When the mortgage is used to purchase the house, the person buying the house has to decide if they are planning to take out a fixed rate mortgage or an adjustable rate mortgage. The adjustable rate mortgage rates change from time to time depending on the economic outlook and also the level of inflation existing in the economy. They are changed by the companies based on the rate at which loans are provided by the central banks of various countries.

The fixed rate mortgage on the other hand is static and the amount that is paid by the individual for the purchase of the house is also static. The person has to pay the same amount each month for years till the mortgage has been repaid completely. At the time of purchasing the house, the person may find one type of rate beneficial and use this kind of rate to get the mortgage.
At the same time, over the course of time, the person may have variations in their financial status and need a mortgage refinance. They may have had a decrease in the level of income or an increase in the level of income and they may want to change their amount being paid. Mortgage refinance is done and the person who has bought the house may stand to benefit from this refinancing because a different type of mortgage calculation is used. This can potentially save even thousands of dollars for the home owner over the course of the years during which the mortgage is repaid.

Some people do mortgage refinance because there are many new mortgage companies that are coming up. Some of these companies provide very attractive interest rates and the person may like to take advantage of this chance. This is another reason for the person to refinance their mortgage.

Another important fact about mortgage refinance that every home owner should know is that some of the financial institutions give out various incentives to the people who use their company. Some people are also attracted by these incentives. There are quite a lot of incentives that some companies provide and these attract the people who have taken a mortgage. Many of these people lose out because of refinancing for silly reasons like these. Though there are many advantages of mortgage refinance, the people who have a mortgage on their houses should make sure that they calculate if they really stand to benefit from the whole process instead of just jumping into the decision to refinance just because of the various incentives offered or because of the seemingly cheaper interest rates.

Reasons to Refinance Existing Home Loan

Homeowners refinance their current mortgages for various reasons. Yet, refinancing is not always the best option. Before applying for a new home loan, carefully consider the advantages and disadvantages. Several homeowners choose to refinance because it allows them to save on their monthly mortgage payments.

Sadly, many fail to consider the risk of refinancing. For starters, refinancing entails an entirely new mortgage. Hence, you must pay closing costs and a multitude of other fees. Moreover, for a refinancing to be worth your time, you should obtain an interest rate at least two percentage points below your current rate.

Types of Refinancing Lenders

If you are applying for a mortgage loan refinance, you have two options. Applicants may select a traditional mortgage lender – bank, credit union, mortgage company, etc. These are considered prime lenders. However, to obtain a low rate with a prime lender, you must have stellar credit. If your credit is less than perfect, refinancing with a subprime lender is a better alternative.

Subprime lenders specialize in loans for people with no credit, bad credit, etc. Nonetheless, an applicant with good credit may also obtain a subprime loan. This is ideal for good credit applicants needing down payment or closing costs assistance. These lenders are useful because they offer the lowest rate possible to individuals with a poor credit history.

How to Find a Good Refi Lender?

Locating a good refi lender requires effort and patience. Many lenders are eager to approve your loan application. However, lenders will not necessarily have your best interest in mind. Before accepting a refi offer, obtain quotes from different lenders. Some lenders will boost interest rates or include additional fees.

To avoid a shady lender, use a mortgage broker. Besides, this is the easiest way to compare lenders. After a broker receives your request, they will match you with various lenders. You are able to make a side-by-side comparison and choose the lender with the best refi loan package.

You can cash out your equity when you need to repay your high interest debts. Home equity loans are offered for low rate of interest. Specially, if circumstances have led to accumulation of your credit card bills, it is wise to cash out your equity to repay your loans. But paying credit card bill is just one advantage of cashing out home equity.

If you want to take maximum benefit of home equity then try to build new asset utilizing your home equity. This can be done in multitude of ways. For example you can do some home improvements as it will add value to your house. Adding an additional room or renovating your bathroom may increase the market value of your house significantly.

You can utilize the cash taken against the equity to send your children to college. There can be no better creation of assets than educating your children. A better education will not only help them to become good human being but also to become a successful professional.

