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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
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Refinance a mortgage at the right time and for right reasons.
Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Are there any options besides foreclosure for people who have an ARM that is about to adjust to payments that they can't afford to make and the value of the house has dropped about $30,000 from what they owe on it?

Like | Dislike | Share | Posted: Sat, 10/27/2007 - 09:13 | Post subject:

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

Hi Guest,

Welcome to our community forums.

You can go for the FHA Secure loan program which has been recently introduced by the FHA in order to help delinquent borrowers avoid foreclosures on their properties. But the loan amount cannot be higher than the value of the home.

Moreover, cash-out refinance isn't allowed as a part of the FHA Secure program. However, the FHA would include property taxes and insurance payments into the loan amount. But in order to avail this program, you need to be delinquent on the loan at least once.

If you can prove that you couldn't afford to make the payments due to the adjusting rate on the mortgage, then there are chances that you'll be able to qualify for the loan.

Regards,

Jessica.

Like | Dislike | Share | Posted: Mon, 10/29/2007 - 06:02 | Post subject:

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

I need to do a refinance so that I can pay down my credit card debt. I have qualified for refinancing with low interest rate, that is available for disabled persons but until and unless the co-owner signs the note, the bank will not allow me to refinance. I don't want to do a divorce but I can't sell the house or refinance. Is there any option?

Like | Dislike | Share | Posted: Thu, 11/01/2007 - 22:22 | Post subject:

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

oh, i forgot to add in..the cosinger is my spouse..he was supposed to sign but he is unreachable for a long time

Like | Dislike | Share | Posted: Thu, 11/01/2007 - 22:24 | Post subject:

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

Hi Tsania,

If you are the co-owner of the property you cannot refinance it without the consent of your spouse. Only if he transfer the property through a quitclaim deed or allow you by signing the documents, you can get it. Otherwise it is very difficult for you. It will be better if you talk to an attorney on this regard.

Thanks,
Larry

Like | Dislike | Share | Posted: Fri, 11/02/2007 - 02:50 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Tsania,

It is not possible to sell or refinance without the consent of the co-owner.

Your husband has to transfer his share of property to you and only then you will be able to refinance it.

Like | Dislike | Share | Posted: Fri, 11/02/2007 - 03:17 | Post subject:

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

I am into a refinancing deal with a California mortgage company, secured funding corporation. The closing papers have been given to me but I am not yet getting the funds. It's been 2 weeks now. The company says they're reviewing the appraisal for the refinance loan. What do I do? Do I have any legal rights here? Is this company doing scam?

Like | Dislike | Share | Posted: Tue, 11/27/2007 - 04:47 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Garry,

Was the appraisal done before the refinance? I think you should contact the company talk to them clearly. It may not be a scam but you should keep the contact with them.

Like | Dislike | Share | Posted: Wed, 11/28/2007 - 05:10 | Post subject:

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

Hi Garry,

Welcome to this forum.

The company may not be a scam. But I agree with Jenkin that you should keep contact with the company and wait for some time; see what they do. If they are reviewing the appraisal for the refinance loan, then ask them when will you get the money? You can always take legal actions if you find the company is doing some kind of scam.

Thanks,
Larry

Like | Dislike | Share | Posted: Wed, 11/28/2007 - 21:11 | Post subject:

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

4 months ago I bought a home and have now started renovating the property. A part of the renovation costs include cash obtained from the personal line of credit and my credit cards. But as soon as I started withdrawing my credit card money, my score dropped from 750 to 600. I didn't understand what's going on. I had initially thought of refinance and then I would have consolidated all the loans after I had done with construction. But now that my credit score is down, I'm afraid I won't be able to get the best rate. how do I get out of this whole mess?

Like | Dislike | Share | Posted: Tue, 12/11/2007 - 00:26 | Post subject:

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello Susan,

If your credit score has dropped down to 600 then there are every possibilities that you won't be able to get the best rate.

