August, 2009

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Cash Out Refinancing vs. Home Equity Loan

Sunday, August 30th, 2009

In considering mortgage refinance Virginia, you may be thinking about a cash-out refinance and/or a home equity loan in Virginia.

Cash Out Refinance

A cash-out refinance is refinancing your existing mortgage and, additionally, borrowing some of your equity — built up in your home over the years — in a lump sum. Reasons for the cash can be for home improvements, college tuition, or a family vacation, to name a few. The smart borrowers usually use a cash-out refinance to invest in real estate, or to start their own business and, thus, build a steady stream of income.

Cash out refinances are very good financial tools when used for the right reasons. If interest rates are high, it is not wise to do cash out refinancing if your existing mortgage sits on a really good rate. It would certainly be wise to leave it alone until the right time comes to the fore. (Be sure to check Virginia refinance rates.)

Home Equity Loan

However, if you need the cash badly and are looking to tap into the equity you have accumulated in your home without touching your current mortgage, you may want to consider a home equity loan.

With a home equity loan you can borrow the equity you have built up without touching your first mortgage. For example, if you have accumulated $60,000.00 worth of equity in your home, you can borrow within that equity value without your first mortgage being effected. By the way, the home equity loan is also referred to as a second mortgage. Here, again, beware of high interest rates and high closing costs.

The cash out refinance and the home equity loan are very similar and serve almost the same purposes. Your situation should determine which of the two types of loans is the right choice for you.

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Mortgage Refinance Facts: 1 in 8 Mortgages in Default or Foreclosure

Friday, August 28th, 2009

“Souring Prime Loans Compound Mortgage Woes” By Nick Timiraos
“Programs Designed to Prevent Foreclosures Face Pressure”

“A survey found that one in eight U.S. households with mortgages was in foreclosure or behind on its mortgage payments during the second quarter, putting added pressure on programs aimed at preventing foreclosures.

While foreclosure starts have slowed on the subprime loans that ignited the mortgage and banking crisis, loans extended to borrowers with good credit are deteriorating at a faster clip as falling home prices and mounting job losses weigh on more households.

The Mortgage Bankers Association said its latest survey, released Thursday, showed that 13.2% of mortgages on homes with one to four units were at least a month overdue or in the foreclosure process in the April-to-June period, up from 12.1% in the first quarter and 9% a year earlier.” Source — The Wall Street Journal

The full article is at:
http://online.wsj.com/article/SB125082120504548471.html

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Refinance ARM (Adjustable Rate Mortgage): Should You?

Tuesday, August 25th, 2009

Should You Refinance That Adjustable Rate Mortgage?

By Joseph Kenny

Adjustable rate mortgages allowed many people to get moved into the house they wanted, even when it may not have been possible with other types of financing. This was very convenient at the time because interest rates were low and things looked very good. But, for some, there may be a little cloud over your head because its status may be about ready to change. Here are some things that will help you to decide if you need to refinance your adjustable rate mortgage.

Your adjustable rate mortgage has had its fixed rate portion of time, and now it is about to go to a non-stable adjustable rate. As you very well know, the adjustable rate could change every month, or at least every year. The uncertainty is there because not you, or anyone else on this planet, knows what the economic future holds.

This means that there will always be a strong amount of uncertainty attached to this type of mortgage. Refinancing is a possible solution – but only if you are planning on staying in that house for awhile. To get a new mortgage, means that you will have new expenses involved in the closing and processing of it. Refinancing will add both to your overall debt, and will probably increase your payments, too.

While only you can decide if it really is a good time, you also need to be aware that if you do wait too long, then you may not be able to get a good interest rate. Having a fixed rate mortgage, at a higher rate may not be much better than having a high interest rate adjustable mortgage. It is possible that you may not be able to afford either one. In either case, if the interest does go back down, you could refinance again. This means your best option may be to refinance when you can and get the lower rates – at least they will be guaranteed.

If you see that you can ever get a lower interest rate on a fixed rate than on what you have now – the decision should be obvious. Get the fixed rate mortgage as quickly as you can.

One of the only means that may indicate that it is a good time to refinance is to watch the market carefully. Observe the trends that reveal whether there most likely will be an increase in the interest rates. If the experts predict that rates are likely to keep on rising, then you know it is probably a good time to get a new mortgage.

