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Refinancing a first and second mortgage requires some extra considerations. Depending on your equity, you may find that combining the two mortgages results in a higher interest rate. You may also find that you have to carry PMI with the refinanced mortgage.

Will Refinancing Benefit You?

Refinancing two mortgages allows you to consolidate your loans into one payment, often lowering your monthly bill. You may also find lower rates under the right circumstances.

Those with a large amount of equity benefit most from consolidating loans since they qualify for the lowest rates. It is important to look at interest savings, not just monthly numbers which can be misleading.

However, if you have less than 25% equity, you may end up qualifying for higher rates. With less than 20% equity, you will also have to pay for private mortgage insurance. Even with these factors, you may still find that you will save money by refinancing.

Have You Done Your Research?

To see if refinancing makes sense for you, research mortgage lenders. You can quickly go online and request quotes and terms. Look at the different offers, and work out the numbers. An online mortgage calculator can help you figure out monthly payments and interest costs.

An easy way to compare cost is to first add up your interest payments for both mortgages. Use this number to compare interest payments with each potential mortgage.

You also need to factor in the cost of refinancing. Just like with your original mortgage, you will have to pay fees and points. You want to be sure that you can recoup these costs with your interest savings.

Why Do You Want To Refinance Both Mortgages?

While refinancing both mortgages is convenient, you may decide to refinance only one or both separately. With your main mortgage, you can expect to get low rates.

A second mortgage will usually qualify for higher rates, but you can lock them in. You may also choose to convert from a line of credit to an actual mortgage. Again, you will want to investigate financial packages before signing up with a lender.

Labels: Mortgage Loan Tips

Homeowners who are considering re-financing their home may have a wealth of options available to them. However, these same homeowners may find themselves feeling overwhelmed by this wealth of options. This process doesn’t have to be so difficult though. Homeowners can greatly assist themselves in the process by taking a few simple steps. First the homeowner should determine his refinancing goals. Next the homeowner should consult with a re-financing expert and finally the homeowner should be aware that re-financing is not always the best solution.

Determine Your Goals for Re-Financing

The first step in any re-financing process should be for the homeowner to determine his goals and why he is considering re-financing. There are many different answers to this question and none of the answers are necessarily right or wrong. The most important thing is that the homeowner is making a decision which helps him achieve his financial goals. While there are no right or wrong answer to why re-financing should be considered there are, however, certain reasons for re-financing which are very common. These reasons include:

* Reducing monthly mortgage payments
* Consolidating existing debts
* Reducing the amount of interest paid over the course of the loan
* Repaying the loan quicker
* Gaining equity quicker

Although the reasons listed above are not the only reason homeowners might consider re-financing, they are some of the most popular reasons. They are included in this article for the purpose of getting the reader thinking. The reader may find their mortgage re-financing strategy fits into one of the above goals or they may have a completely different reason for wanting to re-finance. The reason for wanting to re-finance is not as important as determining this reason. This is because a homeowner, or even a financial advisor, will have a difficult time determining the best re-financing option for a homeowner if he does not know the goals of the homeowner.

Consult with a Re-Financing Expert

Once a homeowner has figured out why they want to re-finance, the homeowner should consider meeting with a re-financing expert to determine the best refinancing strategy. This will likely be a strategy which is financially sound but is also still geared to meeting the needs of the homeowner.

Homeowners who feel as though they are particularly well versed in the subject of re-financing might consider skipping the option of consulting with a re-financing expert. However, this is not recommended because even the most educated homeowner may not be aware of the newest re-financing options being offered by lenders.

While not understanding all the options may not seem like a big deal, it can have a significant impact. Homeowners may not even be aware of mistakes they are making but they may here of friends who re-financed under similar conditions and receive more favorable terms. Hearing these scenarios can be quite disheartening for some homeowners especially if they could have saved considerably more while re-financing.

Consider Not Re-Financing as a Viable Option

Homeowners who are considering re-financing may realize the importance of evaluating a number of different re-financing options to determine which option is best but these same homeowners may not realize they should also carefully consider not re-financing as an option. This is often referred to as the “do nothing” option because it refers to the conditions which will exist if the homeowner does not make a change in their mortgage situation.

