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February 4, 2011

Home Refinancing Myths

Category: Home Refinance Articles,Published Articles – admin – 3:01 pm

With the mortgage refinance rates so attractive, most homeowners are once again considering home refinancing, because lowering their monthly payments provides hard dollar savings that are hard to pass up. Home loan programs see guideline changes regularly, so we recommend that you discuss your refinancing needs and eligibility with a trusted loan officer before getting too excited.

  * Lower Loan Payments* Fixed Home Loan Rates

* Reduced  Years of Interest

* Fixed Rate Conversion

 

The Nasdaq blog recommends learning more about the finance myths before investing time shopping online and getting involved in the refinance process.

Myth: Getting approved for a refinance loan will be as easy as getting your first home loan.

The first thing to remember is that each refinance is on a case-by-case basis. Because so many lenders have been damaged in the past few years with bad credit refinancing, the industry in general has tightened up its underwriting guidelines. In many cases your initial home loan may not have required a lot of documentation so you might be shocked by today’s requirements to refinance. While this may make things more difficult for some consumers, it’s much better for the mortgage industry. The general rule of thumb is that if you have credit issues or lack of equity in your home, you may find that you have difficulty getting approved for traditional fixed rate mortgage refinancing. 

Myth: If you were approved for a loan to buy a home, you will be approved for home refinancing

Unfortunately that is not always the case. In many instances, borrowers financed their home originally when lenders had minimal requirements.  Since Obama has been elected, mortgage lenders have tightened guidelines for refinance mortgage transactions. Years ago, borrowers could refinance without equity, but in today’s mortgage market, borrowers typically need equity to be approved.  HUD still offers a FHA refinance option that only requires 3.5% equity, but you would be required to pay mortgage insurance monthly, so it may not be worth it.

It’s no secret that home refinancing can be an excellent way to save money, increase cash flow and get quick access to cash. With that being said, every refinance experience is not always a wise financial move so you need to know the facts before refinancing.  Read the complete Nasdaq article online.

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January 19, 2011

Cash Out Loan Choices

Category: Home Refinance Articles,Published Articles – admin – 5:10 pm

Lead Planet’s Bryan Dornan posted an intersting article on Nationwide today that discussed the best choices for cash out loans.  There are many new implications these days to consider when using your home to get quick access to cash. First and second mortgage guidelines have shifted significantly in recent years, so Dornan’s advice is worthy.

  • What your loan to value (LTV)?
  • What is is your credit score?
  • Is there a penalty for early payment on your home loan?
  • How do you plan to spend the cash?
  • Do you have a  home equity loan presently?

Read the original article written by Bryan Dornan > Refinance or Second Mortgage?

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October 5, 2010

Underwater Home Refinancing

Category: Home Refinance Articles,Loan Relief Articles – admin – 9:02 am

Millions of homeowners find themselves with underwater home loans that have prevented them from refinancing or even selling their property. Until recently, underwater home refinancing was impossible, but several new government mortgage relief initiatives enable distressed homeowners to redo their mortgage terms.  If you’re like nearly 20 million American homeowners, you owe more on your home loan than your house is worth.

 

  Why not simply walk away from this home that you are losing money on every month? That’s what many people are doing. It’s called a “strategic default” when a homeowner who could keep paying the mortgage simply decides it’s not worth it.

Underwater Mortgage Refinancing is Available!

A recent report revealed 31% of U.S. foreclosures in March were strategic, compared with 22% in March 2009. And that number is likely to grow as home prices remain stagnant, jobs remain scarce, and people become angrier at their financial situation.  However, HUD announced a new relief program to help homeowners struggling with underwater mortgages with the FHA short refinance option.  This government loan actually writes down the principal mortgage balance down to the fair market value.

It’s one thing to face foreclosure when you simply can’t make the monthly payments, no matter what the value of your home. When the court orders a foreclosure, you have little choice.  But a “strategic default” is something quite different. The idea of simply walking away from a property that is underwater and making a “fresh start” — even though you could continue to make the mortgage payments — is an idea that seems to be catching on.

