Finance | home lenders refinance mortgage

January 3, 2009

What You Need to Know About Getting a Mortgage During the Fannie Mae and Freddie Mac Crisis

Filed under: Finance — Tags: Byproduct, Existing Home, Fannie Mae And Freddie Mac, Financial Bailout, Financial Stability, Government Financial Assistance, Juggernauts, Mortgage Closing Costs, Mortgage Companies, Mortgage Industry, Mortgage Loan, Mortgage Purchases, Purchase Mortgages, Smart Moves, Trickle Down Effect — admin @ 9:09 pm

Denver Lender asked:

Getting a mortgage can be very frustrating. You find the right house, you fill out that long loan application, you collect all the required paperwork, you fax even more paperwork and speak your loan consultant multiple times during the entire process but yet somehow your loan is not approved. You have a lot of questions but you do not get any answers from anyone.

Why is this happening?

Now, more than ever, mortgage companies are becoming more restrictive when it comes to loaning money to potential home owners. The biggest reason why mortgage companies have become tighter is because the two financial juggernauts that purchase mortgages, Fannie Mae and Freddie Mac, need government financial assistance.

When the two biggest mortgage companies need financial bailouts, it starts a trickle down effect. Fannie Mae and Freddie Mac become more restrictive with their mortgage purchases. Mortgage companies that sell their mortgages to Fannie Mae and Freddie Mac will become more restrictive with the loan applications they approve.

How can I ensure my loan closes?

The United States Government is very concerned about the financial stability of Fannie Mae and Freddie Mac. If these two companies fail, the entire mortgage industry will collapse. The financial bailout will ensure that money will still be widely available to people who want to purchase a home or refinance their existing home loan. When looking to refinance or purchase a home, here are the some smart moves you can do to ensure your loan closes.

First and foremost you should shop for a mortgage loan. The company you used in the past may not be in business. Ironically, shopping for a mortgage meant getting the lowest possible rate. Now, shopping for a mortgage will mean finding a mortgage company that can get your loan closed. The byproduct of shopping for a mortgage is that you will be able to determine what the average rate and mortgage closing costs should be for your mortgage loans. You will also have backup mortgage companies in the event your first mortgage company can’t get your loan closed.

You also might want to consider local credit unions and banks. In the past they had higher rates than most mortgage companies but the downturn in the mortgage industry led to credit unions and banks offering competitive rates. You will still need to qualify for a loan and they may have stricter loan guidelines but by getting a loan at your credit union or bank, they may offer lower fees on your mortgage loan. They may also offer you even reduced fees on savings and checking accounts and other financial services.

Despite the problems that are facing Fannie Mae and Freddie Mac, the government bailout will ensure that these two companies will continue to purchase mortgages from mortgage companies. The mortgage economy is also a small fraction of the overall wealth of the United States so there is still plenty of money available for borrowers. You can still get a loan but the smart thing to do right now is to seek as many alternatives for financing you will ensure that your loan will indeed close.

GORDON

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Is A Refinance Mortgage A Good Idea ?

Filed under: Finance — Tags: Home Financing, Home Loan Lenders, House Refinancing, Incentives, Mortgage Home Loans, Mortgage Loans, Mortgage Payments, Mortgage Refinancing, Percentage Point, Refinance Loans, Refinance Mortgage, Refinancing A Home, Refinancing A Home Loan, Refinancing Loan, Thousand Dollars — admin @ 7:23 pm

MIKE SELVON asked:

Very few people are able to own a home without utilizing mortgage home loans. These loans are, for most people, the biggest debt they will ever be encumbered with and the process of getting a home borrowing is often one of the most stressful things people experience. And, when it comes time to refinance mortgage loans, the same also holds true.

Just about anyone who purchases a house is pretty much destined to labor under the weight of mortgage payments for at least 30 years, which is the life of the most common mortgage loans. Sometimes, the length of a home loan can be reduced or stretched out even longer depending on the needs of the homeowner and what they are trying to accomplish through their mortgage refinancing.