For each re-financing option considered, the homeowner should determine the estimated monthly payment, amount of interest paid during the course of the loan, year in which the loan will be fully repaid and the amount of time the homeowner will have to remain in the home to recoup closing costs associated with re-financing. Homeowners should also determine these values for the current mortgage. This can be very helpful for comparison purposes. Homeowners can compare these results and often the best option is quite clear from these numeric calculations. However, if the analysis does not yield a clear cut answer, the homeowner may have to evaluate secondary characteristics to make the best possible decision.

Labels: refinancing

It used to be the first choice of most borrowers, because since the total payments are spread over a longer period of time with the interest rate set for the entire time of the mortgage. 30 year home loan rates are an industry standard but is it the right choice for you?

The 30 year home loan is an industry standard, but is it the right choice for you? Because the total payments are spread over a longer period of time and the interest rate set for the entire time of the mortgage. This was the first choice of most home owners.

As we mentioned, the plus side for a 30 year home loan is lower monthly payments. This attraction is somewhat dimmed by the fact that you pay thousands extra in interest. But, your interest is 100% tax deductible which does lower your after tax cost. It offers you some flexibility so that if your financial situation changes and you have more money you can pay it off in less than 30 years, this while keeping the low monthly payments. Your payments are smaller so in reality you can purchase a larger roomier home.

To show an example of the interest difference between 30 year home loan rates and one of the other rates. On a 30 year, 100,000 dollar loan using 7% interest rate your monthly payment of interest and principle would be $665.30 dollars. Over the next 30 years you will have paid $139,511.04 in interest alone. Now with a 15 year home loan rate on the same amount you will pay $871.11 per month and over the next 15 years, you would pay $56,799 in interest. This would save you $82,712 dollars.

If you have the will power to invest the savings from the monthly payments, it still could be a good choice to go with the 30 year mortgage. Especially if you can find an investment that the long term payoff matches or exceeds what you would save in a 15 year mortgage. Another factor to consider is how fast you want to accrue equity in your home or to own it out right. 30 year home loan rates take much longer to build equity.

30 year home loan rates are certainly attractive and the vast majority of home buyers get 30-year loans because that is the longest home loan available today. Experts agree if they could get a 35- or 40-year loan, they probably would. There are many other options to consider. Probably the biggest question you have to ask yourself when considering a loan is what are your financial goals? What loan plan will help you the most to reach that goal? It is clearly to your advantage to look into other loan options for the best loan available for you and your financial goals. It may surprise you that because of your personal situation there may be other plans more suitable for you.

Labels: 30 year mortgage loan

If you are buying your first house, you may be a little wary of the mortgage loan that you are applying for. There are basically 3 main terms that will most likely influence you on your mortgage decision.

Everyone would naturally think about interest rates when it come to loans. It is no different with a mortgage loan. This is especially so for mortgage loans because of the sheer quantum usually associated with this sorts of loans. There are also generally 2 types of interest rates structure for a mortgage loan. Fixed rates and adjustable rates.

Fixed rates refer to interest rates that remain the same throughout the lifetime of the entire mortgage loan. It is suitable to those who prefer a stable loan so that they know exactly what they will be paying now and in the future. This gives them the comfort of planning their finances with a certain level of certainty.

Adjustable rates also know as adjustable rates mortgages are interest rates that fluctuate with the market. This means that if you take up an adjustable rates mortgage, you can expect the interest on your mortgage loan to fluctuate with market sentiments. Usually the initial rates of this types of mortgage loans are low so as to attract people to take them up.

The second thing that usually comes up for mortgage loan seekers is the loan tenure. In other words, the duration of the whole mortgage loan. A longer duration will mean lower monthly payments but more total interest paid. And vice versa.

Most people prefer to take a longer term for a lower monthly payment. The monthly payment is the third thing that that will determine your choice of mortgage loan.

Find your priorities and evaluate your housing loan offers. You can also get help choosing the best housing loan from those who are actively in the market.

Labels: Mortgage Loan Tips

If you think that you will not be able to get a mortgage to buy a house because of bad credit, you will be glad to know that there are mortgage loans designed specifically for individuals with bad credit.