Besides benefits, some of the plus points attached with home equity loans are that most of the home equity loans are offered without closing cost. This makes home equity especially beneficial for those who want loans but do not want to spend any amount to get it.

Most of the home equity loans require interest only payments each month, hence the repayment installment would be lower than another loans you take. However, the monthly installments you need to pay depend on how much amount you are taking against your home equity.

Repayment of home equity loan depends on you and can be deferred as along as you own your home. These extended repayment schedules make the month to month repayment easily affordable.

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Cashing out home equity holds multitude of benefits. It involves no closing costs and repayments of loan depend on you. The monthly installments of repayment are again very easy to manage as you may need to pay only the interest on loan. if utilized to create further asset, Home equity loan can be advantageous.

But the majorities of them are in fact homeowners and are tax paying voters. The Federal Government does not tax the proceeds of a Reverse Mortgage, but the State of Florida taxes the mortgage two times in the same transaction. These taxes are taxed on the Mortgage and then a Tax stamp is also charged which amounts to a large sum of money being taken from the senior. If Seniors are to be able to help them selves in the tough economic times and use the asset that they paid for all of their lives then they should not be taxed on those funds, The State of Florida is one of the only states that taxes the proceeds from a Reverse Mortgage. This Reverse Mortgage specialist is fighting mad and I think all people in the state should be on the band wagon and fight this tax.

Just think it maybe you one day who needs the money to live of of and the money they take maybe the money you will need to pay your bills. Don’t wait speak out Now!!! Speak out to your State Rep and tell them to stop tax seniors! The seniors in this state are on more trouble then anyone else they need the help just to survive, they are being exploited and taken advantage of my these taxes.

Help our seniors in their so called golden years and give them back the dignity that they work their lives to achieve!

Ready to Jump Through Hoops?

For your first mortgage, you had to undergo a paper chase to satisfy the requirements of the mortgage company. This experience will serve you well. But for your refinance home project, there are still some do’s and don’ts to observe to give yourself the upper hand when entering a contract.

So check your documents. Are your tax income papers in order? Is your credit history satisfactory? Is your employment record updated? Are the records of the first mortgage complete and neatly filed? These are just some of the documents to prepare. Looking for lost documents or calling up certain offices for your records eat up your valuable time just when the refinance home loan agent is ready to talk to you.

When you’re ready for an audience with the loan agent, make sure you’ve done your homework. You should know about mortgages before signing a contract. One simple rule is: don’t rush into a refinance home loan.

The Do’s

Find out about your home’s value. If this has increased, expect to pay more for the mortgage. But settle on a company that offers a lower interest rate than your present mortgage. The new loan should be able to give you 2% less in interest rates than your current loan.

Do shop for lower interest rates. You may be surprised that an adjustable mortgage rate is lower than a fixed mortgage rate. The catch, though, is the possibility that your monthly bills might shoot up. Consider this if this is not a risk.

Do ask about penalties for loan prepayment and getting out of the contract. The loan agent should make it clear that you have the right to rescind the contract within three days, which is the rescission period.

Do make sure that if you’re going to resort to this option, let the refinance home company know of your decision and your reasons through a formal letter followed up with a telephone call to the right people before the 12PM deadline on the third day.

Do check the company’s background if you’re using a new mortgage company. With several mortgage companies competing for business, you might fall for a lousy deal with the lure of very low interest rates and no closing fees.

The Don’ts

Don’t be rushed into a home refinance loan, and don’t be afraid or intimidated by the mortgage companies. Check out online sites that provide information on consumer rights.

Don’t entertain calls purportedly coming from companies requesting more information. Go to the company office. Inform them of the request for additional information and verify if indeed this request came from them.

Don’t entertain strangers offering a better deal and cash even if they give their credentials. Tell them you prefer to discuss things in their office. Don’t sign anything. Some people lost their homes to scammers because of those nice strangers.

