With interest rates for 5 to 30 year mortgages approaching amounts lower than 5%, thousands of home owners are faced with the age old question, "To Refinance or Not to Refinance?"
Currently banks are overwhelmed with mortgage applications, and about 80% of which, are for refinancing. It can be a tough call. Refinancing can result in steep penalties, but if the interest rate is low enough, you may free up some much needed cash flow. Just like any investment, refinancing is not something to be entered into without doing your homework.
Here are some key points to consider before you take the next step:
Rates have not hit 4.5% as yet, but they are close. You may want to decide whether it's worth waiting a little longer. Also, that 4.5% that they are throwing around, is an estimate. Larger loans above $417,000 will fall under a higher rate structure. It may also be worth your while to pay down your loan if you fall under one of the higher rate categories.
Lending terms are much more strict than a few years ago. Get your ducks in a row and ensure your credit is in good shape before applying. Three main credit agencies, Experian, Equifax and TransUnion will provide one free annual report and more copies may be obtained for about $10.
Nowadays, most lenders require 20% equity in a home before approving. If you have less than that, you may be required to make up the difference.
Add up the costs of refinancing (the points, appraisal and closing costs) and determine how long it would take to recoup those costs with your new savings. If you don't plan on remaining in your home that long, refinancing may not be the best move.
When you get a new rate quote from the bank, pay close attention to the points you need to pay. For example you may get a quote for $5.124% with no points, and 4.874% with 1 point. The value of a point equals 1% of the loan amount. Even thought the second quote is for a lower rate, it may not be worth it in the long run when you include the extra cost of the point charge.
The new rate should be at least 1% lower than your existing rate.
To save closing costs, ask your lender if they will consider renegotiating the terms of your existing mortgage without going through a formal application process.
Shop around for the best rates. Don't overlook the smaller banks and credit unions – they too are competing for your business.
Before you make a decision, sit down with a financial planner or lender. Take a copy of your current mortgage and have an up to date idea of what your home is worth.
by Carolyn Capalbo
To Refinance or Not to Refinance?
tags: finance, Mortgage, refinance 1 ความคิดเห็น
The Basics of Unsecured Loans
tags: credit, finance, loan 0 ความคิดเห็นUnsecured loans
may be the perfect option for those that need a loan but do not have anything to put up as collateral for the loan. With secured loans, people who have things such as a house or even a car have the assets to obtain a secured loan, agreeing that they will lose said asset should they default on the loan. An unsecured loan does not rely on any of these assets as collateral and is simply a written agreement between two or more parties that is made official by the signatures of both parties.
An unsecured loan can be as basic as an agreement between members of a family that borrow or loan money. If the borrower writes the lender an I.O.U., this simple borrowing of money has now become an official unsecured loan. In this case if the borrower should default on the loan, it can have many more repercussions than one may initially think. There may come to be hard feelings between the two parties and cause much tension in the family. The lender will have no real course of action except to take the matter to small claims court, if it was for a substantial amount.
Another popular type of unsecured loan is that which comes in the form of a credit card. These cards are given to the customer with a set amount as a credit limit, the amount of money that the customer is allowed to spend. In exchange for the card, the customer then agrees to pay back the money with additional interest charges, within a certain period of time. The credit card does not need anything to be placed up as collateral it is a simple written document between the customer and the credit card company, outlining all details of the agreement. This is not the only written agreement between the customer and the company however. Every time the customer purchases something and uses their credit card to pay for it, they must sign the cashier's slip. This is a further agreement that the customer will repay the money they just borrowed. Default on an unsecured loan such as a credit card can end up with the account being turned over to collections and the customer's credit history being very negatively affected.
Banks also provide unsecured loans in the same manner as credit card companies. The only difference is that instead of cards, checks are given or money is deposited directly into the customer's account. Before approving an unsecured loan, banks and credit card companies will both review a person's credit history and their current financial situation. These are the two main factors that you will want to concern yourself with when applying for these types of unsecured loans. Being employed is very helpful, as this proves that you will have money coming in the future that will help you to repay your debt. Having a good credit history also goes a long way in obtaining an unsecured loan so be sure to fix any mistakes and repay debts that appear on your credit report.
What you Need to Know about Personal Loans
tags: credit, finance, loan 0 ความคิดเห็นPersonal loans may be a good choice for individuals that find themselves in a financial situation where they need money quickly. Personal loans are thought to be unsecured loans because there is no collateral in exchange for the funds for the loan. Instead, there is simply an agreement between a company and an individual in which they have come to agreeable terms for a set amount of money to be borrowed and be paid back within a set period of time. A personal loan may seem like the right solution to just about anything but before jumping into a contract, there are a few things that you should know.
Before you apply for a personal loan, you need to look at your credit report. Companies, especially banks, are often wary of approving personal loans because they are much more at risk than the borrower is. Because there is no collateral, should the borrower default on the loan, the bank is left simply giving that money away. Although there is legal action that can be taken, that too is costly and takes time. Because of this, those with low credit scores and a lot of outstanding debt on their credit report may find it difficult in obtaining a personal loan. Before applying, it's important to get your credit report as clean as possible. Make sure that all the information on it is correct and start paying off debts so that you will have a more attractive credit report to lenders.
