Refinancing Your Mortgage: 3 Important Points And 3 Pros And Cons

refinancing your mortgage

Should you refinance your mortgage?

refinance mortgage pros and cons

Refinancing mortgages have proven to be one of the most popular home loan options for those with good credit.

However, there are also some disadvantages to consider when opting for this. Here’s a look at the major pros and cons associated with refinancing your mortgage.

The advantages to refinancing your current home loan are many.

If you currently have a lower fixed interest rate than your mortgage lender, taking advantage of a refinance mortgage may give you the ability to refinance at a better interest rate than what you have now.

Pro: Refinancing can reduce your monthly payment

Refinancing can also save you money by reducing your monthly payments by as much as half. The reduction in monthly payments can help reduce your financial stress related to paying your mortgage.

Con: You will lose your home

The main disadvantage to refinancing is that you will lose your home.

The loss of your home in a refinance transaction doesn’t take place until the end of the mortgage term. This means that you won’t be losing your home until you have missed several payments.

This disadvantage is offset by the increased possibility of enjoying a better interest rate by refinance. If you have a refinancing your mortgagelarge amount of debt, the amount of money you could save by refinancing your mortgage could be greater than the amount you could lose by foreclosure.

Even a modest improvement in your financial position can help you avoid foreclosure.

Pro: Pay off your debts faster

One of the major benefits when you choose to refinance your mortgage is that it can eliminate up to two thirds of your debt.

This means that you can pay off your debts faster, leaving you with more disposable income.

In addition to getting rid of any accumulated debt, a refinance can also give you a new loan that you can use to make larger purchases such as homes.

With the economy the way it is many people are struggling to make enough money to make ends meet. A refinance can help you increase your monthly income while simultaneously reducing the amount of money you owe.

Before refinancing your mortgage, try a longer loan term

If you are considering to refinance your mortgage there are several factors you should consider before taking out a loan.

For example, you should determine how much of your income will go toward paying off your loan. You may be able to lower your monthly payment with a longer loan term.

A longer loan term will also lower your interest rate and keep your monthly payments down. Before deciding on a refinance mortgage you should also evaluate if you will save money by refinancing rather than selling your home.

Search for the perfect mortgage lender

It’s important to compare refinancing mortgage options with those of other mortgage lenders.

While competitive rates and terms are good when it comes to getting a loan approved, make sure you don’t sign up for the first refinance loan offer you get.

You should shop around and see if you can find a better deal elsewhere. Some home owners purposely put their property on the market in order to get a better rate.

By offering a better deal, you might be able to attract a better buyer, which could increase your chances for a successful refinance. Another advantage to shopping around is that you can find out if you can qualify for a no documentation refinance mortgage.

Consider Home Equity Loans (HELOC)

If you are trying to decide between a refinance mortgage and home equity loans (HELOC) to finance your next purchase, you should research the pros and cons of both types of loans.

The advantages of a refinance mortgage over a HELOC include lower monthly payments, but HELOCs have higher interest rates.

If you plan to stay in your home for a long time, it’s probably a better idea to get a refinance mortgage since you won’t have to come up with as much money as with a HELOC.

But if you plan on moving within a short period of time, a home equity loan makes more sense.

If you are considering getting a refinance, make sure you are in good financial shape before you take out a new mortgage loan. Even a little traffic ticket or medical emergency can wipe out some of your refinancing savings. So it’s important to make sure your credit is in good shape before you apply for a refinance mortgage.

The 9 Most Common Mortgage Questions With The Best Answers

mortgage questions

What are the most common mortgage questions

What are the most common mortgage questions asked by your mortgage lender?

Surprisingly these questions are almost always about the cost of your mortgage loan.

The following article will explain what these questions really mean to you and how to answer them confidently.

Your lender is going to look at what you can afford in your house, your credit rating and your financial situation.

They will also consider the risk you pose to them by virtue of your credit rating and bad debt history. This means they will want to know the total amount of money you owe, including any outstanding payments.

What are the costs involved in refinancing my mortgage loan?

If you need extra cash to make ends meet or to pay down debt, a new mortgage may be the way to go.