There are any number of reasons why people refinance mortgage loans. One very common reason is divorce. In many cases one person moves out and the other wants to remain in the home. When this happens it makes a lot of sense to get the mortgage refinanced if possible.

Refinancing a home loan in this situation will assure that the house is only in the name of the one staying in the house. It will also serve to pay off the previous mortgage so that the other person is no longer obligated under the terms of the old home financing arrangements. In many cases, the house refinancing is taken out for an additional 30 years to make the payments manageable for the newly single person.

One of the most popular reasons why people choose to refinance mortgage home loans is because there has been a drop in loan rates in the home financing market. Often a family can end up saving hundreds of dollars every month even if the interest rates have only dropped half a percentage point, depending on the size of the loan. This often makes it an easy financial decision to spend a few thousand dollars on loan fees in order to save that much each month.

Many times the home loan lenders offer special incentives to encourage people to refinance their mortgage by waiving the closing costs, appraisal fees and other costs associated with refinancing. In these cases, it is simply a matter of doing the paperwork and then enjoying the lower monthly payments.

People often take advantage of the combination of lower interest rates and no closing cost loans to refinance their mortgage for a shorter time period. Many times people who have 20 to 25 years left on their original mortgage can get a refinance loan with lower interest rates. They take a 15 year mortgage and end up paying about the same monthly payment. This way they can cut many years off the life of the mortgage and will be able to enjoy a house that is free and clear much sooner.

Another reason why people are motivated to refinance their mortgage is to pay off their other debts. They can accomplish this if they have gained a good amount of equity in their house. When doing their refinancing, they can borrow more than the balance of the original home financing.

When people use part of the proceeds from their refinance mortgage loan, this is often considered a debt consolidation loan and it is a smart way to manage debts and pay them off sooner.

Since the high interest consumer loans are being paid off with a lower interest, the payment will go down, or the borrower can pay the same amount they were accustomed to paying and just pay the debt off that much sooner. Another benefit is that the interest on the refinanced mortgage is tax deductible whereas the consumer loan interest is not.

AVERY

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December 31, 2008

Refinance Mortgage: The Cost Of Doing Business

Filed under: Finance — Tags: Administration Costs, Amortization Period, Application Costs, Bill Payment, Creditor, Downside, Earning Income, Faith Estimates, Good Faith Estimate, Loan Discount Points, Mortgage Rates, Mortgage Refinance, Refinance Mortgage, Welcome Option, Yield Spread Premium — admin @ 1:04 pm

Rony Walker asked:

There is always a possibility of getting a no-cost refinance. Mortgage rates being what they are, this is, of course, a very welcome option. But lenders are in business to make money. Keep this in mind when you are trying to get a refinance. Mortgage problems make your entire fiscal situation even worse if not properly managed.

If your creditor is not earning income by charging direct costs for the loan, those fees will be integrated into the loan or you will be paying through an interest rate that is higher than normal. It is true that some banks offer true no-cost loans but not a lot of them do. Make sure you read your agreement thoroughly. You can get a Good Faith Estimate. When you do, ask the lender to guarantee it. Legally, Good Faith Estimates do not have to be guaranteed. This makes them almost worthless. However, lenders will guarantee these estimates if they do business with you.

It is a complex thing to seek refinance. Mortgage transactions have many costs attached. These include, loan discount points, processing costs, administration costs, application costs, and many others. Lender charges can be negotiated by the borrower. Some of them can even be waived. A Yield Spread Premium is the money that banks give to mortgage brokers for bringing your loan. Ask about this beforehand as you might have received a lower interest rate if the lender did not pay the broker a Yield Spread Premium.

What Is The Downside?

The bad things about a refinance? Mortgage refinance fees you pay to acquire the loan for one thing. You might not recoup these fees for a number of years. Another is the extension of the amortization period. You may be qualified to shorten it but you simply may not want to pay more each month. Also, a mortgage refinance makes the entire mortgage just that much bigger. The position of your equity will be affected by the refinance. Mortgage will increase if you take out the refinance in cash

Bill payment is something people do with a refinance. Mortgage payment is not the priority for them. They also use the cash to pay off credit cards. This is not a wise course of action. You will only dig yourself deeper into debt.