Traditional mortgage lenders seldom offer property loan products to those with bad credit. Because big players have the luxury of choosing their customers and giving out mortgage loans to those with bad credit can be a risky move.

So there is a market gap that smaller mortgage lenders are filling up. It is in fact a very intense completion in the market for bad credit mortgages.

A bad credit mortgage is conceptualized specifically for people with bad credit and are looking for mortgage loans to purchase their homes.

Because the risk these mortgage lenders take are much higher, you can expect bad credit mortgages to charge a higher interest rate. More conditions may also be imposed onto the borrower.

Because a bad credit mortgage is considered a proper legitimate loan, it also gives you a chance to repair your credit record. When you promptly make the monthly payments, your credit record will be updated accordingly. This will improve your credit score.

It is best to get advice from proper mortgage experts if you are taking up a bad credit mortgage loan. They have good knowledge of what is happening in the market and can advise you on the best mortgage deals around that you are eligible for. You can also check out a quick guide to housing bank loan.

Labels: Bad Credit Mortgage Loans

Buying a home is one of “wants” of any working adult individual. Properties are appreciating every year. It keeps up with inflation. However, with good mortgage deals to take up, a lot of people can actually own that dream house that he wants.

Getting the best mortgage deals requires work from yourself unless you are engaging the services of a mortgage broker to manage the hassle for you. You can expect a mortgage lender to put it’s interest first instead of yours. So it is best to get at least 3 quotes from mortgage lenders to compare and have a good feel of the current mortgage interest rates. You can easily get in touch with mortgage lenders. Because it is a pretty competitive market, you can just search for them online and get them to contact you at a convenient time for your mortgage requirements.

There are 2 main factors that you should really take notice of when assessing a mortgage offer. They are the interest rates and the repayment structure of the mortgage.

A trap that many home buyers fall into is taking up the mortgage deal with the lowest rates in the initial years. But when the interest rates start to float, they cannot find mortgage lenders who are willing to remortgage their homes. They end up having to service high interest rates after the period where the interest rates are locked in.

So take note of how interest rates are structured in your mortgage offer. Interest rates can appear very low in the initial years, but can hit you hard when it starts to float depending on factors which you have to find out from the mortgager.

Another trap that a lot of people fall into is by stretching the repayment period for as long as possible so as to pay a lower monthly instalment. Note that the longer the mortgage loan tenure, the more total interest you are going to pay. It can seem affordable to you, but in real terms, you are paying more.

When applying for your mortgage loan, clarify anything that you do not really understand. It is the mortgager’s job to help you understand the terms of the mortgage. Don’t assume or act like you are a seasoned property player when you are not.

Labels: Mortgage Loan Tips

A 100% cash out mortgage refinance enables you take out cash from the equity you have build up in your house. Because you are using the house as a collateral, the interest rates for a cash out can be lower than most other forms of loans you see in the market.

The main concern for mortgage lenders are whether the borrower has the ability to repay the loan. They may use many factors to assess whether you will be a good customer. Factors include things such as your assets, credit record, cash on hand, etc.

Your debt ratio will be calculated by factoring all your existing debts like personal loans, car loans, etc, against your income. So if you make a monthly salary of $5,000 and have a car loan paying $700 a month, you ratio will be $700/$5000 = 14%. What ratio is a favorable number depends on the internal assessment process of the lender. Some mortgage lenders may be more lenient than others and vice versa. If possible, minimize you debts to have a better ratio.

In the event that you lose your income, mortgage lenders want to feel safe that you can still pay off the mortgage loan. So having liquid assets like cash and stocks will make mortgage lenders feel safer knowing that you have such assets on hand.

You credit record is one of the most important factors that a mortgage lender will use to assess you as a borrower. They don’t know who you are and have to find some basis to assess whether you are a good paymaster who handles your cash well. So you credit record can determine how well you manage cash. Your most recent 1 year credit behavior reflects most closely to your current personal financial position.

Get at least 3 quotes from mortgage lenders before making a decision. This enables you to find out what is available in the market. It also helps you know if you are being taken for a ride by comparing the different cash out refinance mortgages.

Don’t just look at the best interest rates. Look at closing costs as well.

Labels: Mortgage Refinance