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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Saturday, June 18, 2011

Smart Tricks to Get the Best Deal on Your Mortgage Loan

You don't need to have tons of money in order to buy a home. As long as you have a steady flow of income, good financial organizational skills, and a healthy credit score, you can apply for a mortgage loan that you can use to purchase your dream home. But before you go out and look for a lender to turn your dream into a reality, you must know first that not all mortgage loans are created equal. Some loans are longer, some are more expensive, and some require hefty down payments. To ensure that you get the best possible deal for your loan, here are the things that you need to do.

Collect and compare

If you're smart enough, you wouldn't get the first mortgage loan you see in the market. Instead, you'll collect the quotations you obtain along the way so you have basis for comparison when it's time for you to make a choice. If you take out the first loan that you see, it's possible that you're missing on other better deals that would cost you less money. That's why shopping around is one thing that you cannot neglect when looking for a loan. Never fail to read the fine print before you sign any document. Most of the time, fine print contains vital information that you would want to know about.

Analyze all costs

When comparing the costs of loans, most people make the mistake of comparing only the interest rates when in fact, there are plenty other costs to calculate and analyze. It's also important to compare the overall cost of the loan on different loan terms. This way, you can balance between an inexpensive overall cost and comfortable monthly payment. For example, a 10-year loan would require you to pay $2,000 a month, that's roughly $250,000 worth of loan. If you can afford to pay more than $2,000 a month, that would be a good idea so that you can lessen the cost of the entire loan. But it's not wise to get a monthly payment that's beyond what you can afford just to make the loan less expensive because that would only cause you more problems.

Fix your credit rating

Don't apply for a loan without first fixing your credit rating. A high credit score will help you land better deals whereas a poor credit score will give you higher interest rates and exorbitant costs on the mortgage loan. Be responsible with your monthly payments to cure your ailing credit rating.

Watch out for low interest rate

Another decision you have to make is to choose between a fixed interest rate and variable interest rate. The advantage of fixed interest rate is that you can plan your monthly payments effectively. However, it can be a boon if the current rate in the market is high. What you can do is to wait until the rates reduce before you take out a loan. If you don't mind fluctuating monthly payments, it would be fine to go for a variable interest rate loan.

Once you've organized your finances and have obtained a loan from a trusted lender, the next step would be to find your dream home. You can use an online home finder to make house hunting easier for you.

For more details about Fort Collins Real Estate & Denver Real Estate, please visit us online.

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Friday, June 17, 2011

Upside Down Mortgages - The Alternative To Action

So you are upside down on your mortgage, and you are starting to sweat. You see the equity that you had in your property turn into negative equity, and you realize that something has to be done. Unfortunately, in all actuality, there is nothing that can be done. Your house and your houses equity (or lack there of) are at the whim of the invisible hand of the market. When this happened several years ago, people began giving up on their homes, also known as strategically defaulting. People were walking away from homes and trying to sell at a rate that only further moved the prices down due to the increased inventory. Here is what I believe would have been the better solution:

My advice to almost everyone that was experiencing a declining home value would have been to stay put, and continue to make their monthly payment. Do nothing out of the ordinary! The reason for this is because the best, most secure way to add to your home equity is to pay down a loan. I understand that a lot of the initial crash had to do with losses of income, but staying current on your mortgage was not enough of a priority for some. Every time you make a payment, you are simply putting that money into a safe place until you are ready to sell your home and take it out, or maybe even open a home equity line of credit and put that money to work for you. By running from your mortgage obligation, not only are you losing out on the potential rebounding of the market and the new equity to be had, as well as other severe consequences, but you are going to wind up paying money to someone else to live, rather than yourself. Also, there are many options available for adjusting a current situation.

For instance, we have been seeing interest rates dropping over the last several months. FHA loans (and other government loan programs) are allowing for refinances if you owe up to 125% of your home's current value. Those who bailed on properties have not been able to reap the benefits of such low rates, while those who stayed in their home have had very favorable refinancing options available to them, freeing up money to be put to work for them in other areas of their lives. Renters and those unable to obtain loans are going to have to wait until later, and there is no telling how the market is going to look in the future.

In conclusion, a long term home is always a safe bet. It has been a difficult season for short term loans and property flipping, but those that have stayed in their homes through the storm will come out on the other side in a better situation than they were originally in. No matter how bad the equity situation gets in a home, with all things being equal, markets show a tendency to rebound. We have been through many a recession in the past, and we have continued to improve after each one, so why is this one any different?

Anthony Flores is a real estate agent and investment specialist in Riverside Ca. Please visit his blog to read more about the homes for sale in Riverside Ca and the houses for sale in Norco Ca

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Mortgage Refinancing Options


Mortgage refinancing can become a regular habit for some people as there are no strict rules on how many times you can rearrange the mortgage on your home. However, penalties may apply.

There are many benefits to mortgage refinancing, but people who find themselves in constant debt sometimes use mortgage refinancing as a way out. This is certainly not the best way to handle debt. The home will never be paid off at that rate and the homeowner eventually stands the risk of losing their home. Learning better ways to manage debt is a far better option than constantly using mortgage refinancing as a form of budgeting.

Before thinking of mortgage refinancing, consider other options. How much of your present and planned future debt can you dispose of? Do you really need the new "toy" you want to buy? You want that new quad, it's only $13,000.00 but, ask yourself this question first: Is walking around the acreage or using the old pickup so bad? What will you do with the quad anyway beside running in water ditches and jumping ridges? Ponder, maybe that is $13,000.00 you really do not need to add to your debt load.

Then there is that big wedding. With creative mortgage refinancing you can pay for that dream wedding. However, have you considered the ten or twenty year amortization you just added to your lifetime of debt? Along with that $20,000.00 "windfall" from your new loan there may be legal or disbursement fees to discharge the old mortgage, legal or disbursement fees to register the new mortgage, and other administration fees you have not even considered. Suddenly, the $20,000.00 dollar wedding has grown into $26,000.00 headache.

Do you realize that the equityyou have built up in your home over time is eroded every time you borrow against the mortgage? The equity is the difference between your home's market value and the outstanding balance of the mortgage. In plain English, your home equity is the amount you have already paid against the value of your house. Your home equity increases as you make more mortgage payments. If you are always borrowing against the mortgage, you are adding years of payments and wiping out any equity you have gained.

Another option in the world of mortgage refinancing is to get a home equity line of credit. This loan is also based on your home equity. Rather than giving you the loan up front in a lump-sum, you'll have ongoing access to funds up to an established credit limit through a line of credit. Watch out for that one if you are an uncontrolled spender! Great grandma left you her home debt free, and you take out a home equity line of credit to spend like there is no tomorrow. There is no free lunch here. Every purchase you make on this line of credit is debt against the property. It devalues the equity already in the home. You can sink yourself in debt and loose the home faster than it took great grandma to pay for it.

One good safety net is having a closed mortgage where your financial institution may not allow you to break your mortgage agreement. That might be a benefit, preventing you from burying yourself in debt.

Financially responsible people look at mortgage refinancing as an investment or when it is a last resort to get accumulated debt under control. The extra funds generated can be available for home improvements, college tuition and major purchases. Weigh your options carefully and shop wisely.

A mortgage refinancing specialist can talk to you about when and how to best apply for mortgage refinancing. They will assess your current debt load and spending habits to help you come with reasonable options that work best for your lifestyle. When you are considering mortgage refinancing for any reason or have questions about the current state of your refinancing plans, turn to the experts for solid, helpful advice.

Find out the latest information on mortgage refinancing from a trusted mortgage broker at First Foundation.

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