|
|
Compare Mortgage Refinance Lenders
Spare 1 minute to Fill the Form on the
left and let the lenders compete for your business. We will find the
top lenders in your area for you to choose from.
-
100% Free service
-
No Credit Check
-
No SSN needed
-
No obligation
-
Fast & secure
Have not got a
minute? See the rates in your area
|
Refinance Rates
Purchase Rates
Refinance Rates,
Compare Rates in your area:
Refinance Rates
Purchase Rates
Purchase Rates,
Compare
Rates in your area:
|
Refinance Home Mortgage Loan
Explained
Refinance home mortgage loan has always
been popular among homeowners in periods of low interest. Refinance
mortgage allows the homeowner to replace the existing high interest loan
(or loans) with a low interest rate mortgage refinance which would soften the
heavy burden of debt.
Refinance mortgage could provide low interest rate and flexible
repayment options. If previous loan has been paid timely,
homeowner's credit score will have improved. This will help to get
better loan terms. Since new loan offers better terms, mortgage could be
paid off faster.
A person with good credit score can easily take advantage of mortgage
refinance loan. Those who have bad credit can also get a mortgage
refinance. However they will have to pay slightly higher interest rate.
Probably the best advice for people with bad credit would be to see if
they could improve their credit score first. Recently, more mortgage refinancing applications have
been turned in for approval than ever before. This is due to a
struggling economy, low home interest rates, and new stimulus programs
that make approval of mortgage refinancing easier. In addition, the
lenders and banks do not want to deal with more home foreclosures or
defaults. Many new refinancing mortgage options now exist for nearly any
homeowner. Eased requirements and restrictions allow more people than
ever to get refinance
approval.
Things To Do To Reduce Costs and Fees Before Applying for
Refinancing
Saving money through a home mortgage loan refinance is more than just
finding the lowest interest rates. You can further cut fees and costs
through the structure of your loan, avoiding PMI and buying lower
interest rates. These are;
1. Get prepared. Many homeowners’ refinancing applications are
being denied or returned as incomplete due to simple, easily avoidable
mistakes that could cost the non refundable application fee. Do your
homework; contact one or two mortgage lenders and banks to ask what
their requirements are for a home loan refinance. This way, you can
prepare for those requirements in the meantime.
2. Close credit card accounts. Close inactive credit card
accounts to improve your credit score, making you eligible for lower
interest rate loans. You will need to notify the credit card companies
in writing that you wish the accounts closed on your request.
Next, check your credit report after 30 days to be sure closed
accounts include the comment "Closed at Customer's Request." You want
future lenders to know it was your request and not bad credit that
closed your accounts. Also, take the time to check for any mistakes in
your credit report that could negatively impact your credit score.
3. Avoid the hidden cost of PMI. When refinancing a mortgage,
many homeowners cash out part or all of their home's equity to invest in
home improvements or pay off credit cards. But, if you are borrowing
more than 80% of your home's value, you will be hit with private
mortgage insurance, costing you hundreds a year.
4. Pay points now. If you are planning to stay in your home
for several years, then you can save money by paying points for lower
interest rates. You pay up front fees to ensure you have lower interest
payments over the course of your loan. Remember, this only works if you
keep your mortgage for several years.
5. Choose a short-term home mortgage loan. Short-term mortgages offer lower
interest rates than long-term mortgages. You save money by the lower
interest rates and shorter payment period. The trade off is a larger
monthly payment, but this option can save you thousands. Some homeowners
get a better interest rate, but also have their home loan lengthened,
which may negate savings through a better interest rate. If you have to
lower your monthly outgoings due to your current financial position,
then you would need to look at extending your payment period,
obviously. Homeowners should be aware of what the reality of
refinancing a mortgage means to their finances, both good and bad, both
long and short term. Set out the objectives you would like to achieve
with refinance and pursue those objectives.
Where and How To Find The Best Refinance Home
Mortgage Loan
1. Internet is a good place to start searching, gathering
information about home mortgage loan refinance and lenders. There are
numerous refinancing companies available online. They may be able to
provide home mortgage refinance loan at a slightly lower interest rates.
Because the cost of providing service is lower, if the application is
made online and they may save broker commissions. You can still enjoy
outstanding customer service and fast approval.
