Mortgage Assistance : Tips for Shopping a Loan Modification
If you are one of the countless American families that is facing foreclosure or is struggling to make the mortgage payments, it is understandable to be going through a lot of stress and worry right now. You may be looking for someone that you know that you can trust to turn to who may have some answers to help you out in this tough situation. Well there is help and here are a few real world tips to help you stay in your home and prevent foreclosure.
First of all, if you have a good relationship with a trusted mortgage adviser, such as a loan officer, you can call them and ask them if they are doing loan modifications, or if they know someone who is.
Take a look to see if they have a website for the company and make sure that the owner’s names and faces are preferably on the website. This is called accountability, “where does the buck stop ? ” so to speak, you want to know these things when dealing with a loan modification company.
Ask how long the company has been in business and find out what kind of modifications they have done. You will want to ask them to define what a loan modification is. A good definition of a loan modification is: A change in your interest rate that is NOT a refinance, that enables you to stay in your home for the long term.
Now this could include monies that you owe being put on the balance of the mortgage, and it might also include a month or two break in the mortgage payments to give you a chance to catch up if need be. Also, ask to see if you can meet the person in charge of the loan modification in person, or if that’s not possible, do they have a video presentation of themselves on their website?
You should ask them if they give a 100% money back guarantee, this is very important and many people don’t realize that any good loan modification company will offer one. You want to know if the loan modification company will give you your money back if they cannot succeed in modifying your loan.
You will need to get pre-qualified for a loan modification which is a pretty quick and simple process if you have all your data. This data should include your mortgage statement showing your current interest rates and payment, also if whether your tax and insurance is paid out of your mortgage, and you will also need your pay stub and a financial statement outlining your monthly budget figures. In regards to the financial statement, that should include all of your expenses , including, credit card payments, car loans, groceries, clothes, home and car insurance, medical bills etc.
The key to preventing a foreclosure is to act quickly. Remember the process to qualify for a loan modification can take anywhere from 15 to 60 days, and in some cases even longer. You will need to be able to foresee your situation for the immediate future and determine if you may be at risk of facing financial difficulties to come. Sometimes it may be difficult to predict the future, however if the income for the household has decreased due to a job loss recently , or if you know your company is going to lay off people sometime in the near future, then it would be a good idea to start preparing yourself for any possible outcome.
The best way to do that is to start preparing your financial statement as described earlier, also start looking around for a good broker or adviser while you are still not under any real pressure. Prepare a list of possible lenders and brokers and set some time aside to contact them all and get as much information as you can, you will want to ask all the questions mentioned in this article.
You will also need to prepare a hardship letter. This is basically a 1 or to page description of your situation and why you would need a loan modification.
You may not be in any critical situation at this point, and hopefully you will never find your self facing foreclosure, however being properly prepared in advance can save you valuable time if the need arises, as this will be crucial in helping you save your home.
Now that the dust has started to settle in regards to the housing meltdown, or credit crisis as we know it, there has been a change in the mortgage landscape in the last few months. Right now it is like no other time in history , mortgage values are falling every day, many people are facing foreclosure, and even many mortgage lenders have gone out of business because they don’t have enough money to cover the loans that they wrote.
Did you ever think that you would live to see the time that banks have run out of money? Well that’s exactly where we are right now. There has been over 150 banks in the last year alone that have gone out of business.
refinancing your home today
So what does all this mean to you ? Now maybe you are currently in an adjustable rate mortgage that doesn’t adjust for another year or two, or maybe you are in a 30 year fixed mortgage that doesn’t adjust at all. So why would any of this concern you ?
Well the biggest reason why this may interest you is that mortgage rates are at their lowest levels in recent history. The rates at the time of this writing are going for around 4.75 -4.90 %, that means that you could refinance and get a 30 yr rate for under 5%.
However the window of opportunity is quite small. Right now inflation is continuing to be a huge topic with the federal government, the American dollar is growing weaker every day, and as we move through out 2009 and approach 2010, it is highly possible that more and more money will be moved out of mortgage back bonds and put into the stock market, which can result in mortgage rates skyrocketing.
So the time to refinance your mortgage is now. But you may be asking your self, ” how can I refinance my mortgage when I have lost equity in my home ? Although in normal circumstances if a house has little to no equity it can be very difficult to find a lender that would be willing to accept to refinance your mortgage.
However times have changed.
Out with the old administration and in with the new. To deal with the housing crisis, the Obama administration has decided to take action by implementing certain plans to help home owners from forclosure and also to help them reduce the financial strain for those locked in at high interest rates.
