Tag: mortgage

Everything You Need To Know About Mortgage Refinancing

When we are speaking of the term mortgage refinancing we are addressing the process of replacing an initial mortgage, or possibly multiple mortgages. This process can potentially save you thousands of dollars ifyou evaluate all aspects of the process. Whether you are looking to pull out equity or reduce your monthly payment, it’s important to focus on the different costs associated with mortgage refinancing.

When to refinance?

One of the biggest factors affecting the most convenient time for a mortgage refinancing is your own financial situation. If you have a stable job and good earnings it might be the perfect time for you to refinance. Steady income will definitely give you the advantage to become an eligible borrower for the loan with lower interest rates.

Becoming aware of the interest rate fluctuations, or better said interest rate growth, is in your best interest. Once you get a feeling that the bank or your lander will raise the rates it might be just the time for you to step in and refinance your mortgage.

Refinancing might be a good idea if you are planning to continue living in the same home for more than the next 5 years and especially if your home has gained some value. Keep in mind that the perfect scenario for refinancing your mortgage is the one in which your home has the same value or more of what you owe, otherwise it might not be so wise for you to embark on the adventure of refinancing.

Try to walk in the shoes of your mortgage loan officer in order to pick the best time for refinancing. When taking year-end bonus into consideration, one can only conclude that the best time during a year to get a loan is near the end of the fiscal year. If the goal is to get as many borrowers and close as many deals as they can, your mortgage loan officer might make a better offer for you in order to reach his own goals. This can also be applied to the time of the month you are choosing for refinancing, as some of the mortgage loan originators probably have certain monthly numbers they need to reach.

Benefits Of Mortgage Refinancing

Many people are opting for mortgage refinancing due to different reasons. Evidently, the end goal is for you to benefit from it, and thus this action must be taken into consideration prudently. One of the benefits of taking a mortgage refinancing is a better mortgage rate. Fluctuations of mortgage rates might actually be astoundingly beneficial for some borrowers, saving great deal of money by refinancing their mortgage. The interest rate of the potential loan or maybe even current credit situation is why many people opt for refinancing in order to get lower monthly payments.

Another benefit of refinancing your mortgage is that you can shorten the term of your mortgage and even switch from the adjustable rates to fixed rates. This way it is possible to pay off the mortgage much faster and save money during that period of time as the mortgage rates on shorter periods can be much lower and your monthly payments won’t be rising to an insanely big amount.

Combining two mortgages into one is another great side of refinancing your mortgage. People usually do this in order to refinance their original mortgage at a lower rate. What is great about combining two mortgages is that one can get a single monthly payment instead of two or even more.

What to consider when refinancing your mortgage?

The first thing you need to consider when thinking about refinancing your mortgage is the reason you want to get the loan. Make sure to enter the process of refinancing only if you have thought it through thoroughly. In addition, you should keep in mind that you need to be very well informed if your goal is to get the best deal. Before you even go to your preferred mortgage loan officer make sure you are familiar with your credit history and current credit situation, that is, if you are aiming for better interest rates.

It will be wise to put a little extra time in estimating your home’s value. Compare the values of similar homes nearby, search the market and maybe even postpone the refinancing if the value of your home is lower than you’ve expected. In addition you will want to take into consideration all the refinance loan costs and fees, gather all the required documents, and do your research before committing.

How to compare rates

The best way to compare rates is simply to gather as many mortgage proposals as you can. Gather information from great number of lenders and different types of lenders as well.The one thing you should be focused on is to search for the lowest mortgage rate but as well to be careful and look for the low closing costs. This leads us to selecting the right lander for you as one of the crucial steps in refinancing mortgage. Take your time and gather various proposals and use the competitors’ rates to negotiate for better terms. The more prepared you go to your potential lander the better your chances are to get a favorable loan with lower rates and lower fees. Negotiating is a big part of the whole process, so you should keep that in mind. This way you might get the deal you are searching for and save thousands and thousands of dollars.

This mini-guide to refinancing your mortgage should steer you in the right direction and give you some essential information about the whole process. Be sure to gather as much information as you can to be fully for this process. Take one step at a time and think through all your options to make the best decision for your financial situation.

