Mortgage : Home Loans : Refinance : Home Equity Loans

Negotiating Terms and Interest Rates With Mortgage Lenders

staff — Thu, 31 May 2007 07:47:58 +0000

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The Subprime Market - Why Is It Collapsing?

staff — Thu, 03 May 2007 21:05:54 +0000

The sub prime market is declining due to a high rate of foreclosures. These foreclosures are the result of the proliferation of stated income loans that allow borrowers to multiply their real income on papers. The problem is larger than we think. On a loan, there are so many partners involved and each partner is there to make sure the loan closes. A non exhaustive list will show mortgage brokers and loan officers, loan processors at mortgage companies, account executives, bank processors, underwriters, title companies, appraisers, and realtors. Everyone is there to make money and there is no money if the loan does not close for most of the parties involved, except for the appraiser that earns his or her money upfront. That explains why there have been so many bad home loans.

I would like to point out the fact that our economy is based on results, not on processes. As long as a manager can show a number of loans that exceed the company’s quota, upper management is happy. We need to shift from a result oriented management to a process oriented management. I have seen so many irregularities in the American companies just because employees have to show quantity instead of quality. This management culture has caused so many problems to American companies.

We have to learn our lesson. Companies that will survive are those that can make a difference between quantity and quality. Quality should prevail over quantity in our economy. The collapse of many giants in the mortgage industry may be a good thing for the future of the mortgage industry. The survivors will be more careful in approving mortgage loans and we will see fewer foreclosures.

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We have to learn from our mistakes. We have to stop writing loans to borrowers that do not have the required income. Let discipline our practices while waiting for a better market.

Any question, visit www.melphis.com for more information.

The Mortgage Doctor

Melphis Mortgage

A Higher Level of Service

Tel. 954-485-5590

www.melphis.com

Ernst Louis-Jacques, M.B.A
Mortgage Planner/Motivational Speaker/Business Consultant
Melphis Mortgage
http://www.melphis.com

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Home Equity Loan - What Is It?

staff — Wed, 25 Apr 2007 09:49:35 +0000

If you own a home then you’ve probably heard the term, home equity loan, or home equity line of credit, but perhaps you really don’t understand the meaning. No problem, you are certainly not alone.

Financial terms like home equity, second mortgage, or 125% equity loan can be challenging. So, here is a quick explanation on equity and how it applies to you.

Basically, equity is the value of something you own, like a car or home, minus what you still owe on it. Think of it as what you can put in your wallet after you sold the item and paid off the loan.

Here’s a quick visual example. Let’s say you own your home and it is currently worth $175,000. You have a loan balance, or mortgage balance, of $100,000. The equity in your home would be $75,000.

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Of course, with every payment you make on the mortgage, the less you owe on the loan, and the more equity you’ll build up.

This sounds great, but remember, in the beginning you will always be paying more in interest charges than on the principal balance.

It’s only later that you will really begin building up equity in your home. Of course, if housing values continue to rise you’ll build up equity that way too.

The worst example of equity is with a new car. Because of how quickly they depreciate, cars rarely have any equity value after the loan is paid.

So, when you hear someone talking about a home equity loan, you’ll now have a better understanding of what they’re talking about.

By the way, you can learn more about what are Home Equity Loans as well as more information on everything to do with home equity loans, visit us at http://www.HomeEquityLoansA-z.com

Refinance Closing Costs

staff — Mon, 16 Apr 2007 10:20:00 +0000

Closing Costs. Zero Closing Costs. No Out of Pocket Costs, No Points. We hear a lot about this stuff but when it comes time to refinance, do we really know what closing costs we are paying? The truth of the matter is that mortgage companies know you’re fixated on closing costs. Because it’s next to impossible to make an apples to apples comparison of closing costs between competing lenders, even with Good Faith Estimates, unscrupulous marketers are frequently able to get you to take your eye off the ball by promising unrealistic closing costs, while smoothly throwing a fastball and couple of sliders right past you for a strikeout. So how do we avoid being hit by the pitch? We need to evaluate the costs as they amortize into the loan, one way or another.

First, I’d like to debunk the notion of “No Closing Costs”, heavily advertised by national marketers and banks. Have you ever heard the expression “There’s no such thing as a Free Lunch?”. All things in this world have costs to produce, and if you know anything about the companies that produce things, you’ll agree that they do their darndest to make you pay for them.