These tips can help you safeguard yourself from getting duped into dubious deals. Your new loan should be your chance to own a home, not lose it.

Wanting to refinance your home while you are unemployed is almost impossible, though don’t lose heart just yet! When you want to refinance your home, the first thing that a creditor or a lender would look at is the number and value of the assets that you possess in your home. The second thing the banks would look at would most definitely be your employment. Let’s face the fact, if you are unemployed, there is little chance of you being able to service your mortgage loans even after your refinance it, thus banks would not be keen to offer refinancing packages to those who do not hold a stable job! The thing is, even if you have a job, it is not guaranteed that you would get a good deal from the lenders, they would still evaluate factors such as the stability of your job, how long you have worked with your current company, and other relevant factors. Thus imagine how your application would look if you are unemployed!

Thus, the most realistic method to save your home while being unemployed is through loan or mortgage modification. You could do this by making use of private programs from the banks out there, or the government backed options such as President Obama’s Mortgage Modification Program. Loan modification is also free, thus it makes it easier to obtain without having to pay upfront charges. You can also modify your loans yourself, as long as you understand how it is done, and qualify for the criteria for loan modifications. It is easier to gain approval for loan modification as your credit, assets in your home as well as your employment do not come under scrutiny like how refinancing packages work. It also proves to be a useful short-term solution for you until you can find a job and get your financial situation back on track!

Find loan modification guides that are widely available online, and start applying for one to ensure that you successfully salvage your home even when you are unemployed!

In terms of what situations qualify for the refinance, it boils down to taking borrowers out of a difficult situation. For example, if the borrower is in a hard money loan they’ll qualify. Or a borrower facing a ballooning or having a rate at or 2% of market will fit as well. The general rule of thumb is that if the borrower saves 20%on their monthly payment by the refinance, they qualify, but still have to meet the rest of the underwriting guidelines. Which, because the SBA guarantees 75% of the loan for the lender, the underwriting rules are reduced relative to other commercial mortgages.

One of the biggest benefits of refinancing through the 7a is that you can go up to 90% loan to value – 90%… Most of the industry is currently at 70-75% on general purpose/ 60% on special purpose and in a declining property value environment, where many deals are getting canceled due to lower than expected value, this is a huge benefit.
Another major benefit is that there are a handful of SBA lenders that will go down to mid 500 credit score and a few that will go to 500, assuming that the rest of the borrowers situation is ok.

The floating rate and guarantee fee have historically been the biggest negative of the program. The rate that most borrowers see is PRIME + 1-2.75% and floats, adjusting once per quarter. The guarantee fee is 2.75% of the guaranteed portion of the loan (75% of the actually loan balance), which is received at close, taken out of the proceeds.

HOWEVER, it pays not to assume that all SBA 7a loan programs/lenders are the same. We represent 2 banks that are currently offering 5 year fixed 7a loans AND they absorb the guarantee fee themselves. So the borrower gets the benefit of the 90% financing and alooseneda underwriting guidelines plus has a 5 year fixed rate mortgage, at prime plus 1-2%. Again, fixed for 5 years, and amortized over 25 years.

Cash out refinances are doable under the 7a program but come with more loan scrutiny. The most important concept here for the borrower to understand is that all cash out proceeds must go towards business expenses. No personal debt consolidation allowed, for example. Further all cash out proceeds will be controlled by the bank and they will directly pay off any debt that is being rolled into the loan.

Despite all the issues currently going on in the capital markets, the SBA 7a program is still viable and offers business owners a solid option to refinance their current debt into lower rates and thus lower monthly payments.

Private mortgage insurance, or PMI as it is commonly called, is a form of insurance that is designed to provide protection for the lender against non-payment, should the borrower default on a mortgage loan. The primary benefactor of mortgage insurance is the lender. There are no protections afforded to the borrower with these kinds of policies. You should understand that when you purchase PMI coverage, you are paying premiums with every mortgage payment to protect your lender.