And The Upside?

Sticking with the home long enough will help you break even on the cost of the mortgage refinance. Lower interest rates and monthly payments will greatly improve your cash flow. You can also shorten your loan period in exchange for higher mortgage payments. Finally, the cash you obtain can help you in another investment. You just have to make sure the rate of return is higher than your interest payments.

Clearly, there is a lot to learn about mortgage refinance. A lot of it depends on your particular situation. As with most things, seeking professional advice will yield better results. Make sure that the counselor understands your situation and what you intend to do with the refinance.

HUMBERTO

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December 27, 2008

Refinance Mortgage Loan: Shorten Your Loan Term

Filed under: Finance — Tags: Amortization, Benefit, Closing Costs, Debts, Freedom Mortgage, Home Equity, Home Mortgage, Lenders, Mortgage Loan, Refina, Refinance Loan, Refinance Mortgage, Retirement, Term Mortgages, Thousands Of Dollars — admin @ 5:21 am

Rony Walker asked:

A 15-year loan term has many advantages, although it may appear to be expensive because of the higher monthly amortization. However, a shorter loan term assures you that you’ll be free from this burden before or at the time of retirement and save thousands of dollars. Consider having your loan restructured to a shorter loan term.

Benefits of a Shorter Loan Term

The prospect of spending 30 years paying back a mortgage is discouraging. If you have 20 years remaining on your loan, the option to shorten your loan term to 15 can be tempting. Taking away 5 years from a 20-year loan means a higher monthly bill, but freedom from the mortgage after 15 years instead of 20 is definitely more appealing. But if it’s only a matter of a few hundred dollars more, why not? Never mind if you’ll be paying a higher monthly bill.

You’ll be saving thousands of dollars from interests alone with the five years knocked off from the 20-year loan term. Another benefit is building your home equity faster. A refinance mortgage loan offers the chance to restructure your terms.

What’s Involved

For a home mortgage, the lender will pull your credit record to check if you’ve been paying your debts on time. You’ll also be paying the fees involved before, during, and after your loan is processed.

The lender will assess all the information to evaluate if you are a good risk for a shorter loan term. If you’re dealing with the same lender, the process won’t be as rigorous and as lengthy like it would be if you go to a new lender.

It’s a fact that lenders prefer long-term mortgages because it rakes in more profits. To counter loss in future profits, lenders penalize borrowers for paying their mortgage ahead of term. This is why prospective borrowers should always inquire if the lender charges prepayment penalties.

Assuming that your lender does not charge penalties on prepayment, you have to contend instead with the closing costs for your refinance mortgage loan.

Others get a refinance mortgage loan to switch to a short term interest only loan. They are banking on the equity of the house and intend to sell it in the near future. The proceeds of the sale will go to the interest and they can still have extra money from the profit. In your case, you’re looking at the full ownership of your home in a shorter time.

For a new loan, you can decide if you want a fixed rate mortgage or an ARM. An online calculator can compute how much you’re going to pay the monthly bill in 15 years’ time. From the calculations, you’ll be able to determine the feasibility of a short term ARM or fixed rate refinance mortgage loan.

Short Term or Long Term?

A short term, or traditional loan, will always depend on your financial situation and future plans. A short-term refi is ideal now that interest rates are low. You’ll be surprised that you’ll be paying the same monthly fee as your first mortgage, so there’s not much of a change in the monthly bills. The prospect of paying off your loan in 15 years, however, is imminent. For those who feel secure with the stability of the traditional 30-year loan term, switching from an ARM to a fixed rate refinance mortgage loan is recommended.

