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What does refinancing mean? Replacing a debt with a new debt having different
terms. This is most often done for home mortgages.
Here's
breaking news on refinance that you should consider.
Check out my new site - RefinanceMortgageNow.net.
The
Baltimore Sun reports Dec. 23, 2007:
Despite the mortgage meltdown, the blizzard of advertising for home
loans continues. Fewer pitches scream "Bad credit? No problem!" Instead,
lenders struggling to remain profitable are targeting people with good
credit and plenty of home equity. Mortgage firms that have survived
the subprime shakeout are focusing on persuading homeowners to refinance.
The lenders promote refinancing as a flexible tool to lower interest
rates and stretch out payments. But critics say the offers often appeal
to the same inclination that led many borrowers astray - the tendency
of people to live beyond their means by using their home equity as an
ATM.
"It's all the art of distraction," said Bruce Miller, chief executive
of Dailey & Associates Advertising. "For some people, all they care
about is the monthly payment. And that keeps them from digging in and
concentrating on the hidden elements." The Federal Trade Commission
sent warning letters this year to 200 lenders, brokers and other mortgage-market
participants about misleading ads. The most problematic pitches are
those that tout low interest rates or payments but play down the fact
that they are temporary, or don't disclose it at all, FTC senior attorney
Lucy Morris said.
Here
are some tips to help you decide whether or not to refinance:
•Know the terms of the current mortgage. How often will the mortgage
adjust? How much will it adjust? These are both important factors to
consider when determining if refinancing is a viable option. Contact
the lender regarding the terms of the loan to avoid any surprises when
the mortgage adjusts.
•Think about how long you will live in the home. The longer you live
in the home, the more money you can potentially save in interest costs
from refinancing.
•Maintain a good credit score. A good credit score is one factor that
could enable you to obtain more favorable financing terms. Paying bills
on time and keeping credit card debt low are easy ways to maintain good
credit. Check your credit report every year to ensure there are no negative
marks on the credit history, such as missed credit card payments or
large accounbalances.
•Determine refinancing costs. Consult a loan officer to figure out
whafees are involved with refinancing. An application fee may be required
as well as closing costs. You may also choose to pay discount points
to buy down the interest rate. By knowing the upfront costs for refinancing,
you can determine exactly how much time it will take to recover the
expense.
•Roll-in refinancing. Avoid paying fees up front and immediately enjoy
lower monthly payments by rolling in closing costs into the new loan.
Rolling in the costs is particularly appropriate if you will sell your
home or refinance again in a few years, because having a higher loan
balance will likely matter less than being able to enjoy the immediate
benefit of lower monthly payments.
From
the Boston Globe, Jan. 2, 2008:
An estimated 2 million American homeowners face increased monthly mortgage
payments this year. Many cannot afford the increased payment, or find
buyers for their homes. They face foreclosure.
Also in 2008, state and federal officials must decide how to regulate
subprime loans. The industry is gone for the moment. Lenders sold about
$26.3 billion of subprime loans in the third quarter of 2007, down more
than 80 percent from the roughly $139 billion sold at the peak of the
boom in the fourth quarter of 2005, according to Standard & Poor's.
But its recovery in some form is widely considered inevitable. Both
issues remain substantially unresolved. The steps taken in 2007 were
modest. The problem continues to expand.
From
the WSJ:
• The Issue: The Bush administration's program to help homeowners with
subprime adjustable-rate mortgages doesn't include borrowers with good
credit who took out an unusually complex type of loan known as an option
adjustable-rate mortgage.
• What's at Stake: Loan balances on many option ARMs are rising, even
as home values are falling, a scenario that economists say is likely
to lead to another spike in foreclosures. Because option ARMs are so
complicated, the attorneys general of several states are starting to
focus on option ARMs, which they believe were an inappropriate mortgage
product for many borrowers.
• What's Next: Some economists call option ARMs "ticking time bombs"
that could result in losses of $100 billion, on top of an estimated
$400 billion in expected losses on subprime and other mortgages.
Says Wikipedia:
"Refinancing may be undertaken to reduce interest costs (by refinancing
at a lower rate), to extend the repayment time, to pay off other debts,
to reduce one's periodic payment obligations (sometimes by taking a longer-term
loan), to reduce or alter risk (such as by refinancing from a variable-rate
to a fixed-rate loan), and/or to raise cash for investment, consumption,
or the payment of a dividend. In essence, refinancing can alter the monthly
payments owed on the loan either by changing the loan's interest rate,
or by altering the term to maturity of the loan. More favourable lending
conditions may reduce overall borrowing costs."