Ask your lender if you can extend the term of your current mortgage for up to three years or less. This will let you pay down debt, save on closing costs and possibly pay less overall in interest.

What are the consequences of delaying my loan?

If you have delayed your mortgage, you’ll probably have to pay rent for a longer period. This could put a strain on your budget. Your lender might also raise your rates. Discuss your options with your counselor today.

What are the consequences if I am no longer able to pay my mortgage?

Your lender will probably want to talk to you about repaying the balance in full by selling your home or moving to another rental property. There are other legal and possible solutions available to you, but your lender will want to be involved.

What are the consequences if I am able to pay off my mortgage early?

A deferred loan is a loan that is paid off over time. Your lender will usually lower your interest rate and reduce your principle so you can pay off your loan faster. For some borrowers, this is an ideal solution because they get to avoid the headache of refinancing and late fees.

What are the consequences if I’m moving?best home loan

A federal law called the Real Estate Settlement Procedures Act (RESPA) regulates your mortgage rights when you’re transferred to another residence. RESPA sets forth guidelines for the lender and borrowers, and spells out when a lender can attach a lien against your home. You can learn more about RESPA by visiting Lending Tree.

What else do I need to know about mortgage loans?

The answers to your questions and the information provided on our website will help you decide which type of mortgage best meets your financial goals. Learn more about your mortgage options, including common, miscellaneous mortgage terms, common deductions and tax consequences, and common insurance terms. When you’re ready to refinance or sell your home, you’ll have everything you need to know by asking the right questions.

What are the most common mortgage mistakes that homeowners make?

There are several common mistakes that homeowners may make. Homeowners often incorrectly pay down their mortgage and do not include capital improvements on their income taxes. Other homeowners mistakenly assume they can deduct the interest from their mortgage interest payment. In order to learn more about common mortgage mistakes, visit Lending Tree.

What are the pros and cons of mortgage refinancing?

Mortgage refinancing is a good option for homeowners who have fallen behind on their mortgage or who have substantial interest rate differences between their present interest rate and their new higher rate. Homeowners should be prepared to pay closing costs and other costs associated with refinancing their mortgage. Before deciding if mortgage refinancing is right for you, visit Lending Tree.

What are the pros and cons of a reverse mortgage?

A reverse mortgage is a specific loan program for homeowners who are 62 years old or older and whose home is worth more than the mortgage amount. The homeowner must sell the home in order to obtain the loan, which can be done through an estate sale or by putting the home on the open market. Once the loan has been paid off, the homeowner retains ownership of the property. The lender will provide a specified amount of money each month, which is paid directly to the homeowner. If the homeowner wishes to retire to their current home, they may do so without paying a dime.

4 Tips How To Get The Best Home Loan

best home loan

how to get the best home loan

How To Get The Best Home Loan

Are you looking for some loan modification tips on how to get the best home loan workout? Then you have come to the right place. With the recent housing meltdown and the tightening of mortgage rules, it has become increasingly difficult to modify your home mortgage loan. However, there are some loan modification companies that are willing to help you get a new loan that will be acceptable to your lenders. These companies are in the business of helping homeowners negotiate with their lenders to get the best mortgage home loan workout possible.

Tips on How to Get the Best Home Loan

If you are currently behind in your mortgage payments, you may know that your lender is more than willing to work with you. In fact, they are often willing to forgive a portion of the principal so that you can catch up. Many homeowners find this to be a good place to start when they are first trying to figure out how to get the best home loan workout possible. Of course, this is one of the best methods for borrowers to catch up, since late fees and missed payments will quickly add up if you do not catch up soon.

When you are researching how to get the best home loan workout, it is important that you keep in mind that lenders want your home. This is a critical piece of real property for them. You can work with a mortgage company to modify your mortgage and get it to where you can afford your current situation.

You should make sure you have all the information you need before you begin. You should gather all your documents and mortgage paperwork so that you can compare them to your current situation. If you are struggling with finances, you will definitely want to take this route. But you should also realize that if you can’t make your payments, you could lose your home.

Talk to your Lender

One of the first things you should do when you are trying to find out how to get the best home loan is talk to your lender. Find out what your options are and let them know you would like to renegotiate terms. Explain about your current financial situation and how your circumstances are affecting your ability to make your mortgage payments. Sometimes lenders will be willing to negotiate some terms to help you in your quest for lower interest rates. They may even be willing to waive some fees or reduce the amount of your mortgage.