As your credit score is based on the information available in your credit report, it is lowered due to the increase of unsecured debts like cash obtained from credit cards. So, a lower credit score due to these debts will increase the risk to the lender.

It would have been better if you had taken out a construction loan for this purpose.

You should try to bring down the credit card balances in order to increase your score. You may try for a home equity line of credit or a loan from your 401K account and pay off the credit card debt.

Like | Dislike | Share | Posted: Tue, 12/11/2007 - 03:45 | Post subject:

lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Garry,

Are you sure those were closing papers? Paperwork will be sent to you after you apply for the mortgage and then when everything is signed off on, then they draw the final paperwork and you will usually sign those papers with a title company that will handle the dispursement. Most every lender will review your income. credit and appraisal before drawing final paperwork so that's why I ask.

If you did sign final paperwork then the lender still has the right to not fund the loan if there is something they don't like but this is rare since they usually review everthing before drawing the final docs. Contact the title company that handled the closing and ask them if the lender has funded the loan. If they have, then you need to demand those funds from the title company immediately.

If you did not sign the final paperwork yet, then you are still waiting for final approval to be able to do so.

Like | Dislike | Share | Posted: Sun, 01/13/2008 - 21:45 | Post subject:

lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Susan,

Credit reporting agencies really hit your score for utilizing credit cards. They look at how much available credit you have and how much you owe. The more you owe in relation to your limits is what will bring down the score. So first off, try and pay down one credit card at a time to below 50% of the credit limit. Start with the credit card with the lowest balance and pay it down to this level, then move to the next one. After paying down even just a couple, your score should improve. Do not close credit lines since this will reduce the credit limits and therefore making it appear that you are more maxed out.

To get approved for the best rates out there, you do not need to have a perfect credit score if you have plenty of equity, and other assets to offset the lower credit score. However I would suggest paying down on a couple of credit cards first to help secure the best financing possible.

Like | Dislike | Share | Posted: Sun, 01/13/2008 - 21:53 | Post subject:

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

my home was appraised at $328,000. mtg balance $143,770. I'm looking to borrow about $115,000. I refinanced in 06/03 with an interest rate of 5.825 fixed for 30 years. I plan on selling in about 5 - 6 years. My credit score is only about 600 (I think - could be slightly higher) What are my options?

Like | Dislike | Share | Posted: Thu, 01/24/2008 - 04:40 | Post subject:

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi del,

Welcome to the forum.

The very first that you should do is to get your credit report from one of the bureaus or check for it online at annualcreditreport.com . I am saying because you are not fully aware of your score value.

If you are thinking of a refinance, I don't see any problems in it because you have last refinanced in 2006 march and 1 year is alerady over. Most lenders require a seasoning or loan payment of 12 months for anyone to refinance again. Since you alerady fulfil this criteria, therefore you can start off talking to lenders about their offers.

Hope this helps...

God bless you.

Samantha

Like | Dislike | Share | Posted: Fri, 01/25/2008 - 02:36 | Post subject:

lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Del,

The more you borrow against the home, the higher the rate will be. If you need to borrow the full amount to pay off your ex according to the divorce decree than that's what you will have to do.

I can tell you that the rate will most likely be a little higher than what you are paying right now. With a score of 600 it is hard to say if you will be in the mid 6's which is possible or higher. The reason is that several other factors will be taken into consideration to determine the best rate available for you such as: Assets that include checking/savings, stocks, 401K, along with your actual credit history (ie: late payments, prior bankruptcy, etc). I would work with a good mortgage broker that has access to many lenders and has the expertise to get you the best mortgage terms.

Like | Dislike | Share | Posted: Sat, 01/26/2008 - 23:06 | Post subject:

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

I have tons of cc debts and 3 mortgages on my home. Two of them are at 10% and 7.45% . My credit is worse as I have had missed payments default debts and judgments as well. my job is a good one and I'm lucky that it is. I have somehow avoided garnishments by arranging for payment plans. But what are my chance of a refinance as it's getting tougher going with 3 mortgages? Or should I file bankruptcy?