California based Mortgage Consultant Joe Almirantearena reveals mortgage
refinancing secrets at a new web site (http://findmyloanonline.com)
that is full of free reports, a home buying guide, and free mortgage calculators.
The site is designed to give California residents all the facts about
mortgage refinancing so they can make an educated decision when obtaining
a mortgage.
Fresno, CA -- (SBWIRE) -- 12/31/2007 --
It seems like everyone in California is jumping on the mortgage refinancing
bandwagon. Maybe you're thinking about it yourself? After all, with
rates as low as they are, the promise of lowering your monthly payments,
sometimes significantly, is a great attraction for many homeowners.
But before you sign on the dotted line, there are a few things you should
know about the way refinancing works so you don't make a mistake
that could wind up costing you big time.
"With refinancing as popular as it is right now, California residents
have to be even more careful about shopping for the best loan,"
says Joe Almirantearena, a California based mortgage consultant. "Even
the most attractive offer can wind up being a disaster once you realize
how much the loan is really costing you."
Almirantearena offers these tips when considering refinancing:
* You should get a significantly lower rate for refinancing to make
sense. Don't rush to refinance unless it's truly worth your while. If
you're working with a mortgage broker rather than going it alone, you
can be assured that they're bringing you the best offers out there.
If you're going it alone, you'll have to do the legwork for yourself.
* Consolidating unsecured debt with a refinance loan can be a dangerous
idea. You may not be in financial trouble now, but if in a few years
things change, instead of simply missing a credit card payment or two,
you'll now be in danger of losing your home as well.
* Your credit score counts... big time. If you've had credit problems
in the past like a bankruptcy, it might make sense to wait a while for
your credit score to recover before trying to refinance. Most lenders
make it hard for people with less than perfect credit to get the best
deals. But, again, if you choose to let an expert like a mortgage broker
get involved in the process, they can often find loan options that most
homeowners didn't even know existed - which can save you thousands
over the long haul.
California - based mortgage expert Joe Almirantearena specializes in
providing mortgage information to California residents that allows them
to make informed decisions about their mortgage financing options and
learn the insider secrets that can save them thousands of dollars over
the life of their loan.
Joe Almirantearena is available for interviews and will welcome all
your mortgage related questions.
Call 800-785-4952 for a Free No-Obligation Consultation, or visit http://findmyloanonline.com
SFGate.com
reports on the mortgage crisis:
Chase spokesman Tom Kelly said a deed in lieu is possible when the
customer clearly cannot afford the house, and the loan servicer agrees
there is no way to make it work financially. (Many servicers ask homeowners
to try to sell the house first, which Cil had already done.) A deed
in lieu helps the borrower because "it clears the decks on what they
owe," and appears on a credit report as settled debt, Kelly said. It
also is advantageous for the investor who owns the mortgage because
it avoids the legal and holding expenses of a foreclosure, which can
drag on for many months. The Cil's house will now become an REO - short
for "Real Estate Owned" by a bank. Chase will hire a property management
firm to inspect it and make any needed repairs, and then engage a real
estate company to put it on the market. Realtors who specialize in REO
properties have work pouring in these days, as more and more foreclosures
hit the market. That in turn depresses prices. Cil said a six-bedroom
house a few blocks away is listed at $420,000 - $30,000 less than he
paid for his much smaller house two years ago.
Steve
Tytler writes Dec. 16, 2007: "You should refinance as soon as
possible because the longer you wait, the more equity you are likely to
lose. As I said before, I expect home prices to drop about 10 percent
to 20 percent over the next year or so, and then the housing market will
flatten out with very little appreciation or depreciation for a few years.
And it's already happening in several areas of the Puget Sound region.
One of the top local appraisers that we often use at my mortgage company
says that about 75 percent of the homes that he is appraising today have
comparable home sales in their neighborhood with depreciating prices.
He says home values have dropped anywhere from 2 percent to 12 percent,
depending on the area in which he is working. In general, the farther
a neighborhood is located away from the major urban job centers, the more
its home prices have depreciated. It's simple supply and demand. Lots
of homes for sale plus few buyers equals lower home prices."
David
Faulkner writes:
There are a few important steps to be aware of when refinancing.
1. First you get the loan application and then complete it. This can
be very difficult to do, I hate all forms!
2. The loan consultant then offers many different mortgages to you.
3. You must carefully decide which mortgage is right for you.
4. Complete the documentation that you need to apply to that specific
loan.
5. When you receive the disclosures for the loan, including all legal
information, terms and other forms you must complete these and send
them back to your loan consultant.