The ( HASP) Homeowner Affordability and Stability Plan is designed to help those who have Fannie Mae or Freddie Mac backed mortgages. The main idea behind the plan is to offer incentives to lenders that are willing to help homeowners refinance or at least modify their mortgages even if they have low equity in their homes.
Many people that have taken advantage of the plan have been able to save their homes from foreclosure by getting new lower interest rates that are more affordable.
Some have been able to reduce thier interest rates by more than 2 percentage points, say from having a fixed rate of 6.5 reduced to 4.5 or even more. Many homeowners have seen savings anywhere from $ 200.00 a month up to $ 500.00. this obviously translates into thousands of dollars in a given year.
So if you feel that you are left out of the loop because of your particular situation , and would be interested in taking advantage of these current low interest rates before it’s too late, there is hope. The advisable thing to do, is to contact your existing lender and talk to them about the (HASP) and find out if you qualify. Your lender will be more than happy to assist you because they are not interested in dealing with the responsibility of having to resell your home because you lost it to a foreclosure.
How to Refinance your Home and Prevent Foreclosure
The average person today in this country is possibly faced with a property value that is gradually declining as a result of the housing crisis that has affected the nation as a whole. Also many households are dealing with the possibility of at least one income earner being affected by a job loss in which is adding to the current hardships that many people are facing these days.
Due to the current hardships the economy has created, many home owners are now finding themselves in financial trouble and could risk losing their homes to foreclosure. However, many are turning to the possibility of looking for ways to refinance their homes to prevent a foreclosure.
refinance mortgage to prevent foreclosure
The idea of re-setting that loan can come in two ways. A.) Going back to the bank and asking for a new loan, B) Modify your existing loan. However there is a catch 22 , in that in many cases, the very event that has caused the problem will actually disqualify you from refinancing your home. So you don’t get a new loan, but you could modify that loan.
In a large number of cases, many people have loans that are probably as much or more than the actual value of the property, in which has made many home owners feel that they would not qualify for a refinance or a loan modification.
However this is not necessarily true.
If you are a person that is still working, and you’ve got a loan that is due to reset in the next year or two and you know that there will be a jump in payments, you can go ahead and refinance your home up to 105 % of the value of the property. This is possible through the new Fannie Mae and Freddie Mac plan established by the Obama administration (HASP) Housing Affordability And Stability Plan.
So there is in reality 2 options available through the new plan, you can refinance, or your can attain a loan modification. A loan modification is exactly what the term implies, you are not getting a new loan, nor are you getting rid of the old loan, but you are essentially modifying the existing loan with your existing lender.
Most people would be ill advised to try to represent themselves in these dealings, as the procedures and issues involved can be quite complex. Remember that the banks and financial institutions are NOT on your side, they are professionals who know all the ins and outs of the legal proceedings which is intended to result in the best possible deal for themselves. There fore it is highly recommended that you consult with a professional legal team that will look out for your best interest.
At time of this article, the interest rates have fallen to the lowest point in the last 50 years , creating a great opportunity for those looking to re modify their existing loans or seeking to refinance altogether. Many people have recently been able to reduce their interest rates by as much as 2 percentage points, resulting in savings totaling in the thousands of dollars for many home owners.
To put that in perspective, in some cases people have seen their mortgage payments drop from anywhere between $200.00 and $400.00 per month, which is a very significant amount in savings for any household.
If you are looking to refinance or modify you existing loan under the new government plan you may visit www.financialstability.gov for more information.
Payday loans can help you with cash when you need it the most. Payday loans also referred to as cash advances can be used for any financial emergency. These loans are helpful as long as you are able to pay it off within the stipulated time period. The moment you allow them to roll over, they can be the worst thing that can ever happen to you. The payday loans are very helpful undoubtedly but if you fail to pay them, the rate of interest these loans attract are astronomical.
Online payday loans or store front payday loans
Payday loans can be availed online when they are referred to as internet payday loans. Alternatively, you can also get them at store fronts. They are referred to as store front payday loans. The main advantage of availing payday loans online is that you can always shop around for the best deal from the comfort of your home. You can also compare rates offered by different payday loan lenders. However, there is one disadvantage of availing payday loans online. Since the incidence of payday loans scams have increased these days, if you happen to get involved in a scam unknowingly, it will be difficult for you to trace the whereabouts of the company if you want to settle scores with them.
pay day loan
Consolidate payday loans
Payday loans are not legal in all states in United States. There are a couple of states where the amount that can be given as loan is also restricted. If you have a number of payday loans and want to get rid of them at the earliest, you can opt for payday loan consolidation. In payday loan consolidation, all your payday loans are consolidated and treated as a single account.