The bottom line about refinancing may be something as simple as how well you sleep at night. If you are spending time worrying about it, or if your mate is, then it may be worth that better sleep to have something more predictable. Before you sign on a new contract, though, be sure that you carefully compare a number of offers so that you make sure you get the best deal available to you.

Joe Kenny writes for NationsFinance.co.uk, offering easy mortgage applications along with UK Loan Store’s mortgage broker section of the site.
http://www.nationsfinance.co.uk/

Article Source: http://EzineArticles.com/?expert=Joseph_Kenny

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Mortgage Refinance Guide – Free

Monday, August 24th, 2009

Get the “Insiders Guide to Mortgage Refinance”   * * *  In this free guide you will discover:

  • What you MUST do to avoid 5 costly refinance mistakes. (video)
  • How to determine whether refinancing or loan modification is the better choice for you.
  • Home stimulus: Is there stimulus available for you?
  • How to get the most from mortgage refinance. (video)
  • Mortgage foreclosure: How can you prevent it?
  • Mortgage debt refinance vs. Payoff (video)

Visit this site for details on the insider’s mortgage refinance guide.

mortgage refinance guide

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Mortgage Refinance Virginia vs. Loan Modification

Friday, August 21st, 2009

Mortgage Refinance Viginia also brings to your attention the possibility of loan modification and, particularly, the government Making Home Affordable program.

Making Home Affordable is a plan to stabilize the United States housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.

The Home Affordable Refinance Program gives up to 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. The Home Affordable Modification Program commits $75 billion to keep up to 3 to 4 million Americans in their homes by preventing avoidable foreclosures. [Mortgage Refinance Virginia readers may be able to benefit from this program.]

The government-sponsored consumer website, www.MakingHomeAffordable.gov provides homeowners with detailed information about these programs along with self-assessment tools and calculators to empower borrowers with the resources they need to determine whether they might be eligible for a modification or a refinance under the Administration’s program.

Through this government website, borrowers can also connect with free counseling resources to help with outstanding questions; locate homeowner events in their communities; find a handy checklist of key documents and materials to have ready when making that important call to their servicer as well as FAQs from borrowers in similar circumstances; and much more.

“Home Affordable Refinancing

” Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.

“Home Affordable Modification

” Many homeowners are struggling to make their monthly mortgage “payments perhaps because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.”

Source — makinghomeaffordable.gov

” A loan modification is different from a traditional mortgage refinancing. When you refinance, you sign a new contract for a new loan. A loan modification involves changing the existing loan by lengthening its term or lowering the interest rate so that you can continue to afford your mortgage payment.

” Homeowners may be eligible for a loan modification if they have a mortgage payment greater than 31 percent of their monthly gross income and can document that a financial hardship has made the payment un-affordable.”  Source — www.Philly.com

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Mortgage Refinance Virginia — When Is It Worth It To Refinance?

Sunday, August 16th, 2009

When considering mortgage refinance in Virginia, you need to be sure that the new interest rate will be low enough (the interest rate difference between the new refinance mortgage and your existing mortgage will be great enough) to pay for the cost of refinancing.

When interest rates were two points below your current mortgage rate, it was considered a good rule of thumb to refinance. But with today’s low closing costs, even a difference of one percent can save you money on your interest costs. Even with low fees, it only worth it to refinance when you can be sure you can recoup the mortgage costs.

Figuring Up Costs

Refinancing is simply paying off one loan and taking a new one. The same fees that you paid with the first mortgage, you will probably have to pay for the refinance mortgage . Usually, loan costs range between $2000 and $6000 for a $200,000 loan. You will also have to add in points for lower interest rates (i.e., buying down the interest rate, adding additional thousands of dollars in costs. The only way to recoup these costs is to keep your mortgage for several years.

Interest Rates

To make refinancing worth it financially, you need to be sure that interest rates are low enough to pay for the cost of refinancing. One simple way to figure this out is to use a mortgage interest calculator from one of the lending sites. These calculators will give you an estimated monthly payment and the total cost of the interest. By punching in different interest rates, you can see your potential savings.