JULIO

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November 21, 2008

Refinance Mortgage: Wiser Moves This Time Around

Filed under: Finance — Tags: Downpayment, Enough Money, First Mortgage, Independent Mortgage, Loan Agent, Loan Process, Mortgage Adviser, Pre Approval, Private Mortgage Insurance, Smart Choice, Sound Professional Advice, Stars In Their Eyes, Tax Matters, Time Borrowers, Unpaid Balance — admin @ 1:46 am

Rony Walker asked:

Couples go into their first mortgage with stars in their eyes. When additional bills come up, the budget is skewered. Paying the monthly bills and the mortgage installment becomes stressful. But there’s no way out but a refinance mortgage. This time around, couples should have learned their lessons. They should want a better deal instead of shuddering at the thought of a new loan when they’re still looking at a huge unpaid balance from the first loan.

Traumatic Experiences With The First Loans

Getting your first mortgage was exciting and thrilling. You went into raptures at the thought that of having your own home. You wanted to hurry up the loan process. Anyway, you could afford the monthly bill of $798.36 for a $150,000 home. What you didn’t include was the monthly residential tax plus other add-on fees and complexities.

Think like the shrewd taxman. If you don’t have the savvy for tax matters, let an expert help you. An independent mortgage adviser would be a smart choice. He or she looks at the issue objectively being under no obligation to the mortgage company. Your refinance mortgage will fare better with experience and sound professional advice.

Perhaps when you got your first mortgage, several options were bypassed because you wanted to rush your pre-approval, even pestering the sullen loan agent to get your loan application on top of the pile. The biggest surprise for first time borrowers is contending with the downpayment for the loan, which is pegged at 20% of the total loan amount. If they do not have enough money for the downpayment, they agree to have the private mortgage insurance added to the fee, which makes the loan expensive and more than they can afford in the end.

Another mistake is getting an ARM when you have a fixed income. With the uncertainty of the economy, interest rates are likely to swell, affecting your budget. The ARM is perfect when interests are at a low and hibernate there for months on end. Fortunately, if you have a short-term adjustable mortgage, Federal cuts could cause a drop in interest rates.

A Tip or Two

To qualify for refinance mortgage, get pre-qualified with several lending companies so you can compare options and prices. But don’t let the credit companies pull your credit history because each pull drags down your credit score. Once you get pre-qualified, choose the company with the best offer to look at your credit history.

Watch out for high closing costs. These indicate that you won’t get a good deal. You’re trying to sort out your finances through this refinance mortgage, not make it more messy. Avoid lenders charging closing costs that are too high, even if they offer lower interest rates.

Check out for prepayment penalties. Nobody likes to be fined for paying off a loan ahead of schedule. Frankly, it doesn’t make sense. But that is how lending companies survive and it is good business logic.

Give honest answers to the questionnaire. A falsehood can undermine your application for a loan when you really need it. You are dealing with experts who have been through hundreds of applications. If there are further requests for information, provide it promptly to avoid further approval delays.

To protect yourself from more surprises, be privy of the company’s policy on early payment and get all the documents pertaining to your refinance mortgage. The mortgage documents will be your reference as you go along.

JACKIE

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November 5, 2008

Home Loan Refinance : How To Decide When You Should Apply One

Filed under: Finance — Tags: College Debts, Credit Card Loan, Credit Score, Educational Costs, Equity Account, Good Reason, High Interest, Home Loan, Interest Payment, Interest Rate, Interest Rates, Lenders, Loan Fees, Loan Proceeds, Loan Refinance — admin @ 5:10 pm

Alan Lim asked:

Deciding to apply for a home loan refinance is a decision that can best be made by the individual homeowners after reviewing all the facts and identifying all the financial implications.

Why should I apply?

There are many reasons to apply for a home loan refinance, although some are not good reasons. The main good reason is to reduce the amount of interest payment during the balance of the loan term. However, another primary reason why homeowners choose to get a new loan on their home is to free up ready cash either through the equity in the house, or through paying off credit card loan or other high interest payment. Usually a home loan is requested when the homeowner has need of a significant amount of money either on short notice, or over the next weeks or months.

What will it cost?