Strategic Default Dangers

Here’s some advice. Think twice before you walk away from your mortgage. This decision may catch up to you in ways you never considered.  Of course, walking away from a home loan and letting your home go into foreclosure will significantly damage your credit. That doesn’t seem to be much of a deterrent even to those who could afford to keep paying. The prevailing sentiment is that “everyone’s credit is in the tank” so it’s not such a scary proposition.

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June 25, 2010

Freddie Mac Reports Lowest Home Loan Rates Since 1971

Are you considering home refinancing?  Freddie Mac announced this week saw the lowest home loan rates since 1971.  The number of loan applicant applying for a mortgage loan dropped by 5.9% during the week ended June 18.  Mortgage refinancing activity fell 7.3% compared with the previous week, while purchase volume slipped 1.2%.

Comparing home refinance rates: A year ago, the average home loan rate was 5.22% and 10 years ago, people were refinancing at 8.15%. Today, the average 30-year mortgage rate is 4.675% and the average 10-year mortgage is now at 3.875%.  Lenders continue to extend low interest rates because to the instability in the market and the European debt crisis.  Read the original article > Compare Mortgage Refinance Rates

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June 15, 2010

Home Refinancing Appealing But Tough to Qualify for

Mortgage refinance rates have dropped almost two percentage points below their housing boom peak and they remain available at record lows.  Freddie Mac reported that mortgage rate average fell to the lowest point in 2010 4.72% plus 0.7 point for a fixed rate home loan on a thirty-year term.  Clearly this is a great time for a home refinance loan, if you can get approved.  Credit, Lack of Equity and Inability to Document Income are the 3 most common reasons that homeowners have not been able to refinance into these record low rates.  A few years ago if you had good credit, you could pretty much qualify for any mortgage, but things have changed dramatically.  Today even people who have 700+ credit scores are finding it difficult to qualify for a conventional or FHA mortgage and it is frustrating millions of borrowers who need to refinance.  To receive the best mortgage refinance rates, you need good credit scores and the ability to document your income.  Stated and no-income verification loans are no longer viable options for home refinance opportunities.   You also need enough home equity to meet the refinance guidelines.  Many California borrowers had sufficient equity a few years ago, but the housing crisis has taken its toll on property values statewide.

The Mortgage Bankers Association released a report recently that outlined borrower problems in its latest report on home refinancing activity, which declined 14% last week after consecutive weeks of increased refinance loan volumes.  The low interest rates and homebuyer tax credit have clearly made a positive impact on the mortgage refinance market in 2010.  However, “despite the record low mortgage rates, many homeowners remain underwater on their home loans.  This means that their mortgage is greater than their property value.  According to MBA’s vice president, Michael Fratantoni, many distressed borrowers have been late on their mortgage payment which significantly damaged their credit and taking them out of contention for mortgage refinancing this year.

Since the pool of qualified borrowers looking to refinance is shrinking many lenders are offering aggressive mortgage specials.  Many reputable mortgage lenders are offering a no point refinance and some are going further with the no cost mortgage that enables borrowers to refinance without coming out of pocket for any lending expenses.  The no cost home loans also help borrowers avoid raising their mortgage balance in an effort to finance the lender fees and closing costs.  According to mortgage marketing executive, Bryan Dornan, “Again qualifying for no cost refinancing is difficult because you need good credit, sufficient income that can be documented and enough equity in your home to qualify for the loan refinance program.”  Dornan continued, “It’s not a motivation factor.  The borrowers who need home refinancing most simply do not qualify under today’s tighter lending guidelines.”

To put it into perspective, interest rates dropped last week, yet refinancing volumes fell.  In most cases, mortgage refinance rates follow the yields of longer-term Treasuries whether they rise or fall.  In recent months it’s been down, as the European debt crisis has led to banks dropping interest rates even further.  The vice president of HSH Associates Keith Gumbinger, “We have not seen mortgage rates lower than this in upwards of 50 years.” Gumbinger believes that the rates will begin trending higher once we get some good news regarding the economy.

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