You can consolidate debts on your own or you can take the help of a consolidation company. They will negotiate with your creditors so that you can enjoy reduced interest rates and consequently lower monthly payments too.
You can avail payday loans to get out of the financial mess but it is very important to bear in mind that payday loans can draw you into a vicious debt cycle. So, before they start controlling your life, take control of your finances.
Why Refinance Your Loan Instead of Taking a 2nd Mortgage
Today we’ll explore the options of refinancing a loan as opposed to taking out a 2nd mortgage.
When you are refinancing a mortgage , your are taking out a secured loan that will replace your existing mortgage. As the number of foreclosures increase around the country, it is important to consider all of your options. The big question is why refinance instead of taking out that second loan?
The first consideration is the interest rate. If a home owner has been making payments on an adjustable rate mortgage that has been reset to a higher rate, they may be better off applying for a refinance mortgage. Depending on their credit history, a fixed rate mortgage may be available.
You may be also able to extend the time frame for repayment of a refinance mortgage. By extending the time frame repayment , the borrower can lower their monthly payments. Any money saved can be used to repay the principal amount, by reducing the principal , you can reduce the term of repayment.
advantages and disadvantages of mortgage
In order to do this, it is best to make sure that your loan does not have a pre-payment penalty other wise the refinance costs will certainly outweigh any savings in the long term.
Some borrowers may wish to liquidate some of the equity on their property , possibly to pay off higher interest rate credit cards, car loan or maybe make some home improvements, so if there is equity in the home, a refinance mortgage would be possible.
Since interest rates on an adjustable rate mortgage ( ARM) shift up and down over time, it may be advantageous to lock in a lower fixed rate mortgage. A fixed rate mortgage ( FRM) will ensure that the required payments over the loan term don’t fluctuate.
Some borrowers have opted to what is known as “cash out refinancing”, this refers to the process of refinancing an existing loan to remove the equity. Typically people will do this to pay off high interest non secured debt, such as credit cards for example.
There may be tax advantages to a mortgage over a credit card or a non secured debt, because non secured loans may not be tax deductible depending on your state tax laws, however in many states mortgage interest rates are tax deductible.
A change in deductions may also shift the borrower in a lower tax bracket, however its always important to check with a tax professional or adviser prior to taking any action towards refinancing.
However there are risks involved associated with a cash out or refinance loan. Although you may save money on mortgage payments and taxes, you are putting up your home as collateral for the loan, you can put your house at risk for a foreclosure if are unable to make the payments.
The borrower may also be faced with higher loan fees and points. Points are a percentage of the loan, and can used to lower the interest rates. Typically, if you pay more points, you may qualify for a lower interest rate and lower payments.
A refinance loan should always be weighed against the alternatives, such as either keeping your existing loan, or taking out a 2nd mortgage. If your existing rate is more than 1.5 percentage points higher than the refinance rate, then it may be beneficial to you to refinance.
For more information on refinancing , please refer to all the other many resources available on Loans Online Resource.com.
Mortgage Refinance: Obama’s “Making Home Affordable Program”
Many of you by now have heard in the news about how the Obama administration has been working with mortgage lenders called the “Making Home Affordable Program” to help deal with the housing crisis that has affected many homeowners in the past year or so.
There are 2 separate programs available in the plan.
The first one is basically a loan modification program in which the lender that services your loan, is going to look to modify the loan terms for you in order to prevent you from foreclosure. However at this point, it is still fairly vague on what or how the modification terms will be like in relation to what the lenders are willing to offer.
The Obama administration has worked on setting some details and guidelines as to what they would like to see lenders do to assist purchasers. Some of these things include:
a) Offering an extension of a loan from a 30 year mortgage to a 40 year mortgage term in which could help bring down the monthly payments.
b) Adding the interest due on the loan to the back end of the over all mortgage loan.
c) Lowering the interest to a more affordable rate and have that rate slowly increase over the next couple of years
The loan modification part of the program is designed primarily to help people who are currently in their home but may have had some problems with making some payments on time, or the loan is currently past due at this point. The idea is to have lenders help out homeowners who are in trouble by allowing certain modifications that will make home loans a little more affordable.
This program is only going to be open to loans that are owned by Fannie Mae or Freddie Mac. However if your loan is not backed by Fannie Mae or Freddy Mac, there are still options in which a homeowner can get help in modifying or refinancing their loans.
If you fall into the latter category, the best thing to do is to contact your servicing lender on what loan options may be available and they could possibly give some advice or help point you in the right direction. Remember, that you are not alone in this situation.
