Refinancing Loan

If you’re in the market to refinance your mortgage you’ll find several national banks and mortgage companies bragging about their “no cost” mortgage loans. Are these loans truly “no cost” or are there really no free lunches when it comes to mortgage loans? Here are several tips to help you avoid overpaying when refinancing your home loan.

What does “no cost” mortgage refinancing really mean? Banks and mortgage companies never waive their fees; they simply offset them by marking up the interest rate. This is true of flat fee mortgages and the supposed no-fee refinancing offers you see on television. Advertisements promising a flat $395 fee or zero cost loans are never telling the whole truth about the loans. These offers are simply gimmicks used to trick homeowners into accepting loans with hyper-inflated interest rates.

Most mortgage companies and brokers slip .5% – .75% markup of your mortgage rate for their commission; however, these “no cost” loans typically and another .5% to this unnecessary markup known as Yield Spread Premium. This hyper-inflated mortgage rate means that you’ll pay more every month you keep the loan than if you had simply paid your closing costs. Depending on the amount of your loan this could add up to thousands of dollars every month!

This deceptive marketing is practiced by nearly every bank, Mortgage Company, and mortgage broker in the United States. When it comes to refinancing your mortgage there are truly no free lunches when it comes to flat-fee and no cost mortgage loans. You can learn more about your mortgage refinancing options including costly pitfalls to avoid with a free mortgage toolkit.

By: Louie Latour

What’s happened in the mortgage industry? Can you still get a new home mortgage or refinance your existing home mortgage? Why is all the news about the mortgage industry such doom and gloom?

Well, let’s take a look at all this more closely. Before the resent sub-prime fall out a buyer with a credit score of 580 and a somewhat poor credit history could get 100% conventional loan financing on a new home. The sub-prime lender was willing to take a chance on the buyer because they would be collecting a much higher interest rate on the buyer who had the lower credit rating. Often times the seller would either pay all of the closing costs or it would be rolled into their loan. Therefore, the buyer was able to move into a home with little or no money out of pocket.

A number of these buyers were only able to get approval for an adjustable rate mortgage (ARM). This meant that their rates and house payments would go up in one, two or three years, depending on the ARM program for which they had gotten approval.

The mortgage lenders would instruct these buyers to be sure and make their payments on time which would definitely improve their credit scores and then they would be able to refinance and get a better fixed rate mortgage before their ARM rate would adjust upward for the first time.

Loans for buyers in this category were considered sub-prime loans. For some lenders their total portfolio of loans was made up of sub-prime borrowers.

So what happened? The percentages didn’t work out. Not enough of these sub-prime borrowers were able to meet the commitment of their new house payments which eventually lead to foreclosure. Some of the borrowers where able to keep their payments made, but not on time. So with the late payments their credit scores did not improve as they had hoped. Therefore, they were not able to refinance before their ARM rate adjusted and their payments when up. At that point, these borrowers also went into default.

Simply too many of the sub-prime borrowers went into default for those lenders whose total portfolio was in the sub-prime market. Therefore, a number of these type lenders were forced to close their doors.

That is not to say that a large percentage of these sub-prime borrowers did not and are not currently making their payments on time and proving that they were worth the chance that the lender took on them. It is just that a large enough percentage of them did not and the lenders were forced to have too many foreclosures on their books at one time in order to still make a profit and stay in business.

As a result the bar has been raised for the buyer wishing to get a new mortgage loan today. Lenders now want a little more proof that a buyer is truly taking solid steps to rebuild their credit worthiness. Today a borrower generally needs a credit score of 620 to get a one hundred percent conventional loan on a new home purchase. In addition, their whole credit history is scrutinized more thoroughly by the lender.

This has impacted the real estate market because a pool of buyers that were once available have now reverted to renters. If sellers can’t find buyers, then they can’t become buyers themselves as they want to upgrade.

For people who have always had good credit very little has changed. Those people just need to go about business as usual. But, as we said they may have problems selling their current home because of the reduced size of the buyer pool.

For those who have previously had some credit problems and really want to buy a house you just need to take steps to improve your credit score and you too can still have a home mortgage loan.

If you are sincere, you can fairly easily improve your credit worthiness. Start by simply reviewing your credit report. There may be items on the report that have been paid but not reported properly to the credit bureaus. There may be items that are not even yours, especially if you are a Jr. or Sr. Some items may belong to your son or father that may be negatively impacting your credit score. Your credit report should not be a mystery to you.

There is a large segment of the population that falls in the borderline credit worthiness range. A lot of these buyers are still worthy of home ownership. At this point in the mortgage loan industry buyers either have to improve their credit scores
and credit history or the mortgage loan industry has to find a way to still accommodate people who have little down payment money but can still make a monthly house payment.

By: Jackie Beem

Taking advantage of the multitude of different programs out there will enable you as a homeowner to get the best possible deal on a mortgage refinance while also allowing you to have much more easier to manage and budget for monthly payments with lower interest rates. This will in turn mean paying down the loan quicker, and not only saving you money right now, but as well as saving you money in the future.

What are Reasons to Refinance Your Mortgage?

There are a lot of different reasons for you to refinance your mortgage. Understanding the benefits that come with a mortgage refinance will put you on the path to getting the best deal on any of the several different types of refinance home loans that are available. Here are some of the best reasons that you should consider one of the many different types of home mortgage refinance loans out there:-

1. Lower What Your Monthly Payment Is – By getting yourself a refinance on your home mortgage, you have the ability to lower your interest rate as well as what your monthly payment currently is.

2. Put Cash Back Into Your Pocket – Be smart and learn how you can capitalize on your equity just like you can with your checking account. Refinancing can be a great way to put money back into your pocket, particularly if you need it.

3. Consolidate And Simply Your Debts – Having multiple loans can at times really be a burden for anyone. Take charge and pay off your high interest debt with one easy payment by using refinance mortgage loans.

4. Your Credit Score Has Improved – If your credit score has recently improved, you can find yourself in a position to have a lower interest rate on your mortgage. Home refinancing loans can make that happen.

5. Stop Your Payments From Growing – Refinancing can put a stop to rising monthly payments. Be at ease financially and physically by having your monthly payments locked into something easier to manage.

Should You Refinance?

Knowing if whether or not you should refinance your home loan is a very quick and easy assessment:

o Do you want to start fresh by replacing an older secured loan with a new home loan secured by the same assets, only that it has a better interest rate and lower payments?

o Can a refinance be used to reduce your interest rate and lower your overall monthly payment. Sound good?

o Knowing whether the amount saved on interest balances one-time fees payable during refinancing is worth it to you.

When You Should Refinance?

Refinancing your mortgage is a critical financial decision and should be taken with all seriousness. You should be thinking about refinancing your mortgage:

o When mortgage interest rates lower (They have!)
o Your financial situation has changed recently
o To consolidate any debt, especially high interest debt
o You need to improve your current finances

However, when you are thinking about refinancing, you really should not consider just one of the above reasons alone; instead you should evaluate your unique and comprehensive financial situation to see if a mortgage refinance makes sense to you.

How Do You Get Started?

You have done your research about home refinancing loans and you know what you want your financial goals to be; but you at the same time you would like to know which refinance mortgage options are going to best suit your specific needs?

By: Mabia Williams