Mortgage Term

Besides interest rates, you also need to compare terms (i.e., the length of the mortgage). The shorter the loan the less you will pay in interest. Ideally when you refinance, you should choose a loan with a shorter term. You can also choose a biweekly mortgage, where you pay half a mortgage payment every other week, which can reduce your loan by years.

Finding Low Cost Lenders

Not all lenders charge the same fees or interest rates, so you can save thousands by searching for lenders. You can easily go to the big name mortgage lenders and request quotes, but some smaller financing companies offer better deals. The easiest way to find them is to look online for a local mortgage broker site. Essentially, you enter some basic information about yourself and income, and then you receive several different quotes. From this list of offers, you can decide who is offering the best mortgage refinance Virginia package.

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Mortgage Refinance Virginia: Tips — Debt to Income Ratios

Thursday, August 13th, 2009

Mortgage Refinance Virginia

Tips — Debt to Income Ratios

Your mortgage refinance Virginia success is enhanced by your understanding of how lenders use debt-to-income ratios in processing your mortgaStop Foreclosurege refinance application in Virginia.

A thorough knowledge of debt-to-income ratios can help you get the most value from your mortgage refinance, debt consolidation or purchase mortgage transaction in Virginia.

How Computed

Debt-to-Income Ratios, often referred to as “DTIs,” are a key calculation used in the mortgage refinance, debt consolidation, and purchase mortgage application process. A debt-to-income ratio is arrived at by dividing your monthly debt payments by your pre-tax income. Debt-to-income ratios are used to determine how much money you can borrow.

There are two different types of debt-to-income ratios which are used in mortgage refinance, debt consolidation or purchase mortgage underwriting in Virginia — a Front-End Ratio (or “Front Ratio”) and a Back-End Ratio (or “Back Ratio”).

Front Ratio

The Front Ratio is calculated by dividing your income into the sum of your total monthly housing expenses consisting of your mortgage payment (including principal, interest, taxes, homeowners insurance and mortgage insurance, if applicable) as well as homeowners association fees, mandatory maintenance fees, and common grounds charges in a development.

Back Ratio

The Back Ratio is similar to the front ratio but, on top of basic housing expenses, the back end ratio also includes your other monthly debt payments — particularly consumer debt payments — into the calculation. Examples of monthly consumer debts are your credit card bills, automobile payments, personal or student loans, etc. Examples of items not typically included in a back end ratio would be premiums for life insurance, health insurance, and car insurance.

Matching Your Ratio to Loan-Program Criteria

When evaluating your application, your lender is trying to match your application with the lending criteria for the mortgage refinance program in which you are interested to see if you qualify for the loan.

While there are many factors considered in determining how much money you can borrow and at what rate, your debt-to-income ratio is amongst the most important. A good-credit, conventional-mortgage program will very often have a debt-to-income ratio requirement of 33/38 – front/back, meaning that your monthly housing costs should be less than one third of your gross income per month.

Example

If you make $3,000.00 per month that means the maximum mortgage payment you could qualify for under a 33/38 program would be $1,000.00 per month inclusive of principal, interest, taxes, and insurance, as well as other housing costs. And, you will only be allowed a total monthly expenditure including mortgage payment, credit cards’ payments, and other consumer debt payments of$1,140.00.

That may seem very conservative, and it is.

Ratios’ Importance

If you’ve ever been turned down by a brick-and-mortar bank for a mortgage refinance, debt consolidation loan or for financing a new home purchase in Virginia, chances are it had something to do with your program’s low debt-to-income ratio.

Many modern lenders are not as concerned about the back end ratio at all and decide solely on the basis of the front ratio. In the case of a veteran’s VA loan, the guidelines only concern the back ratio and ignore the front. FHA loans allow you to carry more consumer debt, but with a higher income requirement — with a standard debt-to-income ratio guidance of 29/41 – front/back.

Refinance — Debt Payoffs

Debt consolidation programs can often make it much easier to qualify if you are willing to specify that certain consumer debt accounts be paid off directly, thereby reducing your monthly consumer debt payments.

Using a Refinance Loan Broker

Contact a nationally capable mortgage broker so that you have access to a wide variety of mortgage refinance programs in Virginia. Be honest with your loan officer about your earnings and debts and things will go smoothly. Remember, a mortgage refinance broker wants to get you the money you need in Virginia, and will work with you to make sure that happens.

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