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Mortgage refinancing can be a great option for many people. However, this is not true for everyone. There are both positives and negatives to consider prior to refinancing a mortgage. Here are 3 things that you should think about prior to attempting to refinance a mortgage.
Save Money through target=”_blank” href=”http://www.refinancingcondo.com/2009/11/mortgage-refinancing-choices.html”>Refinancing a Mortgage:
The main reason people refinance their home loans is to decrease the interest rates. By reducing the amount of interest you pay, you will be truly saving money. However, sometimes homeowners can not get good enough interest rate, pay closing costs, and still benefit. Typically, if a homeowner can save 1%-2% in interest, they will be able to really see a benefit to mortgage refinancing.
Cash Out Mortgage Refinancing to Reduce Other Debts:
A cash out mortgage refinancing option can be a great way for a homeowner to pay off, or down, other debts. When you get cash back from a refinance, you will receive it in a lump sum. This money should be spent wisely though, and you should have a plan for it. Also, this money can help with retirement planning, home improvements, or anything you want. However, spend it wisely and with the long run in mind.
Fixed Rate Mortgages:
Many homeowners are attracted to ARM (Adjusted rate mortgages) because of their low initial interest rates. However, if the rate does rise, so will your mortgage payments every month. That is why a fixed rate mortgage is usually suggested to homeowners. With a fixed mortgage, your interest rate, and monthly payments, stay the same regardless of market conditions.
These are 3 good reasons to refinance a mortgage.
Watch the video related to mortgage refinancing
Help answer the question about mortgage refinancing
I am refinancing my mortgage at a lower rate and am considering a new car purchase. Is this wise to do?I dont have any other major loans or home renovations to do but I am in the market for a new car and would rather avoid financing a new car. I do have an equity loc(variable rate) thats open if i ever need in an emergency but I think it might be better just to go through refinancing. Any opinions?
About Author
MPetrone -
About the Author:
I have been underwriting mortgages for years. Recently, I got into a new business but I still wish to share my advice, tips, and industry inside happenings of the mortgage refinancing industry.
For more articles on Mortgage Refinance check out my website
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You need to make an appointment with a mortgage broker or bank and ask these questions. These
Comment by MissLadeeLuck — September 5, 2010 @ 6:16 am
The thing that matters most is like you said what will be best for you knowing that you are moving into a new house in 2 years…
A refinance to clean up credit makes ALOT OF SENSE!!!
The new rate is actually lower then what you have now…Even though you have a 6.5%, your 2nd mortgage is probably i assume in the 8% or higher range???
So, interest alone is less with the new mortgage..
Also, the main thing to look at , and as a mortgage loan officer i hear it SO MUCH, is the "paying credit cards over 30 years"…
YOUR NOT!!!
You KNOW you are moving in 2 years… All you are doing is tapping into your equity now, the same way you would if you sold your house and used your equity to pay the credit cards…
The thing to remember is that NO ONE takes out a 30 year mortgage, and stays with it for the full 30 years!!!
The average homeowner sells or refinances a mortgage every 5-7 years!!
Also, how much are your credit cards? Lets say $10k…Now is it really ACCURATE to say it will take 30 years to pay that $10k in credit cards???????????
If you think about it, it will probably only take 2-3 years to have that $10k paid off, so when someone says they dont want to extend credit cards over a 30 year mortgage, it doesn't make any sense…..
Also, to tie everything together…Even if you do pay more money, more interest now, and for the next 2 years until you move, you are doing it for a reason..
To get your credit back up, so that your new house can qualify for a lower rate OBVIOUSLY makes paying a higher rate for 2 years worth while…
Now you wil lhave hte critics say ITS NOT A GOOD IDEA…but the fact is everyone in america are in different situations financially… What makes sense for you may NOT make sense for someone else…
WHO CARES WHAT ANYONE ELSE THINKS??? WHAT MATTERS IS WHAT MAKES SENSE FOR YOU AND YOUR FAMILY AND THEIR NEEDS…
currently, your needs (as you have expressed) are to clean up your credit so that you qualify for a better rate in the future… That is what matters!
Also, i wanted to say that you may be able to get a lower rate then 6.95%… I work with Providential Bancorp, we are a nationwide wholesale lender…
I have been qualifying borrowers at as little as 6.5% on a 30 year… The difference between the 6.95%, and the 6.5% can mean alot of money in your pocket..