Negotiate with your Loan Officer

Another method of negotiating loan terms is to negotiate with your loan officer. Find out how your lender deals with negotiating new terms every year. There are probably several people in the office that deal with these types of issues and it will pay to get their input. Getting the right advice can definitely help you in reaching some type of compromise with your lender.

Determine how you want to make the payments

The most important question you need to ask yourself when asking how to get the best home loan is how to make your payments. This can make or break you when shopping for a new home mortgage. Do whatever you can to keep your payments as low as possible. This will help you avoid having to seek out other means of making ends meet while you are trying to buy your new home.

Refinance your Mortgage

A lot of people are also finding that refinancing their mortgage can be a good option. Refinancing is essentially borrowing against the equity of your home and paying off your existing loan. This can save you a significant amount of money and allow you to make larger payments each month. It will take longer to pay off than a new loan, but over the long run, you could end up saving thousands of dollars. If you have any doubts about whether or not a refinancing is a good idea to talk to your lender or do some research online.

Related Topics:

Home Mortgage Tips You Should Know About

Exactly What Can a Home Loan Do For You?

End Up Paying Your Mortgage Off A Lot Quicker

Mortgage Hunting Checklist: 8 Important Things To Do

mortgage hunting

Are you ready to go mortgage hunting?

To keep you from being caught off guard, we’ve put together this list of homework dos and don’ts before you go hunting for that perfect home and signing a mortgage.

1. Check your credit report for anomalies

Do not confuse it with your credit score for which you have to pay and which will be of no use to you in your efforts (nor in general). Just ask for your file, which you can get free of charge. It contains your personal information, including your social insurance number, as well as data on your credit usage (cards, margin, personal loan, mortgage) and your payment habits with telecommunications service providers. You could spot problems that could delay getting a loan and make you miss out on a buying opportunity.

2. Do not visit houses without looking into financing options…

Taking the most exciting step in the buying process without having budgeted or qualified for financing is a classic mistake that exposes its perpetrators to disappointments and wasted time. What could be more frustrating than succumbing to a property and finding out at the time of financing that no lender is willing to grant you the mortgage you need to purchase it. Worse, you could get the loan and find months later, choked with monthly payments, that the house is beyond your means.

3. …And mortgage pre-approval

Some would argue that mortgage pre-approvals push buyers to homes that are beyond their affordability. Many couples in the past have been surprised by the (large!) Amount the bank was willing to lend them. The phenomenon has not disappeared, but it has been mitigated by the tighter qualification rules, put in place for almost two years.

Like the budget, credit pre-approval allows you to narrow your mortgage hunting research into market segments that are within your means. Above all, it will prevent you from missing buying opportunities, as sellers and their brokers are more attentive to offers from buyers who have previously received the support of their banker.

4. Know the mortgage rate and qualification rules

To qualify for a mortgage, you must comply with more demanding debt ratios. Your fimodel toy size house on one end of a see saw and a red dollar sign on the other end weighing down the housenancial obligations, which include mortgage repayment, property taxes, heating and electricity costs, and all of your debts, must not exceed 44% of your income. However, lenders must consider in this ratio a higher mortgage rate than the one actually granted. This is the novelty, especially for five-year fixed rate mortgages.

5. Don’t obsess over the 20% down payment

It’s worth pulling out your calculator. Many lenders provide lower mortgage rates for an insured mortgage. Why ? An insured loan carries less risk for the institution. These receivables can also be securitized more easily in order to be sold on the financial markets.

6. Think about other costs

After mortgage hunting, buyers could be tempted to put all their cash in the down payment, while forgetting the other costs that await them: notary and moving costs, property transfer tax (welcome tax), as well as the curtains and the mower . Consideration of the down payment must take this parameter into account.

7. Think about renovations before, after it will be too late

Many homeowners pay for their renovations by refinancing their home or using a home equity line of credit. On the other hand, these tools are inaccessible if the mortgage exceeds 80% of the value of the house, therefore to the majority of first-time buyers.