Like | Dislike | Share | Posted: Sat, 02/09/2008 - 05:04 | Post subject:

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

Hi dominique,

Welcome to the forum.

How long have you taken those mortgages? If these are more than 12 months, you can refinance. The rates are low now. So you can consider it.

Regarding [url=http://www.mortgagefit.com/know-how/filebankruptcy.html]filing bankruptcy[/url], you will have to qualify for it and it will have a huge negative effect on your credit. So I think Bk should be your last option to choose.

Best of luck,
Larry

Like | Dislike | Share | Posted: Sat, 02/09/2008 - 14:39 | Post subject:

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

I have a first and [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url], 50 days late on first loan and 110 days late on the second. I am trying to refinance now. I am right now on a forbearance agreement with the first lender but I cannot afford the payments. it is twice my actually payment and hurting me a lot. What should I do? Refinance both or any one..my credit is the worse

Like | Dislike | Share | Posted: Tue, 02/19/2008 - 04:29 | Post subject:

lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Lori,

How much do you owe on the first and second mortgage? Also, what is your home worth? These two factors will help me narrow down your options.

Like | Dislike | Share | Posted: Wed, 02/20/2008 - 21:09 | Post subject:

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

Hi Lori,

Welcome to the forum.

You need to answer first the questions posted be Lisa so that we can give you an answer.

As you are already "on a forbearance agreement with the first lender ' and you have said "my credit is the worse" so do you really want to refinance the mortgage or can you really afford the house any longer? Think about that. As your credit is not the bests, you will not be approved for the bests of rates and terms.

Best of luck,
Larry

Like | Dislike | Share | Posted: Thu, 02/21/2008 - 12:59 | Post subject:

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

I am refinancing my mortgage so that I can renovate my home. But I don't have enough equity to cash out as much as is needed for the repairs. So I was just thinking of taking out a loan from 401k. should I refinance after taking out 401k loan or simultaneously? I have good income and understand that there are risks associated with borrowing from 401k. I would borrow maximum $25000. pls advise

Like | Dislike | Share | Posted: Wed, 04/02/2008 - 23:16 | Post subject:

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

Hi Jess,

Welcome to the forum.

If you can take out a loan of 401k, then it is all right. In that case you need not to refinance. You can refinance if you have just take the loan within 2 to 4 years and also you are getting a better rates and terms.

So how long have you taken the loan? How much equity do you have?

Best of luck,
Larry

Like | Dislike | Share | Posted: Thu, 04/03/2008 - 01:45 | Post subject:

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

jess, the biggest risk you run in borrowing from a 401(K) is that doing so is a little too easy for some. in other words, once you've borrowed, you might be tempted to go back to the well again.

as long as you repay that loan in short order, your risk will be negated. i think your plan makes sense, frankly.

Like | Dislike | Share | Posted: Wed, 04/16/2008 - 07:56 | Post subject:

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

My wife and I will be signing on the divorce papers. We don't have children but there's a house we own together and I have agreed to let her keep it.she has been staying there ever since we separated in sept 2006. the divorce papers state she should be able to refinance by the end of august, that too in her name only. But she is unable to refinance due to bad credit. if she is not able to do so, what will happen to me? Say if the house goes into foreclosure, will it be reported by the CRA for 7 years or will the court automatically free me from the responsibility of paying off the loan in case she doesn’t get a loan? I’m getting mixed views from my lawyer and the mortgage company? So any help will be highly appreciated.

Like | Dislike | Share | Posted: Thu, 05/08/2008 - 04:43 | Post subject:

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

Welcome Dave.

If your wife cannot refinance on her name and defaults then it may also affects your credit. Why doesn’t your wife request the lender for navation? If you, your wife and the lender agree then the mortgage can be transferred to your wife's name through [url=http://www.mortgagefit.com/know-how/novation-mtg.html]novation[/url].

Let me know if you have any further questions.

