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

Home equity loan and refinancing are two excellent ways that can help you manage your finances. However, it may prove difficult to choose one from the other and should depend on what your financial goals are. You can opt for the lower payment schemes of cash-out refinancing, or you can choose the great tax benefits offered by a home equity loan. The choice, however, does not prove to be as simple as this. Here is a comparison of these two types of loans to help you see which one is right for you.

Cash-out refinance simply means that you are refinancing your existing mortgage in order to lower your monthly payment and/or your current interest rate, and get some additional cash for other pressing reasons such as for home improvement, renovation, and the likes. If you are lucky to choose the right timing, you may be able to get all these with cash-out refinancing. Say, your home is valued at $300,000 and your existing mortgage balance is $200,000, your home equity remains at $100,000. You are free to borrow the remaining equity as you deem necessary.

Home equity loans are usually provided in two kinds: the home equity line of credit and the home equity installment loan. A home equity line of credit line means that you are borrowing against the value of your home; your home is your collateral to the credit. Home equity plans are usually set at a fixed time; say 10 years but with variable loan rates. Your interest rate and the annual percentage rate of your mortgage can move up and down depending on the market trends. During the specified time, you are free to obtain the cash when you need it, and pay only for what you happen to spend. Some mortgages are offered with payment of full outstanding balance, while others allow repayment over a fixed time.

On the other hand, an installment loan is a loan that has a fixed rate that stays the same all throughout the rest of your home equity loan terms. Also called the closed end home equity loan, you amortize your loan for periods lasting up to about 15 years. In this kind of loan, you usually receive a lump sum at closing depending on your home value, and you can not borrow further afterwards.

Which is better?

Remember that interest rates do not usually behave normally, much as you want them to. When this happens, home equity loans may actually prove cheaper than refinancing, although they are potentially riskier. Choosing what is better between the two should depend on individual circumstances. For example, if you plan to pay off your mortgage and do not need as much money, you can go for a home equity loan to get lower rates and shorter terms. On the other side of the fence, with cash-out refinancing, you can get all your money up front and simply pay off interest and principal on a lowered monthly basis as agreed upon, with no frills. Weigh carefully based on what your financial objectives are and choose one which you think will give you a fairer deal.

By: Alan Lim

If you have purchased a mobile home, you may have done so with a mortgage loan, a chattel loan or simply a personal loan. In any case, if your monthly payments have become too much of a burden or if you just want to repay your loan sooner or improve the terms and conditions of your loan because your credit has improved, what you need is refinancing.

It is possible to refinance a mobile home loan, yet, it is not such an easy task when compared to home loan refinancing. There are several reasons for this but the main ones are undoubtedly the fact that mortgage home loans are a wider market than mobile home loans that are simply a small niche of the financial industry and also due to the fact that mobile homes are still vehicles with values that are reduced over time.

Mobile Home Loans: Mortgage, Chattel or Unsecured Personal Loan

When you purchased your mobile home you may have done so with the aid of different financial products depending on the terms of the purchase. For instance if you purchased the mobile home plus the land in certain states you can obtain a mortgage loan and secure the debt with both the mobile home and the land, if the land is not included and only the mobile home secures the loan, then you are applying for a chattel loan and if there is absolutely no collateral then the money is obtained from an unsecured personal loan.

Refinancing each of these financial products is a different process and therefore has different costs. Some of these loan products are easier to refinance than the others and therefore you need to know these differences beforehand in order to understand which possibilities in terms of refinancing your mobile home debt you have. In any case, refinancing is possible but the costs may persuade you against the idea.

Issues with Mortgage And Chattel Loans

Unfortunately, refinancing a mortgage loan with your mobile home is not as easy like refinancing a mortgage loan with a regular property. The reason is simple, while most houses and condos maintain or increase their value over time and thus, equity builds due to that and due to the reduction of the debt secured by the property, mobile homes depreciate and thus, equity builds at a lower pace if it builds at all.

Chattel loans have exactly the same problem, the mobile home being used as collateral depreciates and the value of the property covers a lower portion of the loan each year even as the debt gets paid. Moreover, mortgage loans have an advantage over chattel loans because the land is included and the land usually does not depreciate thus maintaining an important part of the collateral’s value.

Personal Unsecured Loans

Personal unsecured loans are much easier to refinance because even if your current lender does not want to provide you with a new repayment program, as long as your credit is fair and your income allows it, you can obtain another loan with your desired terms and use the money to cancel the previous loan in advance. You should beware however of prepayment penalty fees.

Moreover, if you can obtain a secured loan instead (using your mobile home and or the land as collateral), you will get more advantageous terms on your loan and you will be able to cancel the previous loan while getting additional funds for any other purpose.

By: Hilary Bowman