Lenders don’t what to see you lose your home because they don’t want the responsibility of having a liability on their hands. So it is in their best interest that they do what they can in order to help you keep your home.
In foreclosure need to refinance
The other part of Obama’s “Making Home Affordable Program” is basically a home refinance plan. If you qualify, they will refinance your current mortgage loan into a much lower and affordable rate. However, having said that, this program is not intended for people who are in trouble or behind on their payments. It is intended for those who have been looking to refinance but have had difficulties due to property devaluation, or the tightening up of some underwriting guidelines which may have made a regular refinance impossible to do.
For the refinancing part of the program, details are still a bit vague since the plan is relatively new, many homeowners will be interested on how they can take advantage of the program. Your current lender may be bombarded with questions in regards to these new implementations so you might want to search online for as much information as possible in regards to this .
However, there are certain restrictions and guidelines for refinancing and in certain cases it may not necessarily be of great benefit for all homeowners, even though the plan can help those who qualify, the program will not be available to everyone.
Today were going to talk about 5 tips that can save you literally hundreds or even thousands of dollars on the refinance of your mortgage loan. Today we are looking at historically low interest rates so you want to be able to take advantage of that by saving as much money as possible.
Tip 1). The first thing you can do is to go back into your records and look at your closing documents from the purchase of your home loan. If there have not been any structural changes to your house or lot, you should be able to use your existing survey on your next home loan. That alone could save you approximately $ 350.00 or more if you decide to refinance your home..
Tip 2). If you purchased your home in the past 7 years, you can get a discount on the cost of your title insurance. The amount of that discount varies by how long it has been since the policy was issued. Depending on the situation, you can use this discount to save up to 40% on your title insurance policy. Typically this is something that your lender is not going to ask you about or automatically pursue, so you should ask your lender about it to find out how much of a discount you are entitled to.
Tip 3). In today’s world, rates and terms are all risk based, so the higher your credit score is, the better your interest rate is going to be. Therefore it is critically important that you minimize the amount of inquiries done on your credit report . You should also know what your credit score is before you meet with a mortgage broker or lender.
mortgage advice
Also, if you get many recent inquiries on your credit report, this will decrease your credit score and put you up at a higher rate. To put that into perspective, just a quarter percent higher rate on a $ 200,000.00 home loan, will mean that you will pay an additional $ 12,000.00 in interest over the course of a 30 year loan.
There are some resources available to you that can help you understand and know what your credit score is before you approach a lender. You can do an online search using terms such as ” what’s my credit score” or ” know your credit score” etc and you will find many resources that can help you determine what your credit score actually is at the moment.
Tip 4). If you are looking to do some renovations or repairs on your home, make sure that you complete all the major work before your appraisal is done, especially if you have received insurance coverage for those repairs. ( this would certainly apply to those who have had property damage due to natural disaster). Not getting any repairs done will mean a lower appraisal, and that’s also going mean a higher loan to value that will put you at risk for a higher rate, and the possibility of having to take out a mortgage insurance on your loan. These costs can easily amount to thousands of dollars per year in additional costs, so you must make sure that all repairs are done before your appraisal takes place.
Tip 5). Make sure that your lender and title agent shop for the best appraisers and surveyors. Often they will go with a firm that they have a good relationship with, and don’t really consider the costs. However there are many great appraisers and surveyors out there who don’t charge premium prices. You can find a number of professional services that will charge $75.00 to $100.00 less, that will do an equally good job.
These are just 5 of many important mortgage refinancing tips available that can help you save thousands of dollars the next time your are looking for a loan.
Improving My Credit Score to Get the Best Mortgage Rates
Before you even consider getting yourself a mortgage, ask yourself this important question, ” Whats my credit score?”
If you don’t know the answer, it’s time you found out.
Your credit score is a 3 digit number that represents your entire credit history. Credit reporting bureaus calculate this number, by looking at things such as outstanding debts, if you pay on time or not, and whether you carry an outstanding balance on your credit cards.
The typical range for a FICO credit score is between 300 which is the worst, and 850 which is the highest possible credit score you can achieve.
To get a good prime rate on a home mortgage loan, you will want to have a credit rating of no less than 650 or higher. In the not so distant past, before the housing and real estate crisis in the US, it was possible for people to get a good mortgage prime rate with a credit score as low as in the 500-550 range. However since then, banks and lenders now put a lot more emphasis on credit scores so it is vitally important to ensure that your credit score meets the new standards.