Like | Dislike | Share | Posted: Thu, 05/08/2008 - 05:38 | Post subject:

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

Is there a place in Texas that would help me refi my loan so that I wont go into foreclosure or start being late with the payments? I am not late at all but the payments are high because I got the house from an investor and I am at 10.5% and my credit is in the 570's. This is my first home and I dont want to lose it. Help me help myself. Thanks

Like | Dislike | Share | Posted: Thu, 07/03/2008 - 13:15 | Post subject:

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

Hi rjones.

Welcome to the forum.

The interest rate is really very high but you credit score is not too good. And you have also made late payments recently. So you will not qualify for FHA loans. And because of the credit crunch the lending criteria got tightened.

But anyhow you should shop for the lenders to see where you can get approved for mortgage or not. You can even go for No-obligation free consultation with the community professionals to know whether you can refinance the mortgage or not.

Hope this helps. Feel free to ask if you have further questions.

Best of luck,
Larry

Like | Dislike | Share | Posted: Fri, 07/04/2008 - 04:50 | Post subject:

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

We had a first and currently have a HELOC. We had our family trust payoff our first mortgage then right after we had the trust take out a mortgage on our property to cover the payoff. Does that now mean the HELOC moves into first postion and the replacement mortgage is now in 2nd position?

Like | Dislike | Share | Posted: Wed, 08/20/2008 - 21:53 | Post subject:

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Lizziebc,

Welcome to the forums.

The Heloc should be considered to be in the first position unless you subordinate it with respect to the replacement loan.

take care

Like | Dislike | Share | Posted: Fri, 08/22/2008 - 04:09 | Post subject:

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

5 years ago, I bought some houses and condos, as I was working for a US company.
Since 3 years I have no US job, working in Europe and need to refinance my existing houses.
Bank knows that I gain enough money but need to see my US tax returns.
In USA I am writing tax returns only for the rental income what I have in USA and it is not great
Bank do not approve my refinancing (50% value of my primary house).
What can I do ?

thanks

Like | Dislike | Share | Posted: Sun, 09/14/2008 - 07:49 | Post subject:

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

I think you sell off the houses if you're not able to manage the loans or refinance them. An experienced realtor will be able to help you in this regard.

Like | Dislike | Share | Posted: Mon, 09/15/2008 - 11:10 | Post subject:

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

My wife and I are in an extremely bad financial situation. We are a month behind on our mortgage, along with a few other bills we filed chapter 7 last year in october. We fell behind in june and havent been able to catch up. We make enough money monthly to pay all of our bills on time if we stick to a budget. the problem is we cant stay on the budget when we are trying to catch up. I was wondering if you know how possible it would be for us to refinance and get cash back. the value of our home is definatly worth more than whats left on the mortgage

Like | Dislike | Share | Posted: Mon, 09/15/2008 - 18:53 | Post subject:

lisa.scherzer's picture
lisa.scherzer | Joined: January 4, 2008 08:48 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

It doesn't seem realistic to go for a refinance since most lenders require at least 2 years out of bankruptcy. Your best solution is to contact your current lender and ask for a loan modification or payment plan. Most lenders are bending over backwards to work something out with you since they don't want to have to take the house back. I'm sure they will come back with something that will work for you to get back on track.

Like | Dislike | Share | Posted: Wed, 09/17/2008 - 00:01 | Post subject:

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

My wife and I bought our house back in 2005 and in 2007, I lost my job and couldn't land one. We couldn't afford the payment any longer. The value of the house dropped almost 50%. Is there anyway way to lower our mtg payment? We very much love to keep the house as we have invested so much in it. If we refinance it under the current value, what will happen to the difference of the original loan?

Thanks,
Roland
p.s. I wish I had a piece of that bailout money.

Like | Dislike | Share | Posted: Sat, 10/11/2008 - 13:15 | Post subject:

jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Roland!