Also, being that my company banks all of our loans in house, we have lower fee's then your average bank or mortgage brokerage…
Because most mortgage companies are a middle man, they have to charge extra fee's in order to make a profit on a loan…
They also have to give you a higher rate then you qualify for in order to make profit as well (then investor they use will pay them to give you a higher rate then you actually qualify for)
What i suggest is that you do your due dilligence, and make sure you are getting the best offer…
Feel free to call me and i would be happy to give you an analisys… My name is Jason Fry, you can reach me directly at 312-264-6448, or email me at jasonf@providential.com..
Good luck and i hope this helps! Call at any time!
Jason Fry
Licensed Mortgage Originator
Providential Bancorp
312-264-6448
Comment by answergrrl — September 5, 2010 @ 7:08 am
You have no downpayment. No money, inadequate income.
Your chances of getting a mortgage in this tight market are zero
Comment by Dasha — September 5, 2010 @ 6:28 pm
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Comment by yaniece22 — September 6, 2010 @ 12:43 pm
You have a lot of good responses here to take into account..
What i can say that i think all other responses are missing is the fact that EVERY LENDER HAS DIFFERENT GUIDELINES IN WHICH THEY LEND MONEY!! . Some lenders specialize with low credit, some only work with good credit, etc.
I have lenders that will lend a 100% financing as low as a 600 credit score.. You are at a 645, and you make plenty enough money to qualify.. (As you can see it is very different then other banks that responded to your question)
Your best bet is to talk with someone that has a portfolio of investors they work with. There are a couple reasons i suggest that:
1. If a loan officer can shop your loan to multiple lenders they are bound to find one or more willing tho lend to you. By looking at multiple options and programs you will be sure to find the lowest costs and rates…
2. As another response said if you on your own call multiple banks to see what you qualify for, EACH AND EVERY LENDER will HAVE to pull a seperate credit report. The more times it is pulled the worse your credit gets. Now, when you work with a loan officer that can shop among their investors, they only have to pull one credit report, and use that copy to shop mortgage lenders for you..
So not only do you keep your credit score where it is, you dont have to worry about any of the busy work..you let the loan officer do it for you..
My name is Jason Fry, and I am a loan officer with Providential Bancorp, a nationwide mortgage lender. I'd be happy to assist you in a refinance, or at least be able to let you know exactly what YOU QUALIFY FOR. You can then make a more informed, and educated decision whether it would be the right move for you.
Feel free to give me a call at 312-264-6448, or
you can email me at Jasonf@providential.com.
Thank You,
Jason Fry
Providential Bancorp
Comment by Dano_Slokes — September 7, 2010 @ 12:56 am
In our society you are allowed to shop around and get other opinions or deal with others who give you more assistance and make you feel more comfortable. I am not reading that your loan officer is up to no good. I am reading that you dont have a good handle on your affairs and need to get more diverse advice so you can make intelligent decisions.
Comment by MEMORY ADJUSTER — September 7, 2010 @ 4:15 pm
The missing pieces of this puzzle to quote solutions are credit score and value of the home.
There are many loan programs designed for debt consolidation. maybe a little guidance from the credit score side would be helpful…if we get your score as high as it could be it helps with rate / fees etc.
I train loan officers and write a blog that can help you…check it out.
Comment by pcreamer2000 — September 8, 2010 @ 2:59 am
It's spam. Your not the only one who got similar email that they won something. Ignore and delete it.
Comment by elyar h — September 8, 2010 @ 7:11 am
You are correct – there are no legitimate 2 or 3% fixed rates out there. VA loan rates will be as good if not better than any conventional loan rate available but every lender has some discretion in the rate they will charge you. Since rates can and do change even throughout the day, there is no lender or website that can guarantee the lowest rate. To say or advertise that they can is illegal. You will have to shop and work with a lender you trust. The biggest advantage of a VA loan is that they don't require a down payment on purchases and they lend a higher percentage of your home value on refinances than most programs.
To start with a $240K loan at 5.875% you must have been making P&I payments of at least $1550 to get to $200K after seven years which is probably more than your contract required. If you continue to do that you will pay your current loan off in 17 more years. If you refinance your balance plus your closing costs over a 15 year term at a current fixed rate of 4.375%, your payment goes down to $1540 and you still pay the loan off two years earlier for a total savings of over $41K.
Going to a 30 year term ($203K at 4.875%) would reduce your P&I to $1074 if a payment reduction is what you are after, especially if you think your income could be decreasing. The rate reduction with either option would recoup your closing costs in under two years, so unless you see rates improving in that time frame (I don't) or a move to another home it is worth considering.
Comment by tlc289 — September 8, 2010 @ 3:20 pm