So what do you do if your credit score is not quite where it should be ? There are a few simple ways to raise it. Hypothetically the easiest way to improve your credit score is to pay off all of your credit cards debts in full at the end of every month. this helps you avoid carrying balances on your credit cards and will raise your credit score.
credit ratings affect refinancing
However credit reporting bureaus have a few secrets that can trip you up. The first on the list are inquiries . Every time you apply for credit, the lender pulls a copy of your credit report history. Inquiries can lower your credit score up to 5 points, so if your thinking about getting a home loan any time soon, you should try to make all your mortgage loan applications in a 2 week period. This way your credit report ratings only take a hit once.
When a bill has a pay by date on it, that’s the date by which your payment actually has to be processed. This does not mean the mailing date. If you are mailing in your credit card payments, make sure that you mail the envelope at least 7- 10 days before your actual due date to ensure that the credit card companies receive your payments on time.
A faster and much more convenient method for paying your credit card bills is to make all payments online. That way you will be able to make your payments on the actual due date with out having to calculate the mailing ti me. Nowadays all banks and credit card companies offer online access for their customers, so if you are not set up for online payments, just contact your bank and they will be more than happy to set up and show you how to use your online account.
If you do carry a balance on your credit cards, try to keep the balance low relative to your maximum credit limit. A good rule of thumb is to keep your balance no higher than 25-30% of your total credit limit. If your balance is higher than that in proportion to your credit limit, lenders will think that you can’t manage your money and your score will suffer as a consequence.
Credit scores are designed to determine how risky you are as a borrower, the higher your score, the less risky your are considered as a borrower, and you’ll get better interest rates when you apply for a loan.
How Your Credit Score Will Impact Your Mortgage Application:
Credit scores have become a really important factor in the past 12 months. This is a big change from the past where a potential borrower could get a mortgage loan with credits scores as low as 580 -600. However nowadays, in order to get the best interest rates you will need to have a credit score in at least around the 680-700 range . A credit score of 580-600 is no longer high enough to secure a good interest rate and to get the best programs available to you.
Credit scores have become a really important item, because it is a measuring stick on how you will repay your debt. This way lenders can go over your whole credit history to see if you have been paying on time or not, and if you are a real credit user or not. So there is a very big emphasis on credit score ratings right now as opposed to the days before the real estate crash.
You can improve your credit score in a few different ways. Although this may sound elementary and very basic, however you can help improve your score greatly by just paying your debts on time. Many people don’t realize how much they can hurt their ratings by paying their credit card balances by even 1 day late. Usually most credit card companies will report you to the credit bureau if you have been late on 2 consecutive payments. However in some cases it can be just 2 late payments in a given year, and does not necessarily have to be consecutive late payments. This is the first thing with improving your credit score.
home mortgage loan application
The second most important thing in improving your credit score is that you should try to lower your debt as best that you can. It is not unusual to see people with 15- 20 credit cards that are all maxed out, with debts ranging far greater than $15,000- $30,000. In many cases their amount of debt is greater than their total net revenue for the year, this something lenders will definitely look at before approving any mortgage or refinance for that matter.
Regardless of whether you pay your debts on time, having a very high debt will hurt your credit scores because the credit bureau will look at the percentage of debt that you are at, and lower your credit score in accordance. So even if you pay your credit cards on time, the amount of debt that you have will certainly play an important factor in your credit score ratings.
For those who don’t have any available credit yet and want to establish some credit in order to qualify for a mortgage, there are quite a few programs available for those who have no credit history.
It is a very good idea to try to take out a loan, if you’ve never had credit before. You could first try to apply for a credit card, or some other form of installment debt, to start establishing a credit history.
There are programs available if you have never had any credit before and always used cash to make payments. Some of these programs may require that you make a downpayment , possibly 20-30 % of the available credit they may offer, such as pre paid credit cards etc. , but it is very important to establish some sort of credit before you really need it.
There are 3 things to keep in mind when you are looking to get a mortgage.
1.) Educate
2.) Find
3 ) Choose
Usually when you are in the market for a mortgage, you are either buying a home, refinancing your existing mortgage for a lower interest rate or improved terms, you are consolidating higher interest rate debt, or you are looking to get cash out.
In any of these situations, the first thing you should do, is go online and do a quick search. You want to find some reputable sites, be it blogs or forums and any other site that you can find some valuable information about mortgage loans This idea is to get a good overall picture about mortgage options and people’s feedback on certain mortgage topics. This is not to say that you shouldn’t seek professional help, however by doing this research , you will be able to gather enough information in order to help you ask the right questions when its time to contact a professional mortgage broker or lender.
