialist
Colorado Home Loans
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Like | Dislike | Share | Posted: Thu, 10/18/2007 - 12:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am looking to refinance my mortgage. I have been divorced recently and got the house in settlement. i plan on doing some repair work in the house that is yet to be finished. But I could also pay off the house with the money I received from the settlement. But will that be helpful for me? The other option is to refinance the house and get extra cash for the repairs. The current loan is that of a refinance at 7% rate of interest. Any advice would be appreciated.

Like | Dislike | Share | Posted: Fri, 10/26/2007 - 23:54 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jason_Turner,

If you can pay off your mortgage and complete your repair works with the money you have received from the settlement, then it is better to do that. Otherwise you can go for refinance. But in that case, do you have enough equity to support your refinance? You have said that your current loan is that of a refinance at 7% rate of interest. So can you get lower interest rate? If so you can go for it.

Thanks,
Larry

Like | Dislike | Share | Posted: Sat, 10/27/2007 - 00:20 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Larry,

If Jason has enough money to pay off the mortgage and repair work in the house; and also get lower rate in the refinance loan, then which one is better to choose?

Like | Dislike | Share | Posted: Sat, 10/27/2007 - 01:58 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jonny,

I have said that if she have enough money to pay off the mortgage and complete the repair works of the house, then it is better to do it. Why should she go for the refinance? Only if she can't do it then she can choose the refinance option with the lower rate.

I hope you have understood now :)

Larry

Like | Dislike | Share | Posted: Sat, 10/27/2007 - 02:04 | Post subject:

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