Income and expenses both need to be considered before applying for a personal loan. Income is important because the lending institution will want to know how much money you are making to determine how much of a loan you can afford to pay back. They will want proof of this income so they may ask that you bring paystubs and other financial records with you when applying for the loan. Although they will probably not ask to see a break-down of your expenses, it's important that you draft one up so that you will see how much you can afford to repay. High income is a great start but if your monthly expenses are also very high, you won't be able to afford that much of a personal loan.
When applying for a personal loan, you also want to make sure that the company you will be borrowing from is just as credible as they want you to be. Although there are many corner shops that offer things such as payday loans or other types of personal loans, you want to make sure that you are getting the best deal for your money. For this reason, reputable institutions such as banks are often most recommended. Although you may not get approved as quickly as you want to, these institutions are least likely to try and scam you or charge you astronomical interest charges. That being said, not all companies that offer quick personal loan approval are all fraudulent so it's important to fully read what they will offer and what they expect in return so that you know that you will not end up paying too much in the end.
Learning About FHA Streamline Refinance
tags: finance, insurance, Investments, loan, Mortgage, refinance 0 ความคิดเห็นIf you presently have a FHA mortgage, you could be eligible for a streamline refinance and benefit from current low home loan interest rates. The term “Streamline” simply means there is little paperwork to supply the lender. As a result, it permits the homeowner a faster and easier refinance closing. An FHA streamline refinance typically has the following characteristics:.
• No minimum credit score requirements.
• No asset documentation such as bank statements, retirement accounts, etc.
• An Appraisal may not be necessary. If an appraisal is required for an FHA Streamline, the maximum loan is restricted to 97.75%. If an appraisal is not used, there is not a maximum loan restriction.
• Upfront mortgage insurance is decreased to 1.5% of the base loan amount (instead of 1.75% for a normal FHA refinance which is not streamlined).
• Any cash from proceeds to the borrower is restricted to $500. Here are some simple rules for homeowners to know when it comes to FHA refinancing:
• The mortgage to be paid off must be an FHA insured mortgage.
• The borrower can not have had a 30 day or greater mortgage late payment in the previous 12 months.
• Non-occupant co-borrowers are not allowed.
• The new loan amount is subject to FHA maximum loan limits in your geographical area.
• If a property has been converted to an investment property it can still qualify for a FHA streamline refinance if the existing mortgage is an FHA loan.
Now, to make sure you get your FHA refinance done correctly, use a mortgage company or loan officer whose company is HUD approved. The benefit is you get to use a company that is an endorsed HUD approved lender and that generally mean they have their own "in-house" FHA underwriters. This speeds up the time for approval and closing. Timing is crucial in today’s market as rate move up and down quickly.
If you're interested in securing or still have questions about how FHA Streamline refinances work for your individual situation or what the maximum loan limits are in your state, inquire below. To get started, you will need to gather the following information for a loan officer to review. The information will normally consist of the following:
• Subject Property address
• Estimated property taxes and home owners insurance.
• Original FHA loan balance from when you got the mortgage.
• Existing FHA loan balance.
• Estimated home value (appraisal may not be required).
Tips to Get Low Rates for Mortgage Refinancing
tags: finance, Mortgage, refinance 0 ความคิดเห็นAfter qualifying several different lenders, authorize only the companies that can give you the best mortgage refinance rates to pull your credit. When you refinance your mortgage, you need to consider that you will have to pay closing costs and other fees like points. Shop around to find the best mortgage refinance rates whether you are looking to avoid closing costs or not. Shopping around is till the most effective way to get the best mortgage refinance rates. What mortgage refinancing rates you are eligible for will depend mostly on your credit rating. If you have good credit, you will probably find several lenders vying to offer you a low refinance mortgage rate. Since most experts recommend that you only refinance when the refinance mortgage rate is two points lower than what you are currently paying, having good credit will work in your favor. However, if you have less-than-excellent credit you will first need to examine whether or not refinancing is in your best interest. With poor credit you will definitely pay higher mortgage refinance rates. With very bad credit, you may find it difficult to refinancing at all. Check to make sure your existing mortgage does not have any pre-pay penalties. Many homeowners select a mortgage that includes pre-payment or early pay penalty clauses. While the cost of this penalty may vary, it generally amounts to about six months of your mortgage loan's interest. If you want to do a mortgage refinancing that has these types of penalties, make sure you have enough funds to cover them. Pay attention to interest rates and closing costs. A lender might be able to provide you with a lower monthly payment through mortgage refinancing with their company, but this does not automatically make them the best choice. If interest rates or closing costs are too high, avoid the lender in question. These two variables are often the deciding factor when it comes to making a final decision about selecting a lender for mortgage refinancing. It is also good to ask questions about pre-pay penalties or any other types of penalties that might be associated with the mortgage refinancing. Often times, lenders will avoid this type of information if they feel it will be a deal-breaker that will prevent you refinancing with their company. The final point to consider while dealing with mortgage refinance rates is that they can vary quite a bit in a fluctuating economy. That being said, and even when interest rates may not be at all time lows, being able to refinancing your mortgage may prove to be very beneficial for you. Lowering your monthly payments can free an important amount of money for years to come. Mortgage refinancing can become one of your smartgest financial moves.