When doing your research, don’t bother with trying to find good rates or even a lender at this point, this is just about gathering as much information as possible to further expand your knowledge. There is an enormous amount of information out there , so take advantage of it, it will pay off in the long run.
Your education will be complete when you can ask these important questions such as:
a) How much am I going to put down ?
b) How Much equity do I have in my house?
c) What is my credit standing and how does my credit score relate to others ?
d) What’s my budget ?
e) How much of a monthly payment can I afford with my refinance or my new mortgage?
Once you’ve answered these questions, you can move onto the next step, which is to find.
At this point you want to find your mortgage broker, lender or bank.
Again a quick online search is the best way to do this is . You will be able to find many reputable lenders and brokers or reputable lender matching services in which they can help find the right broker for you in your area perhaps.
Once you have found a few lenders, you should talk to at least 3 lenders to start, 3 is a good starting number , because you don’t want to overwhelm yourself with too much information at this point. While contacting them , explain your whole situation, let them know exactly what you are looking for, and what your goals are. They will in turn, give you interest rates, they will give you terms, they will give you payments, they will tell you everything you can do with your refinance.
online mortgage broker
The next thing you should do is to write down all of these offers on a sheet of paper and make a comparison. Note that when you make your comparisons, don’t just look at the interest rates, although the interest rates are important, you want to be confident that the lender you choose, can get the loan done.
As you may already realize, getting a mortgage can be somewhat complicated, so it is vitally important that you choose the right mortgage broker or lender . You will need a competent trusted broker, lender or bank to take you through all the steps in order to get your mortgage loan to completion.
Although this may sound like obvious advice, in far too many circumstances people don’t do their due diligence and end up looking to refincance because they finally realized, possiblly due to talking with their freinds, colleagues, etc that they did not get the best deal they could have if only they did their homework before accepting their current mortgage package.
Can You Refinance Your Mortgage to Pay Off Credit Card Debts ?
Most people look at the idea of refinancing their mortgage to pay off high interest rate credit card debts as a no-brainer. The fact is that taking $ 10,000.of credit card debt at 15 %, 20% or 25% and turning it into a low interest mortgage of say, 5.00 % does have its benefits.
However, there are certain pitfalls to this. If you are thinking of refinancing your mortgage to pay off your credit card debts, there are a few things you need to keep in mind.
First of all, credit card debt is unsecured debt, meaning that if for whatever reason you cannot pay off your credit card debts, your creditors can’t secure liens or repossess your property. Obviously a mortgage is secured by your property. It is secured by your house which is most probably the most valuable asset that you own.
So if you are thinking of transferring your credit card debt, to a mortgage debt, make sure that you know that you will be able to afford the payments today and in the future. This is vitally important, because if you can’t pay off your credit card debts, your credit score will suffer, however, at least you will not stand a chance of facing a foreclosure because your credit card debts were transferred to your mortgage. Remember that your monthly mortgage payments will increase substantially if a credit card debt is large enough to warrant a refinancing of your mortgage in the first place.
Another thing to consider when refinancing your mortgage to pay off credit card debts, are the fees associated with the refinancing process. Refinance costs can run into thousands of dollars depending on your loan agreement that you currently hold with your lender.
So for example, you have $10,000.00 in credit card debts and you feel you could pay them off in the next 2-3 years, the interest that you would pay on that would be substantially less than the cost of refinancing your mortgage. This is even if you are currently paying 15%-20% interest rates on your credit card debts. So it is extremely important to do the math before moving ahead with refinancing your mortgage. Consider all the finance costs that could be involved, in many cases you will find that it just isn’t worth it.
The third part of the equation, is PMI, or ‘ private mortgage insurance ‘. If refinancing your mortgage will take the balance of your mortgage over 80% of the value of your home, chances are you are going to have to pay private mortgage insurance. This is not necessarily a bad decision, however it is something that you will have to consider factoring in when deciding whether or not it makes sense to refinance your mortgage debt or not.
The final and most important thing to remember if you do decide to refinance your mortgage to pay off your credit card debt, is DON’T RUN YOUR CREDIT CARD DEBTS BACK UP AGAIN ! This is a mistake that is far too common in America.
People will refinance their mortgages to pay off their credit cards debts, just to charge up their credit cards again , and fall back into an even worse predicament than before. Not only do they have higher monthly mortgage payments to make, they now have the additional credit card payments to make. This is a recipe for financial disaster that has already forced countless homeowners into foreclosure. Don’t become part of that statistic
Now that the interest rates are dropping , people are wondering if this is a good time to refinance their home.