There is generally no choice about having this coverage as most lenders will require that you obtain private mortgage insurance. The main reason that this is mandatory involves the condition that does benefit you as the borrower: the low down payment on the mortgage. Naturally, there is a higher level of default risk when a mortgage loan is given with a low down payment, and that must be accounted for and secured against on the part of lender.
Additionally, private mortgage insurance gives mortgage companies the ability to offer loans that in other cases would be considered too risky to be purchased by third party investors, such as Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation). Retaining the ability to sell loans to these investing companies is important to lenders because it plays an important role in maintaining the liquidity of the mortgage market, which furnishes mortgage companies with the funds to create new loans for additional home buyers.

Needless to say, private mortgage insurance is not a popular form of insurance to buy, since it has no inherent value for the one purchasing it. Again, the lender will be the beneficiary of PMI, not you as the buyer. Yet, it is a necessary part of brokering a mortgage deal, to supply you with the financing to get that house you want. This type of insurance removes the obstacle of paying the prohibitively high down-payment amounts that most loans require. After all, who can come up with the 20% all at once? Most home buyers can’t. Private mortgage insurance allows you to pay as little 0-5% down payment on a new home.

In conclusion, mortgage loans exist to provide more people with the opportunity to own their own homes. Yet lenders have interests that they need to secure when they take enormous risks by providing financial assistance to multiple borrowers. This is where the private mortgage insurance comes into play in modern mortgage loan agreements.

Relocating Is No Easy Thing

Uprooting yourself from a dearly beloved neighborhood is not easy. The emotional aspect of the transfer can cost you dearly, if you’re not sure about your prospects. The problem is compounded by a hurried choice of a Colorado mortgage lender. With the mortgage market in disarray and thousands of sob stories of foreclosures, you have to be careful about your mortgage options.

Before you do take the plunge, discuss the options and possibilities with everybody in the household such as job opportunities for you and your spouse and schools for the children. Weighing the pros and cons of the transfer and the decision to mortgage your home are important factors to figure out long before you look for a home in the Rockies and latch on to a Colorado mortgage company.

You Check Them Out, They Check You Out

If you’re going over the lenders with a fine-toothed comb, mortgage companies will likewise check out your credit credibility, starting with your credit score, record of employment, and your latest paycheck and tax records. They’ll check everything out before considering your mortgage application. This precaution is understandable in light of fraudulent mortgage transactions that have swept thousands of mortgages over the edge.

There are hundreds of mortgage companies in Colorado, and choosing the right one is a tough job to figure out. To start, narrow down your choices to the following:

* Interest rates
* Good track record
* Positive feedback from friends and family
* Safeguards for customer information

When it comes to the nitty-gritty of the mortgage wheedling and dealing, take the following precautions to avoid mortgage fraud:

* Ask how many appraisers will be checking the property. A lone appraiser from the company might risk the proper valuation of your property to their advantage.
* Don’t be prodded to falsify any documents.
* Don’t sign any blank documents.
* Do not agree to an inflated appraisal of the property.
* Always mail your inquiries and have a copy as your letters is part of your documentation of the transaction.

In matters of Colorado mortgage solutions, honesty and precaution on your part is the best policy. You can’t afford to waste the best years of your life or your hard-earned money on expensive litigation and spend time behind bars. Don’t be intimidated or charmed by crooked appraisers or brokers.

If you suspect shenanigans, better back out before you make the deal final. The rescission period allows you to back out of a deal if you believe fraudulent practices have been employed.

Protect Yourself and Your Family

When you are in doubt of any aspects of the transaction, call the Colorado mortgage company to get answers. If they don’t respond to your letters and emails, smell a rat. If strangers approach you about your mortgage and have with them documents to facilitate your mortgage application, better think of plausible excuses to get away.

If you have to deal with the mortgage processing, always do it in the company’s office. At least, you’re sure you’re dealing with the right people. It takes two to tango for a legit Colorado mortgage.

-Refinancing FAQ & Advice
-M Petrone