Here is a list of things which are the bare minimum costs of refinancing a loan:

Title Search & Title Insurance: An inescapable fact of life, these are the costs charged by a third party company whose job it is to find out whose names are recorded in relation to the property, establish a chain of title going back 24 to 60 months, to uncover any judgments, liens, zoning issues, etc. That’s the title search. Title work will also include name searches and “plat drawing”. Then, based on a variety of factors, including the level of risk that they perceive from the title search and the value of the property, they underwrite Title Insurance which covers the lender in case they did not find someone or something on title which make the loan uncollectible. Like taxes, there’s no way to escape this fee, however you may be able to minimize it if you can use the same company you used when you bought the house or last refinanced (look at the closing documents)Title Search averages $300 nationally, with some markets coming in lower and some much higher
Title Insurance is Variable because there are so many factors in involved including the property’s value, but the national average is about $700, although it’s not unheard of for title insurance to cost as much as $3000 or more depending on the size and complexity of the property and the chain of title.

Settlement, the actual coordination of the loan closing, is often listed as an Attorney fee or Escrow Fee. This is necessary to ensure that all the paperwork is correct and that everyone who needs to get a check at closing, be it you, a service provider, your old lender, or any number of creditors you may be paying off. The average is $500, and varies again with the market.

Other title expenses may or may not be required at the discretion of the lender or title company to ensure the security of the property, including surveys, bankruptcy searches, etc. These fees again vary but you can expect your title bill to be the largest third party fees in connection with a loan.
Government Fees: Another one you can’t get around is the government’s fees which can be broken down into Taxes and Recording Fees, but can include more.City/County/State Tax Stamps and Intangible or Mortgage Taxes vary so dramatically that I cannot even begin to address this issue here, but range from nothing at all to 3% or more of the property value. This is NOT the same thing as property tax.
Recording fees are the costs your county recorders office charges to file your deed, is mandatory, and range from $75 to $250 dollars.
Other Third Party Fees:

Appraisal: National Average of $350 but can be much higher depending on property size and location.
Credit Report: Averages $30
Flood / Pest / Other Inspections: Averages $100

Basic Lender Costs:
(remember, there are significant regional variations for these fees, and bigger homes carry bigger fees)
1. Tax Service: $75 Average
2. Wire Transfer: $35 Average
3. Processing: $400 Average
Lender Discount Points:
These are the “Points” on a loan, used to lower the interest rate to help you qualify for the loan based on your income. 1 point is 1% of the loan amount, so one a $200,000 loan a point is $2,000. You usually don’t need to pay points if your debt to income ratio or DTI, the measure of all of your debt payments plus your monthly housing expenses under the new loan, are below 40%. DTI guidelines are much more stringent today than they were even 3 months ago, especially for borrowers who are stating their income to qualify for the refinance.
Fees & Profit:
Up until now, everything we have discussed has been around the hard costs of the loan. Now we get into the fee for service, where the lender or broker actually tries to make money, not unlike any other service provider such as an investment advisor, realtor or lawyer:
1. Origination Fees: Often charged as a percentage of the loan
2. Broker/Lender Fees: Again often charged as a Percentage of the loan

It’s important to remember that no one can do a loan for free, no matter how good of a customer you are, because each loan is a profit or loss to the lender by itself, and they have to assume that at one point or another the loan must be sold. Their time and their risk are valuable, just as your own or your lawyer’s or your realtor’s.Closing costs vary not only by location, but depend heavily on what you qualify for, so your credit will affect the final numbers, especially with regard to Discount Points. Calculating your own closing costs can be best achieved by speaking with a mortgage company who can give you a Good Faith Estimate which outlines all of the above mentioned fees.

Different Ways We Wind Up Paying For Closing Costs

Now that you’ve seen everything laid out, do you believe anyone can offer a “No Closing Costs” refinance? These hard costs are always paid for one of two ways:

You are billed for each item and can choose to pay them in cash at closing or to roll the costs into the new refinance so that there is no money out of pocket to you.
You are charged a higher rate than you would normally qualify for over the life of the loan, which allows the lender to realize a premium, or a profit, which they can then credit toward your closing costs. So if the best rate you qualify for, with no discounts, is 6.00%, raising the rate slightly, to 6.375% or 6.625%, may provide you with a “rebate” which the lender can choose to apply to closing costs.