Lets first talk about FHA and VA loans. If you are lucky enough to have a mortgage with one of those two institutions, there is some very good news. It is a fantastic opportunity to refinance your home regardless of your equity position. Alot of people would like to take advantage of the lower interest rates but they can’t simply because they don’t have equity, which means that the property won’t appraise in excess or equal to the outstanding debt.
With the FHA and VA streamlined program, the value of your property is not an issue, neither is your credit and neither is your ability to qualify for a loan. With the recent down turn in the economy, many home owners have been faced with job losses or subject to other changes in their financial situation. However with a FHA or VA loan, as long as you have been paying your monthly mortgage payment for the last 12 consecutive months you will qualify regardless of your employment status.
Many people are in FHA or VA loans with interest rates at 6.% and above, and we are now seeing interest rates at a 30year fixed mortgage trending down to 5% and possible lower. So with a full point spread between your current interest rates and that of which you could achieve with a refinance, it’s well worth your while to refinance your mortgage today.
If you don’t have an FHA or VA loan , it is still a good time to refinance, however many people are challenged because of their equity position or their ability to qualify. However if you are looking to refinance , keep your eye on the market and contact your mortgage broker . The idea is that you want to get your application in and processed and ready to go in case you see an opportunity in the market , such as a dip in the interest rates, so you can lock in your loan and refinance. You will be happy that you did.
We are starting to see interest rates fall below 5% which is pretty extra-ordinary. If you are a FHA or VA borrower and you have for example a 6.5 % interest rate on a 350.000 $ loan , you could refinance your property for about $3500.00 -$5000.00 at most in terms of loans costs and see a payback for your self within 6 - 12 months ,which is a fantastic bargain.
If you don’t have a FHA or VA loan, and have great credit, could you still qualify for refinancing?
It depends on many factors, however, nowadays your qualification is not so much based on whether you have good credit or not ,as it is based on your ability to pay off that loan. Things have moved more towards the old school, where lenders will want to have a clear picture on your ability to pay off your mortgage. You may have to present tax returns, income slips , whether your are self employed or not, are all factors that will determine your ability to qualify.
Gone are the days when you could simply present a perfect credit score and pass qualification.
In general, people who are shopping around for a mortgage will tend to focus more on the interest rates a particular broker is offering rather than how the actual loan is structured. It is important to know that how you structure a loan, is more important in many cases than the rate itself. To put it another way, how you structure a loan can actually save you more money than having a lower interest rate
In most cases you will be required to put a 5% down payment on your mortgage. There are some brokers that will offer a 3% down payment, however the interest rate will be considerably higher creating higher monthly payments and of course the closing costs will also be much higher as well.
There are a few things to avoid when applying for a mortgage. The first thing you should avoid are pre -payment penalties. A pre-payment penalty is when you are charged a penalty fee for paying off your mortgage early, usually in less than 3 years. Now many of you may be thinking that there is no way that you will be able to pay off your mortgage in 3 years anyway, so that is not an issue.
However circumstances may change , such as the interest rates fall or you manage to get additional credit which will allow you to refinance and pay off your mortgage early. If this happens to be the case, you will not be able to take advantage of these opportunities, because you will be facing a penalty. Some of these penalties can be quite large, sometimes in the thousands of dollars. If you are with a broker that insists that you take a pre payment penalty, just look around and you will find many brokers you can deal with that will not impose that condition.
Another thing to look out for , that are very popular these days, are bi- weekly mortgages. Now there is nothing wrong with making extra payments, but you don’t need to pay some one to make those extra payments. Some brokers will charge extra to structure your loan that way, yet there are plenty of brokers that will structure your mortgage with out charging hefty fees for it.
A good free strategy in regard to this , is to make 1 extra payment a year , this will have the same effect as a bi-weekly mortgage with out having to pay anyone to structure your mortgage that way.
Also another good strategy is to take your payment, multiply it by 13, and then divide it by 12, so for example, if you owe a $1000 mortgage, you could simply pay $1100. every month instead and that will also be equivalent to a bi weekly mortgage plan without paying your broker the extra fees for it.
There are many mortgage products on the market today that can be quite confusing to any potential borrower, the most important thing is to trust your gut instinct. Many times a mortgage broker may tell you not too worry and that you will have no problems with making your monthly mortgage payments, however you must be the judge.
Too often , especially in reflection of this past year’s economic housing crisis, many people have put themselves into debt beyond their means. Don’t allow yourself to be pressured or convinced by a mortgage broker to take out a loan that you feel you will have trouble making the payments.