Advantages of Home Loans

Many of us dream of the same thing: finally getting your dream home. The best way to make that fantasy come true with the high real estate prices is a home loan. They come along with a lot of responsibilities but also a lot of rewards. It also gets mortgaged with a bank, or a non-banking financial institution until you repay completely the loan. The title deed of the house is held by the lender until the housing loan amount is repaid in full with the due interest. You must also go through all the options to see which one will fit your plans, and we are here to help. So is owning a home right for you? Here are the main reasons why people decide to own instead of rent.

1) The tax benefits

You can get a tax rebate along with your house loan which will put a fair amount of money back in your pocket, each year. Both mortgage interest and property tax payments can be deductible from federal and state taxes. For example, you have the mortgage interest deduction. It is one of the largest tax breaks offered to homeowners. This option is especially lucrative at the beginning of your mortgage when the major part of what you pay monthly is applied to interest.

2) You are building equity

It is also called the dollar value of your home that actually belongs to you. You calculate it by subtracting the amount you owe on your home loan from the complete value of the house, and the leftover is the home equity. There are two ways to build it :

  • When you make your monthly mortgage payment, a piece of it goes toward reducing the amount you owe on your loan, and this increases your equity. You can consider this as a form of savings.
  • When the value of your home increases, you gain more equity.

Of course, if in the future you need some money you can tap into it. You have the possibility to borrow against your home equity for education or medical expenses and home improvements. You can as well use it to pay off high-interest credit card debt.

3) Your credit history gets stronger

When the other lenders see that you buy a home and pay your loan always on time, you get more chances to make future great deals. You are a serious borrower and if they choose you, they don’t take risks. It can be useful when you decide to make any new investment when you buy a car, for example.

4) It makes it easy to create your dream home

Homeownership is great when you know that you are free to create whatever environment you like. You don’t need to ask for approval from a landlord. You can finally make your dreams come true. If you want to have pets, to rearrange the floors, do some painting, or add an extra room… Anything that can make your house perfect.

5) It is always a good idea for investment

Staying in your home for a long time can increase in value its price and give you a satisfying return on your investment. When you choose this option, you can be sure in most of the cases that you are right. Also, it saves you from paying rent, and paying for a loan is much more profitable. Although, you must be careful and think about what kind of home loan is the best for you.

Below, you can find some different options for home loans:

Conventional mortgage: This one is the most commonly used type of home loan, and usually gets the best rates. It can last for 15 or 30 years. There is at least 10% for a down payment and a good credit. You have the option “interest only” when you don’t pay any principal in your payment. They have a bit lower payment, and when you make a regular payment you don’t pay off any of the loan balance.

Mortgage insurance: it is important to be aware of this option. This is an additional cost you bear if you put less than 20% on your house. It is intended to protect your lender in case you don’t make payments anymore. When you have at least 20% equity, make sure that you request mortgage insurance be removed (as it’s an unnecessary cost and is not tax deductible).

FHA mortgage: The main benefit of an FHA mortgage is a lower down payment requirement. It’s only 3.5% and is often more flexible with lower credit scores. This makes it easier to qualify for an FHA loan. It’s ideal for first time home buyers.

VA loan: There are more than 25 million veterans eligible for VA financing. You must have served on active duty, no dishonorable discharge and have served a minimum of 90 days during wartime, or 181 continuous days during peacetime. For military borrowers, the VA loans are the best on the market. They have a lot of advantages: they are very flexible, they have no down payment, you can reuse them and the government guarantees them.

USDA rural housing loan: This one can only be used in some specific areas and towns, and they are very flexible. They were designed to improve housing in rural areas. They have a variety of options: you can get it as a single- and multi-family housing, child care centers, fire and police stations, hospitals, libraries, nursing home, schools…

Adjustable rate mortgage (ARM): Their rate is not constant, it can start low but increase after one or several years and it usually gets higher. Be careful with this option because it has got in trouble many house owners, in fact sometimes the rates increase faster than expected.

203k Rehab loan: It allows you to borrow money with only one loan for both home purchase and improvement. They are guaranteed by the FHA, which is great for the lenders as they take less risk when offering you this loan. That way it’s is easier for you to get approved for the loan.