6. The loan consultant will then set up an appraisal company to contact
you. This appraisal company is responsible for valuing your home. This
is an essential step as you need to find out how much your home is worth
now.
7. Your loan consultant pays off your old loan with the new one you've
just taken out, and then process the loan file.
8. The underwriters of the loan will get all the information they need
from the loan consultant. They will either approve the loan, or request
extra information they need. If they do require any additional information
then your loan consultant will give them your contact details.
9. The completed loan document is then sent off to the company that
is issuing the title, or the lawyer who is responsible for closing the
loan.
10. You have a 3 day cooling off period during this time. This is when
you can cancel the loan without any obligations.
11. The refinance process is complete, and you have refinanced your
mortgage.
If you are interested in refinancing your mortgage, then you should
defiantly consider using a trustworthy mortgage company, or somebody
that you have already done business with. You should be able to find
a trustworthy mortgage broker, however if you do struggle, you can use
one of the many online mortgage comparison services.
The online comparison services are very easy, they only take a minute
to do and you get a list of suitable mortgages.
RISMedia
posts:
Many people flock to refinance while mortgage interest rates are low,
particularly when rates are about two percentage points below their
existing home loans. Other factors, like when to finance, will depend
on how long you plan to hold on to your home and whether you have to
pay considerable fees to refinance. It also will depend on how far along
you are in paying off your current mortgage. If you expect to sell your
home relatively soon, you are not likely to recoup the costs you incurred
to refinance. And if you are more than halfway through paying your current
mortgage, you probably will gain little by refinancing. However, if
you are going to own your home for at least another five years, that
is probably long enough to recoup any refinancing costs and realize
real savings as a result of lowering your monthly payment. In fact,
if it costs you nothing to refinance, you can gain even more. Many lenders
will let you roll the costs of the refinancing into the new note and
still reduce the amount of the monthly payment. Plus, there are no-cost
refinancing deals available. Contact your lender, and its competitors,
before you refinance.
Here are
five reasons to refinance:
- Lower
My Payment
- Refinance to cut your monthly mortgage payment.
- Consolidate
My Debt
- Pay off your high-interest debt with the right refinance loan.
- Get
Cash from My Home
- Refinance to access equity in your home like cash.
- Keep
My Payment from Rising
- Refinance to lock in your mortgage rate and payment.
- Get
Cash from My Investment Property
- Refinance your investment property to use toward whatever you need.
From MortgageHome:com:
Benefits of Home Refinancing
Imagine a scenario where you can have access to extra cash, while simultaneously
lowering your monthly mortgage payment. This dream can become a reality
through mortgage refinancing.
A house is the largest asset you may ever own. Likewise, your mortgage
payment may be the largest expense you'll have in your monthly budget.
Wouldn't it be great to use this asset to reduce your monthly payment
and put extra cash in your pocket? When you refinance your mortgage,
you can take advantage of the equity in your home and enable this to
take place.
Lower Refinance Rate, Lower Payments
When you purchased your dream home, the financial environment dictated
interest rates. While
certain factors, like your credit rating and the amount of the down
payment that you were able to afford, influenced your interest rate,
the single most important factor was the prevailing rates at that moment.
However, interest rates fluctuate. When the Federal Reserve enters a
rate-cutting period, the prevailing rates may become significantly lower
than when you originally purchased your home.
By refinancing your mortgage when interest rates are lower, you can
exchange a higher interest rate for a lower one, which, in turn, will
lower your monthly payment.
Shorten the Length of Your Mortgage when Refinancing
Another advantage of home refinancing is that you can shorten the term
of your mortgage. Let's say, for example, that you originally had a
30-year mortgage and have been paying it for eight years. Thanks to
mortgage refinancing, you can switch to a shorter term of either 10,
15 or 20 years. This can save you thousands of dollars of interest.
Also, if the refinance rate is lower, but you maintain the same monthly
payment, you will build up equity in your home more quickly, because
more of your payment will be going towards principal.
Exchange an Adjustable Rate for a Fixed Refinance Rate
When interest rates are low, adjustable
rate mortgages (ARMs) are the housing market's darlings. However,
as interest rates increase, that adjustable rate may not look as sweet.
It's also possible that you opted for an ARM because your financial
future was less secure, or you weren't sure how long you'd stay in your
home. If, however, you've become financially stable and know that you'll
be staying in your home for several years, it may be beneficial to swap
that fluctuating adjustable rate for a fixed one. You'll have more security
knowing that your monthly payment will remain steady, regardless of
the current market environment.
Here are my recommended links about refinance:
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