Sometimes these methods are used in combination. My recommendation is to compare the payments. Let’s look at two completely hypothetical examples:Example 1: Roll Your Costs into the Loan Balance
$400,000 Refinance Loan Amount
$8,000 in Closing Costs
——————————————
$408,000 Financed
At 6.000% Interest over 30 Years
Has a Monthly Payment of $2446 for Principal & Interest
And a Monthly Payment of $2040 for Interest Only
A Typical Minimum Payment Option Would be About $1500

Example 2: Use a Higher Rate to Finance Closing Costs
$400,000 Refinance Loan Amount
“$0″ in Closing Costs (assuming the $8,000 in hard costs is advertised as Zero)

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——————————————
$400,000 Financed
At 6.625% Interest over 30 Years
Has a Monthly Payment of $2561 for Principal & Interest
And a Monthly Payment of $2208 for Interest Only
A Typical Minimum Payment Option Would be About $1465

The reason I’ve included Interest Only payment option figures above is to show you how much more interest you pay each month if you choose a “Zero Closing Costs” option from any leading lender, versus rolling those costs into the loan. The final option is to pay for these costs out of pocket, which is not a very popular option today, but deserves treatment.

Example 3: Pay your own closing costs
$400,000 Refinance Loan Amount
$8,000 in Closing Costs Paid out of Pocket
——————————————
$400,000 Financed
At 6.000% Interest over 30 Years
Has a Monthly Payment of $2400 for Principal & Interest
And a Monthly Payment of $2000 for Interest Only
A Typical Minimum Payment Option Would be About $1465

Compared to rolling the closing costs into your loan, paying them out of pocket saves 46 dollars per month of principal and interest or 40 dollars of interest, a savings of about $500 a year or less. So unless you can’t get a return of more than $500 per year on your $8,000 investment (about 6.25%), there’s no strong argument to pay for the closing costs out of pocket. Online savings accounts and CDs already offer rates equivalent to this, and the S&P 500 has been returning about double this rate, so I personally would rather have access to my money and have it working for me. I won’t get into the fact that the extra $500 or so dollars of mortgage interest per year should be tax deductible as well (and please consult your CPA, we don’t give tax advice).

Cost - Benefit Analysis

Finally, we can turn to the benefits of refinancing and weigh them against the costs. We are going to do this by taking a before and after hypothetical situation, with the closing costs rolled in.

Hypothetically, let’s say that you want to refinance to Lower Your Monthly Payment, Change Your Loan Terms to get a fixed rate, and Take Advantage of the Equity Growth in Your Home to pay off your personal loans and credit card bills, and to improve your home to increase your quality of life. You are not planning to retire in this home, and plan on selling it in 5 years, but like the idea of a secure, fixed rate just in case rates go up a lot over the next 5 years. With the way the economy is going, you also want to keep your mortgage payment as low as possible, so in case anything happens you have the option to pay less on your mortgage.

You have a current mortgage balance of $350,000 dollars on which you pay $2250 per month, and your home is worth $600,000 dollars today compared to the $425,000 it was worth when you bought it.

You have about $32,000 in debts, on which you pay minimum payments of about $1500 a month and would like to take an additional $18,000 to do the kitchen, which you believe would improve the value of your home by $30,000.

So your total monthly spending on mortgage + cards etc. is $3750

Let’s say your credit score is 620, very average for a person with your level of credit card and other unsecured debt, and you prefer to state your income.

Hypothetically (this is only meant to be illustrative), you receive a rate quote and Good Faith Estimate which outlines the following:

Quote 1: Conventional 30 Year Fixed
$400,000 Refinance Loan Amount
$8,000 in Closing Costs
——————————————
$408,000 Financed
At 7.250% Interest over 30 Years
Has a Monthly Payment of $2783 for Principal & Interest
A Savings of $967.00 a month

Quote 2: Interest Only 30 Year Fixed
$400,000 Refinance Loan Amount
$8,000 in Closing Costs
——————————————
$408,000 Financed
At 7.500% Interest over 30 Years
Has a Monthly Payment of $2550 for Interest Only
A Savings of $1200.00 a month

It seems like a no-brainer right? The interest only is much lower, however your basic housing expense has still gone up $300, even though you’ve paid off all the cards and saved almost 1200 there. With the credit cards, even if you experienced a loss of income due to circumstances outside of your control, at least you could have afforded to miss those payments and scratch together money to make your mortgage payment, because the credit card lates would not cause you to lose your house. But with this refinance, which meets most of your goals, now you have to come up with a larger mortgage payment. So you get one more quote for a mortgage which allows for deferred interest, or making a minimum payment when you want to:

Quote 3: 30 Year Fixed Rate Cash Flow option mortgage
$400,000 Refinance Loan Amount
$8,000 in Closing Costs
——————————————
$408,000 Financed
At 7.500% Interest over 30 Years
Has a Monthly Payment of $2550 for Interest Only
Has a Minimum Payment Option of $1497
A Savings of $1200.00 a month on Interest Only
Ability to Defer Interest and Reduce your current minimum payment by over $2250.00

This is a fixed rate loan with the ability to defer interest, or a negative amortization loan, which allows you to use your remaining equity like a home equity line of credit whenever you want, with no closing costs. When you want to make a lower payment so your monthly cash flow goes further, you can do so by making the minimum payment, which borrows from your home equity to cover the difference between the interest only payment and the minimum payment. While the adjustable rate version of these loans are too risky to achieve your particular goals, a truly fixed rate cash flow option might be the answer, fulfilling all of your reasons to refinance while giving you security and flexibility for when a lower payment might be helpful.

Conclusion:
All loans costs money to originate and refinance, even if it’s not always clear how you may be paying for them. As we have seen, if you aren’t taking out a fixed rate cash flow option mortgage with the intent of only paying the minimum payment, most of the time it’s better to roll your closing costs into your loan, so that there is no out of pocket expense to you. Always remember to see if the loan achieves your goals, and don’t put too much stock in the GFE’s you receive while shopping around, because people, whether broker or bank, are more than willing to lie to you to beat out their competition initially, so they can lock you into a process which you cannot easily reverse. My recommendation is to speak with as many people as you can, but evaluate them on the basis of trust. You may find that the person who gives you the highest quote may be the only one telling you the truth. This is not a simple subject to discuss, and while we have tried to treat the subject thoroughly, a consultation with a refinancing specialist would be the best way to get answers specific to your situation.

Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage business, advising clients on their biggest single investment at Refinance One, one of the nation’s leading specialty mortgage companies.

Phone: (800)515-8443
Email: Customers@RefinanceOne.net

Favorite Topics Include: Adjustable Rate Refinance,Fixed Rate Refinance & Fixed Rate Cash Flow Mortgages

Risks Of Interest Only Mortgage Loans

staff — Fri, 06 Apr 2007 12:54:52 +0000

The borrower needs only to pay monthly payments composed of interests and no capital for the first few years of the mortgage repayment program. However, these loans come with some risks that should be taken into account prior to applying.

These risks may imply that you�ll end up paying significantly higher amounts on the long run or worst that you may loose your property if you are unable to meet the monthly payments whether it is in the first stage of the loan repayment program or in the second one when the monthly installments turn more onerous due to the inclusion of the loan�s principal.

Overpaying Interests

To cover for the expected losses due to a higher default rate that these kinds of loans have, the lender will charge a higher interest rate than that of regular mortgage loans. This will imply that even if you get lower monthly payments at the beginning of the loan repayment program, you�ll end up paying a lot more on the long run.

Also, since you are not canceling any principal, the interests are always calculated over the whole loan amount as opposed to regular mortgage loans where the loan�s principal gets reduces every month and so do the interests on the loan. This fact alone implies huge savings that you are walking out on by choosing an interest only mortgage loan.

No Equity Generation

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During the first years of the mortgage repayment program, you won�t be generating any equity on your home. Equity is the difference between the property�s value and the amount of debt secured by it. Since with interest only mortgage loans you don�t cancel part of the principal at the beginning of the repayment program, equity won�t increase.

Equity is very important because you can always resort to it when you need finance during an emergency. If something happens and you can�t afford the monthly payments on your mortgage loan you can always refinance and obtain cash of your property to get back on track. But if you chose an interest only mortgage loan there will be no equity available and thus, no chances of obtaining extra cash out of your property.

Greatest Risk: Variable Interest Rate

If you selected an interest only mortgage loan because you couldn�t afford the monthly payments on a regular mortgage loan, you should be especially careful with variable interest rate mortgages. An interest rate variation can affect the monthly payments on a regular mortgage with variable rate slightly because only part of them is interests. Yet, on Interest Only Mortgage loans it can be disastrous.

