Refinancing Home Loan - Is Refinancing Your Home a Good Idea

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Home Loans And Refinancing - Borrowers Beware
Mortgages...if you are planning to purchase or refinance your home you should be very careful about the home loan you select. There are many gimmick loans on the market today like "interest only loans" and "negative amortization loans" which help people buy over priced property by the skin of their teeth. Having been a loan officer for a number of years in the past, I have often wondered why peopl... Read refinance mortgage article



Bad Credit Mortgage Refinance Secrets
It is a common financial scenario across households in the Western world. Multiple debts have started to build up: a car loan here, a department store loan there; a bank loan here and several credit cards there. While all may have seemed manageable on the optimistic day you took them out, or spent on them, suddenly you realise that you cannot keep up with the monthly payments. You miss out on a pa... Read refinance mortgage article



Refinancing Home Loan - Is Refinancing Your Home a Good Idea
Refinancing your home after a bankruptcy is similar to purchasing a new home. A refinance creates a new mortgage to replace the existing mortgage. Thus, you are required to complete loan applications and pay closing costs and other fees. Some believe that obtaining credit following a bankruptcy is impossible. However, this is the best way to rebuild your credit. Some people choose to acquire new credit cards or lines of credit. On the other hand, if you are hoping to receive an interest rate reduction on your mortgage and receive cash-out at closing, refinancing after bankruptcy is a great idea.

Obtain a Lower or Fixed Rate

If you purchased your home before interest rates began to decline, you likely have a rate that is considerably higher than current trends. Various lenders are willing to lend money to people one day after a bankruptcy. However, if you wait two years after a discharge before refinancing your home, you may be able to obtain a reasonable, low rate. A lower rate will lower your monthly payments. Moreover, refinancing your home after bankruptcy is ideal for obtaining a fixed rate. Initially, some people accept an adjustable rate mortgage. These loans are risky because your mortgage rate will fluctuate according to current market trends. Thus, your mortgage may increase several times throughout the loan. With a fixed rate, your mortgage rate remains the same.

Improve Your Credit History

Refinancing your home after a bankruptcy is a perfect way to re-establish credit. Lenders review credit reports to determine our credit worthiness. A bankruptcy may disqualify you from receiving low interest rates on credit cards and other lines of credit. Once you have obtained three or four new lines of credit following a bankruptcy, and maintained a good payment history, other lenders will see you as a low risk and are willing to extend credit with reasonable rates. Moreover, mortgage companies are more ready to grant a loan because funds are secured by the property. If you choose to refinance and cash-out at closing, the funds received may go towards repaying chapter 13 debts, which will also improve credit.

View our recommended bad mortgage refinance companies here at: Recommended Bad Credit Mortgage Refinance Lenders.

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

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Why to Refinance When Rates Are Moving Up

Interest rates have enjoyed record lows during the last few years allowing many people to refinance and enjoy lower mortgage payments. Now, interest rates are moving in the other direction. The average 30 year fixed rate, according to mortgage giant, Freddie Mac, was 6.31% last week. Still, during this same period, refinancing accounted for 43.6% of mortgage applications.

Why would anyone refinance when rates are going up? With cash-out refinancing, you refinance your mortgage for more than you owe and keep the difference. Freddie Mac is predicting, by year end, homeowners will convert $204 billion of home equity into cash, up from $142 billion in 2004.

1. Pay off home equity credit lines. The average rate for a HELOC (Home Equity Line of Credit) rose to 6.97% last week, up from 5.09% from a year ago. Most HELOC loans have variable rates that go up when the Federal Reserve raises short term interest rates. Recently, the Federal Reserve announced its12th consecutive rate increase and they sent out a strong message they will continue the short term interest rate increase. Using a refinance to pay off a HELOC not only will lower your existing HELOC interest rate, but you can stop worrying about the Fed ...for your second mortgage at least.

2. Consolidate your mortgages. Unless you put 20% or more down on your home, there is a good chance you did a combination (or piggyback second mortgage) loan to avoid PMI (Private Mortgage Insurance) which is required on loans with less than a 20% down payment. Second mortgages typically carry higher interest rates and a cash-out refinance may allow you to consolidate these loans into one lower monthly payment.

3. Secure A Fixed Rate Mortgage. Rates for adjustable mortgages, which are sensitive to Fed moves, have been rising faster than fixed rate mortgages. Borrowers with loans close to a rate adjustment are facing an increase in monthly payments and the possibility of even higher rates down the road. Many borrowers who plan to stay in their homes are fending off the higher rates and potential future increases by refinancing into fixed rate mortgages.

4. Improve Your Home. Home Equity Lines of Credit and fixed rate second mortgage rates have been rising. A cash-out refinance can prove to be a cheaper way to finance your home improvement, especially as the cost of the improvement increases. Properties refinanced during the 3rd quarter of 2005(?) saw 23% appreciation since the original loan was taken out. Improvements made after the refinance may lead to even greater increases.

While many people will no longer be interested in refinancing for a lower rate, there are many reasons to consider refinancing even as interest rates increase. If you have an existing second mortgage, need cash to consolidate credit card debt, or want to do some home improvements, refinancing your current home mortgage may be the best financial move for you. For more information regarding current rates, you can visit our website at http://www.greenwoodloans.com/.

Chuck Aikens
Mortgage Blog

For more information regarding current rates, you can visit our website at Current Mortgage Interest Rates


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