Thursday, March 12, 2009

The Merits Of Mortgage Refinancing

Many people are considering a mortgage refinance because of low interest rates. A mortgage refinance can have many advantages, especially when you’re trying to improve your cash flow.

If you currently have high interest debt, it’s a good idea to consider mortgage refinance. The interest rates of mortgage refinancing are lower than most debts you can have. Especially credit card debt interest rates can be killing. The interest on a mortgage is much lower.

If you currently need some extra cash, mortgage refinancing can be a good idea. Mortgage refinancing gives you the possibility to trade the equity within your house for cash. The cash you get in trade for the equity can be used as you wish. You do need equity for a mortgage refinance. If you have enough equity in your house, mortgage refinance can be a great source if you’re strapped for cash.

If you want to drastically lower your monthly costs, consider rolling up your current debt into a mortgage refinance. You will incur some extra costs when doing a mortgage refinance, but many times it’s worth it. This gives you the possibility to finally start chipping away at your debt. It also gives you more financial breathing room.

When considering a mortgage refinance, ask your financial advisor about the whole picture. What added costs will you incur and how long will it take to make this back in savings? If at all possible, try to keep your current monthly payments, so you can pay off your debt quicker. Also, if you’re currently a senior, consider a reverse mortgage. For seniors, a reverse can have even more benefits than a regular mortgage refinance. Ask your financial advisor about this form of mortgage.

Wednesday, March 11, 2009

Refinancing With Bad Credit - Should You Refinance

Author: Vince Robertson

You have a mortgage, and would like to refinance the loan. But you know your credit is not very good, maybe even bad. There are lenders in the financial market that will make loans to people with less than perfect credit. As a lenders risk goes up so does the interest rate, so if you got bad credit you can expect a high interest rate. If you can drop your rate by at least 2 % saving money is still possible.

There are several questions you should ask yourself when considering refinancing your mortgage. First of all you need to know your credit stats. Has getting credit been a problem for you in the past, if so you will want to take control of your finances. Sign up for a credit monitoring service to look for ways to improve your credit. Try to bring the balance of some of the revolving accounts down before you refinance your mortgage. This will make lenders feel better about loaning money to someone with less than perfect credit. When you refinance your home mortgage you want to better the situation, instead of hurt it.

You will want to calculate all of the costs before making a decision to refinance. When refinancing you need to be able to lower your interest rate and it is always great to get a shorter loan life. Sometimes people are only interested in lowering their monthly payments. However, you will need to remain in your home long enough to benefit from refinancing. There would be no reason to refinance if you plan on moving within a few years. Take the time to figure out how long it will take to recover the costs of refinancing your home. Loans may offer a lower rate of interest but have excessive closing costs and fees. You should find out all costs involved including any additional income taxes you may be charged.

The 2 % Mortgage Rule

The two percent rule refers to your Home Mortgage rate, can you drop your new rate 2% below current rate. Lenders recommend that you refinance your mortgage if you can drop the interest rate two percent less than your current rate. This is just a general rule and should not be the only deciding factor when trying to decide whether to refinance or not to refinance. Are you planning to live in your home for over five years, or do you plan to move. This can be important factors when deciding to refinance.

The average the cost of refinancing is at least 3 % of your home mortgage loan. Three percent of the mortgage is a lot of money to spend, so you want to be able to recover these costs when refinancing your mortgage. If you are making payments on your home and plan to buy a larger home in the near future, then a drop in the interest rates may be the perfect time to purchase a larger home. This could be a great time to refinance, into a larger home. There are always many decisions to make when purchasing or refinancing a existing mortgage. To find out more on mortgages visit this website "youhave2.com" for all the answers you need.

Tuesday, March 10, 2009

Refinance mortgage at lower rates

With lower interest rates on home mortgages, it's possible that refinancing your loan could save you money each month.

If the prevailing interest rates are a full percentage point below the rate you currently pay, it might be in your best interest to refinance.

The first step is to look at your credit history. It used to be that a FICO score of 720 was enough to get you a good interest rate on a mortgage. Now you could need a score of 740 or higher.

If your FICO score is good, determine if it's financially worth your while to refinance. Go online or consult with a lender to determine just how much you'd save each month.

You'll have to hunt for a lender, and it might be difficult to get in to see one right now because of the number of people refinancing.

You'll pay fees and closing costs associated with the loan. Do the math with a lender to find your best option and determine how long it will take to pay off those fees. If you save $300 every month by refinancing and the fees are $3,000, it would take you 10 months to pay them off.

You'll need some equity in your house. Being upside down (owing more than the house is worth) will likely nix a refinance deal.

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You'll need to prove your income now. Gone are the days of no-doc loans where you could put down any figure you wanted and nobody would check. Now they want to know for a fact that you earn enough to repay the loan.

Don't be surprised if you're turned down once or twice. If you really want to refinance, keep looking.

Two points to consider:

1. Do you plan to stay in the house long enough to recoup the closing costs and make a refinance worthwhile?

2. If you need to move and sell your house, will there be a pre-payment penalty that could cost you thousands of dollars to retire the loan?

Beware choosing anything but a fixed-rate loan. Tens of thousands of homeowners ran into trouble when their mortgages reset to a much higher rate. With a fixed rate loan, you'll know exactly what your payments will be for the life of the loan.