It is the discretion of the lender whether he will lower the mortgage payments or not. As you do not wish to sell the property, you can easily go for a loan modification offered by the lender. You can speak to your lender regarding that.

Thanks,

Jerry

Like | Dislike | Share | Posted: Mon, 10/13/2008 - 04:24 | Post subject:

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

Thanks for the info, Jerry.

We are not behind in our mtg payment as of now but it won't be long before it happens. It's just my wife working. Do you think the lender will entertain our plea for loan mod? We really value our creditworthyness and trying to avoid late payments before working on any options.

Thanks again for any help.
Roland

Like | Dislike | Share | Posted: Mon, 10/13/2008 - 15:09 | Post subject:

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

Hi Roland!

If you have genuine reasons then the lender will definitely agree to go for a loan modification with you. You can speak to the lender about the options he can offer you.

Thanks.

Like | Dislike | Share | Posted: Wed, 10/15/2008 - 03:55 | Post subject:

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

What is [b:56cd21a297]QROPS[/b:56cd21a297] ? I want to know more about it's benefits and whole process of a personal pension scheme. Please help me.

Thanks

Like | Dislike | Share | Posted: Fri, 10/31/2008 - 02:58 | Post subject:

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

Hi QROPS,

QROPS stands for Qualifying Recognized Overseas Pensions Scheme. It is a specific pension which is available to expatriates and anyone contemplating living or retiring abroad. If you are a US citizen or a US resident, then the QROPS benefit will be mostly unavailable to you, but citizens of other nations can apply.

For British applicants, it is a scheme set up outside the UK but is regulated in the country in which it is established. This must also be recognized for tax purposes in the country in which it is established. Once the pension plan has been transferred into QROPS and you are a non-resident for at least 5 years, then your QROPS provider has no obligation to report any action to the UK tax authorities. If the QROPS provider is situated in a country where payments in such schemes are paid tax free – then you can enjoy the pension related income without the deduction of tax.

Thanks.

Like | Dislike | Share | Posted: Wed, 11/05/2008 - 02:00 | Post subject:

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

In order to take advantage of my husband's 100% Veteran Disability property tax break, i.e., we do not have to pay property tax since he is at 100% permanent and total however his name must be on the deed/title. I purchased my house 17 years ago, we only married 7 years ago. 2 yrs ago we did a SRR and he signed papers with the mortgage company, however I was told a [url=http://www.mortgagefit.com/quitclaim-deed.html]Quit Claim Deed[/url] would be sufficient to add him so we can file for the property tax break. Does anyone know if this is the case. I would think so, but just want to make sure.

Like | Dislike | Share | Posted: Mon, 11/17/2008 - 12:33 | Post subject:

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

In order to take advantage of my husband's 100% Veteran Disability property tax break, i.e., we do not have to pay property tax since he is at 100% permanent and total however his name must be on the deed/title. I purchased my house 17 years ago, we only married 7 years ago. 2 yrs ago we did a SRR and he signed papers with the mortgage company, however I was told a Quit Claim Deed would be sufficient to add him so we can file for the property tax break. Does anyone know if this is the case. I would think so, but just want to make sure.

Like | Dislike | Share | Posted: Mon, 11/17/2008 - 12:33 | Post subject:

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

Hi smcgovern!

I think your lender is correct in saying that you should use a quitclaim deed to add your husband to the property. You can get quitclaim deed forms online but you can also take the help of an attorney to draft one. To know more about quitclaim deed, check out the link:
http://www.mortgagefit.com/quitclaim-deed.html

Thanks

Like | Dislike | Share | Posted: Tue, 11/18/2008 - 02:36 | Post subject:

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

I am 52 and know that I will never pay off a 30 yr loan and do not have the optimism to think that I will live past 70. Anyway, I need about $30,000.00 cash out to pay off high interest debt. This inturn will not give me 20% equity anymore. I need debt consolidation; FHA Refinance? I will put a lot of money out(closing, FHA premiums, etc.) but will save money over the next 10 or 15 years. However, I will be paying a higher monthly house note for 30 years. I will be more open toward the rest of my 50's and early 60's BUT will continue this higher note unitl my death. I am worried that my wife will not be able to pay this house note if I die. I do not or Cannot get enough insurance to cover the monthly mortage?? Do I refiance at the same rate(I have 6.00% now) and cash out the money and pay all of the closing fees and 1 point to the lender(permanant mortage insurance also) I will be saving about 600.00 per month initially BUT will pay this higher house note(by refinancing at 6.00%) for the rest of my life. You must know that I do not feel as if I am going to live to 82 NOR do I care. My retirement from the government in a year or two will be about $5,000.00 a month clear and my house note will be about $1500.oo per month with everything included in it.???????

oi

Like | Dislike | Share | Posted: Mon, 11/24/2008 - 09:13 | Post subject:

jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Joseph LaNasa!

As you are planning for a cash out refinance, I don't think there is any need to go for a debt consolidation separately. A cash out refinance will help you to solve the issues that you may be facing. You can definitely get FHA refinance provided you meet the terms and conditions of the getting an FHA refinance loan.

To get a FHA cash out refinance loan:

  • You should not be delinquent under the terms and conditions of their current mortgage.
  • The property should be owned by you as your primary residence.
  • The loan amounts cannot exceed the maximum loan limits for the area.
  • The lender will check your credit and your credit should match the requirements of the lender.

You can try for refinancing at the same rate but as you are looking for a cash out refinance, there are chances that the interest rate and the payments may increase and it can be a bit higher than the usual refinance rates.

This community also has a number of lenders who can help you as well. You can seek a no-obligation free mortgage quote from them. This will help you to know about the rates that you may get. Thus, you will be able to compare the rates and choose the one which you can afford.

Thanks,

Jerry

Like | Dislike | Share | Posted: Tue, 11/25/2008 - 02:06 | Post subject:

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

I have tried to refinance but I am self employed. This makes it very difficult. There seem to be different rules. I have not missed a payment but live on the edge of possible miss. Who takes on these types of loans and could I get a good rate? My rate is now 6.75.

Like | Dislike | Share | Posted: Thu, 12/04/2008 - 04:31 | Post subject:

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

Hi aloneymous

As far as I know, it is not impossible to get refinancing but it is difficult to get. More documentation is required if you are self employed and seeking refinance. You can consult other lenders as well and check what they are saying. It is not mandatory to refinance the mortgage with the same lender.

This community also has a number of lenders. You can speak to them and seek a no-obligation free mortgage consultation from them. This will help you in comparing the market rates and you can select the one you can afford.

Thanks

Like | Dislike | Share | Posted: Fri, 12/05/2008 - 01:58 | Post subject:

jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jane,

Lenders generally don't prefer to offer refinance for a loan which has too low balance. They generally prefer refinancing when the loan balance is higher. They do this because of their benefit. It is not that you have to further in debt in order to qualify for a refinance, but the lenders feel it is very time consuming for them to approve the loan and go through the closing for a very small amount of loan.

Thanks,

Jerry

Like | Dislike | Share | Posted: Mon, 12/22/2008 - 00:25 | Post subject:

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

I wish to refinance from a variable rate to a fixed rate. I also wish to shorten the term of the loan. I've been in my home with excellent credit for 16 years and often have doubled my payments to whittle down the principle. Unfortunately, the balance of my current loan is "too low" to refinance. Most companies will not even consider a refinance with me unless I borrow more. Why do I have to be further in debt to qualify for a refinance?

Like | Dislike | Share | Posted: Sat, 12/20/2008 - 07:38 | Post subject:

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

I am in year 2 of a 10 year mortgage on a 2005 Mobile Home. My current interest rate is 9.3% and I am looking to lower that with a better interest rate. I have improved on the home and plan to build a garage this spring. Is it possible for me to refinance?

Like | Dislike | Share | Posted: Wed, 01/21/2009 - 05:53 | Post subject:

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