Tuesday, June 21, 2011

All About Cash-Out Mortgage Refinancing

If your mortgage is already a few years old and you have not been remiss in your amortization payments, then you can benefit from this refinancing facility because the balance of your principal will definitely be much lower now. To illustrate, let's say you want to remodel your property but you do not have the $40,000 needed to do it. If the value of your house is $200,000 while the outstanding balance on your existing mortgage is only $80,000, you can secure a cash-out mortgage refinancing for $120,000. Of this amount, the $80,000 will be used to settle your old account and the $40,000 will be given to you to use as you please. You can even change your mind about remodeling and use the amount instead to pay for your son's college fund or for your dream vacation. Still, you may want to invest that money instead on another property. Perhaps you would like to use a portion to repay or consolidate your other small debts.

As a general rule, the maximum amount that you can refinance is equal to the value of your home. If you wish to borrow more than that, you will need to avail the other mortgage loan products of your bank such as the 125% home equity loan, which can either be a one-time loan release or a line of credit (HELOC). As with other types of loan facilities, there are advantages and disadvantages with availing the cash-out mortgage refinancing. If you are considering this path vis-a-vis other options such as a home equity loan, your comparison should be based on the net effect on your monthly payments. Remember that if you obtain a home equity loan, you are getting a new loan with different terms such as different interest rate and shorter repayment. You will need to pay a separate installment for this new loan on top of the monthly amortization you are paying for your existing mortgage. If you choose the cash-out mortgage refinancing, your current mortgage will be replaced by a new mortgage under new terms. You will still pay only one monthly amortization although the amount may now be different.

Do think long and hard before deciding on the cash-out mortgage refinancing. Study and analyze this option; quantify its effects on your cash flow. If you finally decide to apply for cash-out mortgage refinancing, consider how you will use the money. It is a good idea to invest the proceeds to improve your home because you will be increasing its resale value if and when you decide to sell it later on. On the other hand, if you intend to use the money to settle your credit card debts, you may want to estimate how long it will take you to pay them off "as is" without the refinancing proceeds. Can you pay them off in 5 years time? How does that compare with the term of your new mortgage which could run 15, 20 or 30 years? All things considered, cash-out mortgage refinancing seems sensible enough if by doing so you can enjoy lower interest rates. Of course, the trade off is the longer term of your new mortgage. At any rate, you get to reduce your monthly amortizations if you decide on cash-out mortgage refinancing.

Kevin Benner is the owner of EZ Rate Quotes, LLC an online financial news and information company helping consumers with Financial professionals in the mortgage insurance and debt space. We specialize in localized content development of topics such as mortgage refinance rates in Irvine, CA.

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Monday, June 20, 2011

Mortgage Refinancing to Take Advantage of Lower Mortgage Rates

Mortgage refinance is a loan taken to pay off the first loan on the same asset or property. If a person has a loan with fixed mortgage rates, then he will be paying more interest on the loan. In that case, he can take a new loan with lower interest rates or floating rates to pay off the first one. Mortgage refinancing help the borrowers to lower the monthly payments and thereby save some money for them to spend or invest. So refinancing helps you to reduce the monthly payments. More than 70% of the mortgage market in USA is running with mortgage refinancing.

You have to consider mortgage refinancing seriously to avoid more interest on your mortgage rates and losing your home to the bank. In mortgage refinance market there are two kinds of approaches. One is to work with a mortgage broker and other is to do your own research online. Mortgage brokers have a good knowledge on promotions, different offers and current mortgage rates. Select a good broker who is referred by others or by online research. You can also find the offers, promotions and market rate by researching online. Online research also helps you to compare prices of different mortgage websites. By doing this, you will get an overall picture of the market, but have to spend a lot of time to select the best one suited for you.

You can also consider a longer tenure to pay off the loan taken through mortgage refinancing to reduce the monthly payments. Even though you have the benefit of lower mortgage rates, you have the responsibility of loan payment for a longer duration. Getting a mortgage refinance will be difficult when you have some credit issues. So you have to sort out all the issues before applying for a new loan with lower mortgage rates. It is always better to refinance your property, when you have some equity on your property. Before going for the option of mortgage refinance, you must have a minimum of 10-15% as your own property. You can apply for mortgage refinancing even with 5% equity value, but have to pay more money to get the loan.

Never refinance your property when the value of the property is going down. Since the loan is provided to the current value, mortgage refinance also will be lower to the original loan amount. Mortgage refinancing fee varies from lender to lender and state to state. In most cases, you have to pay at least 3-6% of the outstanding principal amount as refinancing fees. This cost is in addition to the prepayment penalties or other costs such as insurance, tax, legal, moving costs, inspection, appraisal etc. Getting lower mortgage rates through mortgage refinancing is a great option for saving some money for your future.

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Sunday, June 19, 2011

Mortgage Processing Companies: Three Questions to Ask

Even though you and your staff may be specialists in mortgage processing, there are always going to be some areas where you experience bottlenecks and other problems. For example, you may find it difficult to stay abreast of all the new guidelines that govern how lenders assign risk categories to potential borrowers. If you answer "no" to any of the three following questions, then working with outsourced mortgage processing companies may give you a competitive edge as well as an operational one.

Are You Able to Keep up With all the New Laws and Guidelines?

As you may be aware, both state and federal officials are still concerned about the mortgage crisis and how it will continue to affect the financial recovery of our nation. Under these circumstances, it can become very difficult to keep up with new regulations and programs that may be implemented to help distressed business and home owners. In fact, even if you know about various programs, you may be stymied by all of the paperwork and other items required to obtain assistance. On the other hand, mortgage processing companies have dedicated staff members that know how to navigate these programs, as well as tell you which customers will benefit most from them.

Do You Have the Resources Required to Adequately Screen New Employees?

Since your business involves fairly complex financial transactions, you may become a target for embezzlers and identity thieves that try to become employees. Rather than wind up in a very embarrassing situation, you will be well served by working with mortgage processing companies. At the very least, these companies have all of the tools required to perform thorough background checks, as well as employ a wide range of other methods to ensure that their employees do not become a liability from this perspective.

Can You Manage Defaults Constructively and Efficiently?

When your customers are having financial problems, they may inform you of their situation before failing to make a payment. If you do not have adequate resources to investigate and utilize various assistance programs, then you may wind up having to foreclose or engage in other debt collections tactics. On the other hand, when you make use of mortgage processing companies, they will always be aware of a wide range of methods to manage these situations. As may be expected, when these resources prove ineffective, mortgage processing companies have lawyers and other professionals on hand to recover your assets as quickly and smoothly as possible.

Today, outsourced Mortgage Processing companies can streamline some of the most complicated areas of your business. This includes helping you limit liability associated with employee screening, as well as making it easier to recover your assets if a customer happens to default on a loan obligation. As an added bonus, when you work with professional mortgage processing companies, you can always have peace of mind knowing that they will always have access to the kinds of training and other resources that enable them to provide excellent and consistent performance for your business needs.

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