2. Use a broker to help you find
the best Refinance Home Mortgage Loan if the
information is becoming too complicated for you. There are numerous
mortgage refinance companies that are available in the market and they
are providing diverse offers. Therefore, finding out the perfect one
could be a tough task for most people. Don’t struggle alone; use a
mortgage advisor who is thoroughly acquainted with the ins and outs of
this market. A experienced refinance mortgage broker can give you some valuable advice.
3. Another option is just to drop into your bank
to ask their terms to start with. Since you have a history with them, it
is not a bad idea as long as you remember to check other lenders before
deciding. You may easily get too comfortable with your bank, don’t.
Your existing lender may modify your mortgage terms instead of losing
you. Check with them, too.
What To Do And Look Out For During The
Decision Process
Here are a few things to pay attention to when
you refinance your mortgage loan, to make sure that you don’t overlook
anything that you might regret, or that can cause you problems later.
1. Apply for a pre-approval to many different lenders to make
sure you are getting the lowest refinance rate possible. When you do this, make
sure that with the initial pre-approval application, the lender is not
pulling your credit history. You will want to reserve your credit pull
for the lender that you are most likely to work with. You can decide
that after you have gone through the preliminary pre-approval process
with a few lenders. Each time your credit is pulled, it docks your
credit score just a little. If you have too many inquiries, it could
keep you from refinancing your mortgage loan with the lowest rate
possible. When you pre-apply for home mortgage loans online, most
lenders or mortgage service companies will not initially pull your
credit. Check for information about this on their website. They will
usually tell you whether or not they are going to pull your credit.
Also, if on the application you do not give them your social security
number, they cannot pull your credit. If, on the application, they ask
you to describe your credit, they are probably not pulling your credit
report.
2. Make sure that your original mortgage does not have a pre-payment
penalty or early payoff penalty of any kind. Sometimes people will
get into their mortgage with the mortgage having a pre-payment penalty
and they will not even know about it. Pre-payment penalties periods
usually range from 6 months to 3 years with a penalty for an early
payoff. The penalty is usually about the amount of 6 months worth of
your home mortgage loan interest, but this varies. You would have to be able
to have some significant payment and interest savings on your refinance
loan to justify refinancing a mortgage loan with a pre-payment penalty.
3. Pay closest attention to the interest rates they are offering &
the closing costs when evaluating different lender offers, in the
mortgage loan pre-approval process. These are the two biggest factors
that will help you figure out which lender is right for you. If one of
these two factors is too high, it could offset the benefit of
refinancing for you.
Comparing lenders would certainly help you find
the best deal on refinancing, but those numbers can get pretty
confusing, especially when you are to investigate rates, fees, and
points. Remember though that just because a mortgage company has the
lowest rates, it doesn't necessarily mean that it offers the best deal
for you.
Many refinance companies will post their rates
online. Lower interest on an ARM or fixed-rate mortgage can be tempting,
but have a look at the fine print. What points or fees are usually
required for the rate? Mortgage lenders lure consumers with low initial
numbers, only to have high closing costs. A better number to look at is
the APR.
The federal law requires the annual percentage rate, or the APR, to be
disclosed to consumers before signing any contract. The APR would
include the interest rate of the mortgage and closing costs and this
will give you an accurate idea of the total cost of the refinance
mortgage loan.
Just as your original mortgage had closing costs, so will your refinance
mortgage. Standard fees include origination fees, appraisal costs, and
closing fees, while points may also be required to secure a low rate. By
looking at the APR, you can determine which lenders are offering the
best fees in relation to their rates.
4. Get your interest rate and closing costs in
writing as soon as you decide on a lender to work with. Get your
lender to give you a commitment in advance of all of the costs that will
be involved with your loan. Find out if the refinance loan you are
getting has a pre-payment penalty as well. Sometimes lenders will leave
out important information like this, if they think it might scare you
away from refinancing with them.
5. Before refinancing, decide on how long you plan to keep the
mortgage. Then, compare the costs of mortgages for how long you will
have them, even if you take out a 30 year mortgage that you plan to have
for only a couple of years. Mortgage calculators can always help with
the math. The initial lowest rate refinance mortgage loan may not always
be the best deal and it will clearly depend on your situation. For
example, paying points for low rates will not save you money if you plan
to move in a couple of years later.
6. Remember you are in the driving seat.
No matter what financial problem you may have, if any, you are always in
control. There is no single mortgage lender or bank you must use, and
there is no one who can tell you what type of mortgage refinancing you
need. You are in complete control of almost every aspect of a home loan refinance. The
only things that are up to the mortgage lenders or banks are whether or
not you get approved, what the interest rates are, and what other costs,
fees, and insurance are needed. Many of these things can be negotiated,
but it is ultimately up to the lender you choose to refinance.
