Refinance Home Loans - Knowing When to Refinance

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Home Refinance - To Refinance or not to Refinance
I have written many articles on refinancing a fixed rate mortgage to an adjustable rate mortgage. I have helped people cut as much as $800 off their monthly payments by turning their high fixed rate mortgage loan into a much lower ARM. This may be the time, however, to put the strategy in reverse, especially if your adjustable rate mortgage is coming up on the adjustment period.

If you ... Read refinance mortgage article



Cash Out Refinance - Refinancing Your Mortgage To Get Cash Out
A cash-out mortgage allows you to refinance your mortgage and pull out part of your equity. Before deciding how much to cash to use, be aware of the impact of PMI and equity amounts. However, you may find the benefits of refinancing outweigh the costs.

Cash-Out Mortgage Basics

With a cash-out mortgage, you can refinance for lower rates or to just get part of your equity out. ... Read refinance mortgage article



Refinance Home Loans - Knowing When to Refinance
Do you want a lower monthly payment? Perhaps you prefer to switch your adjustable rate mortgage to a fixed rate. If this sounds familiar, refinancing your home may serve to your advantage. In the past five years, mortgage interest rates have dropped dramatically. Thus, many people who purchased homes when rates were high refinanced their homes. Refinance involves creating a new home mortgage, and homeowners must re-apply for a home loan. With this said, refinancing sounds great for individuals with good credit. However, refinance loans for bad credit are widely available.

Refinance Home Loans

Ordinarily, a person with bad credit would have a difficult time obtaining a loan. This is because a persons credit worthiness is based on information included in their credit report. Individuals with a history of paying bills late or refusing to pay their creditors are considered high risk candidates, thus lenders are unwilling to loan money to them. However, refinance loans are different. When a homeowner refinances, their house serves as the collateral. Therefore, if a person defaults on the loan, the lender may take possession of their home.

Knowing When to Refinance

The key to refinancing a home involves knowing when to refinance. Commercials and radio advertise low interest rates. Thus, many homeowners choose to take advantage of low rates and lower their monthly payments. Unfortunately, the cost of refinancing a home may sometimes outweigh the savings. Because a refinance creates a new mortgage, homeowners are responsible for fees such as closing costs, title search fees, settlement fees, prepayment penalty fees, etc. Moreover, some mistakenly refinance before a home has time to build sufficient equity. Another reason for refinancing a home includes receiving a shorter term, which may also boost a home's equity

One benefit to refinancing a home with poor credit is that homeowners may receive a lump sum at closing. This money may be used to improve credit - pay off credit cards, consumer debt, etc. For this to happen, a property must have ample equity. Some mortgage professionals encourage homeowners to keep an original mortgage for at least two years before refinancing. This allows the property value and equity to grow.

To view our list of recommended poor credit mortgage companies online, visit this page: Recommended Poor Credit Mortgage Refinance Companies Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

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Refinancing Your Home - A Refi is a Refi Right

In this day or automation, bill paying online and Internet loan applications, one would think that conducting a refinance loan is the same, no matter what. However, there are three main types of refinances, so it is important to learn the difference if you are considering refinancing.

Rate/Term- This is the most basic refinance transaction that occurs, which ultimately simply lower the interest rate paid on the loan and pays off the existing mortgage balance only. Sometimes, the term may also be reduced. For example, an old loan with a 30-year term is paid off with a new loan that carries only a 15-year term. All closing costs are paid outside of the new loan by the borrower.

Limited Cash Out - This type of transaction is often confused with a rate/term refi, with the main difference being the fact that closing costs are often rolled into the new loan with a limited cash out refinance transaction. Additionally, Fannie Mae and Freddie Mac, two government sponsored agencies, will allow borrowers to obtain up to $2000 or 2% of the loan amount, whichever is less, back at closing in the form of cash. Both agencies have also determined that you can payoff an ex-spouse and still have the loan considered as a limited cash out refinance transaction, so long as the appropriate divorce papers are supplied to the lender.

Cash out/debt consolidation - With this type of refinance, consumers are often looking to get cash back or payoff debts in addition to the mortgage(s). For instance, a borrower might have several credit cards and a student loan that they would like to roll into one easy payment. A cash out refinance transaction would payoff all of the debts at closing.

Also, Fannie Mae and Freddie Mac have determined that if a borrower is paying off a home equity line of credit or a second mortgage with a refinance loan, the transaction is considered a cash out refi unless the second mortgage was used to purchase the home originally.

With this knowledge, you should be a refi expert in no time!

To view our list of recommended mortgage refinance companies online, visit this page: Recommended Mortgage Refinance Companies Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.


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