The terms of such a loan vary from one institution to another, but the principle is the same. When granting the mortgage, the lender makes additional funds available to the buyer, accessible only on presentation of invoices proving that the work has been carried out. In the meantime, they are paid with a line or a credit card. When the renovations are complete, the temporary loans are transferred to the mortgage.

8. Will you be staying in your new home for a long time? Think about it!

The interest rate is one important aspect, but there are others. This is why the mortgage broker will inquire about your plans. Do you plan to have children? Do you think you will be called to work in another city or in another country? Is your job stable? The answers to these questions could have consequences on the choice of lender, the term of the loan, and the type of rate chosen, fixed or variable.

If you were to sell your home before the end of the term, usually five years, you could face hefty mortgage prepayment penalties. The formula for determining the amount is particularly disadvantageous for the customer of a fixed rate mortgage. The penalty can sometimes be equivalent to the down payment. For a variable rate mortgage, it is more reasonable. It represents three months of interest.

If the purpose of the sale of the house is to acquire another, often this is not a problem, the lender will agree to transfer your mortgage to the new property on the same terms, unless you move to another country.

The mortgage advisor won’t ask you these kinds of questions, but ask yourself deep down whether your relationship is strong. Couples who break up are most often the victims of these significant penalties. They emerge impoverished from separation, unable to purchase a new home, with a bill of several thousand dollars for mortgage prepayment.

Above all, never sign a mortgage at the rate posted by your financial institution. It is artificially inflated.

4 Amazing Home Mortgage Tips You Should Know About

home mortgage

Don’t get overwhelmed when searching for a home mortgage company. If the process seems overwhelming, it is time to start learning. The tips laid out below will help you get a good base of knowledge in mind.

Home Mortgage Pre-Approvalmodel toy size houses in a row each one higher than the next with a red arrow across the top of them zooming upwards

Get pre-approval to estimate what your payments will be. Shop around and find out what you’re eligible for so you can determine your price range. Once you have decided on the total amount of monthly payments, you can then determine the possible monthly mortgage amount you can afford quite easily.

New laws might make it possible for you to refinance your home, even if you owe more than what your home is worth. This new opportunity has been a blessing to many previously unsuccessful people to refinance. Check to see if it could improve your situation; it may result in lower payments and a higher credit score.

Many homeowners may give up on their problems with a lender; if you are in financial trouble try to renegotiate the terms of your loan. Be sure to discuss all your options with your mortgage provider about any possible available options.

Don’t Be A Spend Thrift

Avoid unnecessary purchases before closing day on your mortgage. Lenders often recheck credit a few days before a mortgage is finalized, and they could change their mind if they see a lot of activity. Wait until after the mortgage is settled before making any additional purchases.

You will be responsible for the initial down payment. In years past, some lenders didn’t ask for down payments, most do require a down payment now. Ask what the down payment has to be before you submit your application.

Any changes to your financial situation can cause your mortgage application to fail. You should have a stable job before applying for a loan.

How Is Your Credit Rating?

good credit checklistMake sure your credit rating is the best it can be before you are planning to apply for a mortgage loan. Lenders tend to closely look at your entire credit history to make certain you are a good risk. If you’ve had poor credit, do what you must to repair it so that you avoid having the application denied.

Ask your friends for information on home loans. They are probably going to be able to provide you with a lot of advice that you should be looking for. You may be able to benefit from their negative experiences they have had.

If you are having problems with your mortgage, look for some help as soon as possible. Counseling is a good way to start if you cannot stay on top of your monthly payments or are struggling. There are various agencies that offer counseling under HUD offices around the country. These counselors offer free advice to help you avoid foreclosure. Call your local HUD or look on their website to locate one near you.

Understanding Balances

Try to keep balances that are lower than 50 percent of the credit card limit you’re working with. If you can get them under thirty percent, having a balance below 30 percent is even better.

Adjustable rate mortgages or ARMs don’t expire when their term is up. The new mortgage rate is adjusted accordingly using the rate on the application you gave. This could result in a high interest rate.

It can be empowering to have the right information. Do not go through the possible mortgage companies before you decide what is right for you. Have confidence in the decisions you make and consider each and every option prior to moving forward.