While refinancing a mortgage is a great idea for some
people, for others it just does not make sense. Each situation is
different, and needs to be dealt with in its own way. These are some
general tips that will help any homeowner avoid a lot of the hassles of
refinancing home mortgage loan, and help them find the best mortgage
refinance for
their situation.
Article by JS Lee
Factors Determining Your Refinance Home
Mortgage Loan Application
Knowing what the lenders are looking for to
determine your refinance loan application helps you to prepare for it well in advance. The
information the lenders require may increase time to time. Nevertheless, it will
not be less than what I listed below. You could say that these are the minimum
information required. These factors are valid for home purchase loan
applications and even for car loans or credit card applications for that matter.
Your Income Level:
This is usually called household income and includes your partners income as
well if you are buying (or owning) your home jointly (your friend’s income if
you are buying with a friend). Refinance home mortgage loan lenders have a metric called income multiplier. For example if the metric is 3 times of the income, it means
that you can only borrow 3 times of your earnings (or joint earnings). These
metric changes as the lenders get optimistic/aggressive or pessimistic/cautious.
Of course the lender will go through the details of your job as far as verifying
it. They will at least ask your last three months wage slips. They may want to
confirm with your boss. They do this in different manners, though generally by a
letter. You will be asked to confirm in your application that it is OK for them
to do so. The longer you were in your current job is the better, otherwise you
will need to provide information about your previous jobs as well. Self employed
people need to provide accounts and probably confirmation from their accountant.
Your income is the very starting point of the process. There and than the
lenders should be able to tell you how much maximum refinance home mortgage loan they can offer you.
Down Payment:
You will need to put down certain amount of the property value. The higher the
down payment, the easier the process becomes. Your application gets accepted
easier, you are offered better rates and your payments become more affordable.
Unless you have a steady, verifiable jobs and best of credit score you are
looking at minimum of 15–20% down payment (in refinance cases, that would
be the equity left in your home after the loan). They used to do a 25% down
payment and no questions asked mortgages, but the lenders wised up the hard way
not to ask anything. There is the issue of Private Mortgage
Insurance (PMI) that the lenders would make sure you pay if they are lending
more than 80% of the value of the property. So you save on that if you can put
at least 20% (or refinance up to 80%).
Your Credit Score:
It is wise to say that you should not start the process of refinance home mortgage
loan application
without checking your credit score. There are many free credit score providers available,
but I would suggest that you get a copy of your credit report and go through it.
This would at least give you an insight to how it works. There may be something
that should not have been there and it may be corrected by just calling your
credit card company or bank. Your credit score identifies you to the lender as a
number. It really is that simple. John Smith becomes 708 to the mortgage
underwriter. Looking after your credit score is a long, continuous process.
However, if you failed on that do not despair, you can repair your credit in
time. No not with the credit repair agents, just yourself. Starting from today,
if you put your house in order, start making your payments in time and sorting
out your financial affairs you can prepare yourself for a mortgage with good
credit score 6–12 months down the line. If you have time, this would be much
better option for you than trying to get a refinance home mortgage loan with bad credit.
Your Income and Expenditure Statement:
Most refinance home mortgage loan applications will have a section to put your
household income and expenditure or there will be an additional form. You will
need to put all the sources of income in here with all the expenditures including
credit card payments, car loan payments, children’ school fees as well as the
usual monthly utility bills, grocery and clothing spending. This will allow the
lender to assess your ability to afford the mortgage payments. They will ask you
about six months bank statements to verify these spending, so there is no hiding
unless you are making some cash and making payment in cash. Clearly high
spending household will reduce the limit of refinance home loan amount they can get.
Your Residence Verification:
Refinance mortgage loan lenders would want to verify your residence for at least 3 years. If you are in
the voters’ registrar or some government data readily available to the lenders,
you just need to put your addresses for 3 years. Otherwise, prepare the utility
bills for these addresses, you will be asked.
All being well you should get an offer in
the post.