Right now in America , we have not seen such a high rate of foreclosures as any other time in recent history. So be careful to stay within your financial means and always follow your gut instinct.
One of the main objectives that people choose to refinance their mortgage is to reduce their interest rates. Right now a current 30 year fixed mortgage is approximately 4.75 %. So for example if someone has a mortgage rate of 5.5 % they can refinance to a 4.90 percent rate and lower their current monthly payments. This is one of the reasons why people look to refinance their mortgage rates.
Another reason why people will want to refinance is to be able to pay off an adjustable rate mortgage (ARM) or to convert an adjustable rate mortgage to a fixed rate loan. Over the past few years the mortgage rates have been extremely low , and a lot of people have taken advantage of these by getting an adjustable rate loan where the rate was locked in or fixed for a 3 to 5 year period , and now they are at a period where their loans are up for an adjustment.
However there are some things to consider regarding this. It may not be in the home owners best interest to refinance at adjustment time, because the costs of refinancing your home may out do the savings in the long run. In some circumstances it may be best to allow the rates to adjust accordingly because an increase in your current rates may still be lower than what the market has to offer for new home buyers. This is especially true if you plan to sell in the next 5 years or so. However, if you as a home owner plan to stay for the long term , then it may be beneficial to refinance to a fixed mortgage rate in order be locked in for the long run and not have to worry about fluctuation.
Another reason is that a lot of people in the past couple of years have taken out home equity loans or second mortgages and have decided to refinance to pay off their loans or to combine their 1st and 2nd mortgages into one monthly payment. In some cases even if you happen to refinance into a slightly higher interest rate or even keeping it at the same rate, it can still be beneficial because it can still result in a lower monthly payment. You may also consider refinancing if you have a home equity line of credit in which can be refinanced to a fixed rate loan as well.
The last reason why many people consider refinancing is to get cash or equity out of their homes. Some reasons may be because they need to pay off debts , to fund college education, to make major purchases, pay off credit card debts, pay off student loans or car loans. loans etc. Even though they may be taking money out of their homes, they can still benefit from paying lower total combined monthly fees .
So if you need to pay off a few debts or to make any major purchases and you don’t quite know how or where to get that extra cash , then you can certainly refer to the many recources Loans Online Resource.com has to offer.
One of the big downfalls of a foreclosure are the taxes that can accrue afterward. Most people don’t realize that if their lender takes a home under foreclosure, or what is also called the short sale, if the lender does not sell that house for as much as the loan is worth , the home owner can actually be liable for taxes on the amount of unearned income when that sale occurs. So the homeowner in foreclosure not only loses the home, he/she still stands to pay out additional money to balance out the lender’s loss.
If you are facing a foreclosure, never walk away from that transaction. Even if that foreclosure happens and if there happens to be a tax liability, its a good idea to check back with your lender and go over the paper work , to make sure that all the number are correct. If it turns out that there really is a tax liability and your lender is not willing to work with you on it, then should contact a tax attorney in your area and get them to look over the paper work and give you advice.
Now lets talk about your credit score after a foreclosure. A foreclosure will affect your credit ratings the same as a default payment will show on your credit card. Foreclosures last 7 years on a credit report as opposed to bankruptcies that last 10 years.
What about getting another loan ?
It is advisable to not try to get another loan for at least 12-18 months after foreclosure. So stay loan free for at least 12-18 months. If after that point your are looking to get another loan you should first take a close look at your credit reports and work to improve your ratings which are probably pretty damaged . So review all credit reports immediately before reconsidering attaining another loan or mortgage.
To improve your credit ratings,you may want to reduce your credit cards to no more than 5 and try to consolidate your balances if your have more than 5 credit cards.
Another consequence to foreclosure is that not only will your credit score be affected, the credit card companies will periodically review your accounts, and when they notice a foreclosure in your records , you will most probably subjected to higher interest rates in the future.
As we can see , a foreclosure has many more consequences to the consumer that just losing their homes . If you are facing a foreclosure , the best thing is to move quickly. The foreclosure process can take up to a year , so you will have time to look at some options to save your home. If you are not more than 90 days behind on your mortgage payments, your lender will be much more likely to try and work with you to help refinance your home.
If you are in dire financial trouble and you foresee that you will not be able to make your future mortgage payments, you may want to consider the HASP Home Owners Affordability and Stability Plan .
Now this could include monies that you owe being put on the balance of the mortgage, and it might also include a month or two break in the mortgage payments to give you a chance to catch up if need be. Also, ask to see if you can meet the person in charge of the loan modification in person, or if that’s not possible, do they have a video presentation of themselves on their website?