The loan fees will vary depending upon the type of loan, the broker and the interest rate. There is also the factor of your credit score that can impact the interest rates you will be charged. Typically, the better credit score you have, the lower the interest rates and thus the fees associated with obtaining the loan. When determining the home loan refinance package that you accept, make sure that you don’t allow lenders to do multiple credit score pulls from the credit bureau, as that can lower your credit score significantly. Another factor to review is how much of the loan fees are being rolled into the loan and thus will require you to pay interest over the term of the loan.

What can I use the loan proceeds for?

When you obtain a home loan refinance, the cash you receive, or make available through an equity account can be used to pay for almost anything you wish. However, most homeowners are wise enough to only take out a loan for the purpose of bettering their financial position. Perhaps they need to pay for college debts or prepare for upcoming educational costs. They make take out the loan in order to remodel the home. Sometimes a home loan is obtained to pay off credit card debt and use the money saved for other purposes. Another common use for a refinance loan is to pay for large medical bills.

Things to avoid in a refinance

In a time of increasing economic stress in the United States, many homeowners are refinancing homes because they can’t afford the original payments. A home loan refinance can be obtained that will lower your monthly mortgage payment, but caution should be exercised that you are not just placing a band-aid on a mortal wound. Don’t use a refinance loan to stave off a pending foreclosure or bankruptcy, unless by doing so you can significantly improve your personal financial picture.

Benefits of a refinance loan

The benefits of a refinance loan are numerous, but the primary reason for obtaining a home loan refinance is to obtain cash for needed payments, repairs, renovations or projects. Indirectly, a loan such as this can also be used to reduce payments in interest for either credit card debt or for the home mortgage as well. The loan can also be used to reduce monthly payments. Each of these benefits is arrived at in different ways and with a different loan structure.

BRUCE

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November 4, 2008

Refinance Mortgage – Now Could be a Good Time to Refinance

Filed under: Finance — Tags: Commercial Lenders, Credit History, Current Market Value, Fha, First Time Home Buyer, Fixed Income, Half A Percent, History Requirement, Loan Rates, Mortgage Market, Mortgages Rates, New Legislation, Refinance Mortgage, Six Percent, Welcome Opportunity — admin @ 7:26 am

Robert asked:

The mortgage market is currently experiencing an increase in rates as 30 year mortgages rates push slightly over six percent, and 15 year mortgages move over the 5.50 level. Both of these loan rates assume that you would be putting 20% down at borrowing, which is customary amongst most commercial lenders. While most people are hesitant to move into the market at these rates, there exist other options you could possibly take advantage of. The federal government is attempting to ease the crisis in the mortgage market with the Federal Housing Administration. Passing new legislation, the government hopes to spur on new applications by allowing lenders to introduce mortgages with only a 3% down payment.

For a first time home buyer with not much savings this could be an extremely welcome opportunity. Additionally, buyers who are in a bit of trouble with plummeting market rates may be able to benefit from FHA backed refinancing. In August, the government allowed over 200,000 homeowners to refinance, and now additional people may be able to refinance their home down to its current market value, giving people and incentive to stay in the home. The FHA is now getting authority to refinance homes that are in the $700,000 range, were as before, they were only allowed to come in on loans in the high 300s.

Families looking to get into a home fast, who have suffered from the recent recession, may find FHA backed loans quite attractive. The down payment requirements, which now stand at 3%, may be lowered to 1.5%. Moreover, there is no credit history requirement and no fixed income requirement either. But, you do have to pay an upfront premium for these reduced lending guidelines, which amounts to 1.5% of the loan total at closing, and half a percent every year. Not too bad on a reasonable mortgage, especially when compared to a 20% down payment.

For potential buyers, home prices look pretty attractive right now, with the median national home price just under $240,000. Prices have fallen recently, just a bit, to make the market even more attractive. People are rushing to buy homes in areas that have had record numbers of foreclosures. The inventory in hard hit states like California, Florida, and Utah is truly stunning. If you are an eager home buyer, who has some cash saved, now is a great time to be searching for a great deal. And with so many people and institutions looking to sell homes as fast as they can, you may walk away with the deal of a lifetime.

LONNIE

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