External Factors:
These are the factors that you can not affect. I am just going to list some of
them, so that you know. General condition of the economy has direct effect on
mortgages and loans. When the economy is good, everyone including lenders are
optimistic and this effects their decision. They look at the applications
negatively or positively. Rising or falling house prices have a positive or
negative effect on your application, too. Obviously, if the house prices are
rising, the security underlying the refinance loan is increasing and vice versa. I know
you can not do much about it; however, it is the case. Should you not have time
pressures, you may choose the best time to refinance or buy a house according to
lenders sentiment. It helps.
Article by JS Lee
Should You Choose Fixed Rate or Flexible Rate
Refinance
Home Mortgage Loan?
This article may seem to conflict with my other blogs where
I talk about keeping your options open and not getting into high redemption
penalty situation, but you will see that it does not. Let us look at the
terminology.
Fixed rate home mortgage loan or refinance loan means that
you fix your loan interest for a long period of time. Once you get a fixed rate
mortgage, you will have a peace of mind of knowing how much you are going to pay
each month in that duration. In return to giving you a fixed rate, lenders would
want you to be committed to that loan. They will make sure with the redemption
penalties that you will not refinance it anytime soon. I think it is only fair
for them to do this, because to cover your fixed rate they will have to go out
and find fixed source of capital. So your flexibility will be much lower but you
will have a peace of mind just in case the mortgage rates shoot again.
Flexible home mortgages keep your mortgage rate flexible,
meaning your loan interest will go up or down with the determined criteria
(usually the base rate). Here you will have a very small (or no) redemption
penalty, giving you flexibility to refinance again or pay your loan back say
when you sell your home. However, you do not know where the rates are going to
be in two years time. It may shoot up as well as hit the rock bottom.
One thing to note here is that some fixed mortgage lenders
may allow you to move your mortgage if you decide to move, although usually
selling your home and buying a new one must be done in the same time. In general
the real fixed rate mortgages would be slightly higher interest; however there
are so many different mortgages to generalize. Some mortgages may only be fixed
to start with and then it may become flexible and higher interest after the
short initial fixed period. These are little tricks the banks play on the
customers to show them how low their monthly payments. Somehow consumers are
focused on the near term and starting monthly payments plays an important part
in their decision. What we are discussing here is a real deal fixed mortgage of
considerable duration, not an introductory fixed period.
Now the decision of which of the rates to get depends
entirely in your beliefs and circumstances. For example, a) you believe that the
home mortgage loan rates hit the rock bottom and can not go much lower anymore,
b) you have found your ideal home and you will not move for a job or other
reasons for a long time, c) your credit score is very good just now to qualify
you for the best rates, d) you are worried the rates will go up quite much and
you want a peace of mind. Then, you should look to fix your mortgage interest as
long as you can. In the completely opposite scenario, you should remain
flexible. I hope it is all clear.
Article by JS Lee
Differences Of Refinance
And Home Equity Loan
Refinancing your home mortgage loan is different from getting a
home equity loan. While both allow you to cash out equity in your home, these
two types of home financing serves different purposes.
Refinancing Your Home Mortgage Loan is basically replacing one mortgage loan
with another. Typically, refinancing lowers mortgage payments through lower
interest rates or longer loan terms. You can also cash out part of your home’s
equity while refinancing. The real reason behind it is simply you have been
offered a better interest and you will save money on the long run. You may in
fact choose to shorten your mortgage by paying a bit more or the same (you pay
less interest more capital repayment). Refinancing requires paying closing fees.
To recoup these costs, you usually need to stay in your home for a few years.
However, you will save money with better terms than if you choose a home equity
loan (second mortgage).
Second mortgages have slightly higher rates than mortgages, but you have less or
no closing costs. In the case of second mortgages, you keep your existing
mortgage and borrow more on top of it. So your new interest rate only applies to
the additional amount you borrowed while first mortgage remains the same. If you
want to tap into your equity to make some home improvements but plan to sell
soon, then a second mortgage would be better than refinancing your mortgage.
Second mortgages also are a better choice when your current mortgage interest
rate is lower than those being offered by refinancing lenders.
When deciding which financing option to choose, consider the purpose of the
loan. If you want to reduce monthly payments, then refinance. If you simply want
to tap into your home’s equity for a small amount, then apply for a second
mortgage. As these two mortgages are separate, you will be able to pay your
second mortgage earlier than your main mortgage.
Also, consider how long you want to stay in your home. You can lose money
refinancing your mortgage if you don’t stay in your home long enough to recoup
the closing costs with the savings you made from refinancing. Only you know
which loan fits your financial needs best.
Article by JS Lee
Further Readings
(Click on The Title)
| 