An increase on the interest rate on a variable rate interest only mortgage loan can imply a significant raise on the amount of your monthly payments, and thus you may be unable to afford the monthly installments on your loan. Thus, if you choose an interest only mortgage loan try to make sure that you get a fixed rate mortgage or at least that you have enough available income ready in case your monthly payments increase.

—
Joycelyn Crawford is the author of the article you’ve just read.

If you want to keep on reading more tips written by her you can visit this website

Fixed-Rate or ARM - What Are The Advantages?

staff — Tue, 03 Apr 2007 00:57:50 +0000

All mortgages tend to fall into one or two basic categories - they are either a fixed rate mortgage or an adjustable rate mortgage. Among these two categories, however, there are many different options that allow you to get a mortgage that suits your personal needs. Here are some of the advantages of these two basic types that you need to know if you are considering buying a house.

A fixed rate mortgage gives you the predictable leverage of knowing that your payments and rate of interest stay the same throughout the length of the mortgage. There are no changes or adjustments of any kind during the term of the mortgage. The obvious advantage occurs when the interest rates, driven by the economy, changes for the worst. Since you are locked in to your rates, you will not be effected. On the other hand, a fixed rate mortgage may backfire, if the interest rates do drop during economic boom times. This could easily leave you paying much higher rates than others.

The advantage of fixed rate mortgages is obviously the stability it provides - you always know what your payment will be. There are a number of options that will give you greater or lower payments, though, such as the longevity of the mortgage. You can choose from 15-year mortgages, and then at various intervals, all the way now up to 50 year mortgages. The longer the loan, of course, the higher the amount of interest that you will pay throughout the term of the mortgage.

An adjustable rate mortgage, provides you with certain advantages that depend on both your own circumstances, as well as the economy. Most adjustable rate mortgages have a fixed rate portion of the loan, which typically, comes in 1,3,5,7, or 11 years. This portion of the loan allows you to enjoy a fixed rate for that period of time that you choose. This can be really good if the economy is doing well and the rates are low. It is this feature that could also allow you to get a larger house than you might be able to afford if you went for a fixed rate mortgage.

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Adjustable rate mortgages lock you in, for a few years to the rate at the time you bought the house. Usually this means that you have a lower rate than anyone who buys a fixed rate mortgage at the same time. At the end of the fixed rate portion, though, you will see an adjustment made that will reflect the market - whether it is good or bad. This means that you could see quite a large jump all of a sudden. It could be hundreds of dollars more - or it could even be less than what you were paying earlier - if the market is that good. An adjustable rate mortgage will usually have some limits on the amount of an increase there can be in any year. This increase, however, is one of many. Depending on your contract, it could mean that your adjustments are made on either a monthly or yearly basis.

In either case, there are pros and cons - all depending on the economy. The good thing is that there is always the possibility of refinancing - if need be. Be sure to compare any offers you receive in order to determine the best buy for your situation. Get several offers from different companies in order to see the possibilities, and you may want to get some advice from outside sources as to whether a fixed rate or adjustable rate is the best for you.

Joe Kenny writes for the Loans Store, offering re-mortgages offers, or view the latest adverse credit re-mortgage at NationsFinance.co.uk.
Visit today: http://www.ukpersonalloanstore.co.uk/

Lower Your Mortgage Payments With Mortgage Points

staff — Sat, 31 Mar 2007 10:46:10 +0000

However, before purchasing mortgage points you should analyze the particularities of your desired mortgage loan and other factors that may affect whether you can take advantage of mortgage points or not. Though mortgage points can reduce the interest rate you pay for the mortgage, you need to put money down in order to obtain them and thus, only in the long run you can benefit from them.

Lowering The Interest Rate

If you wonder why anyone would want to purchase mortgage points, the answer is quite simple. By purchasing mortgage points you are reducing the total amount of the mortgage and thus the interest rate you�ll have to pay for the principal. A 0.5% reduction on your interest rate may not seem much, but over the full life of a 30 year repayment program, it can save you thousands of dollars more than it can cost you.

The interest rate reduction you can obtain by purchasing mortgage points will depend on your mortgage loan terms: the loan amount, the length of the repayment program, etc. Also, it will depend on the lender and on the money you have available so as to purchase the points. It makes no sense to worry about how you can reduce the interest rate by purchasing mortgage points if you don�t have the money to do so.

A Matter Of Time

There is an issue that you should take into account when considering purchasing mortgage points: The fact that it takes time to cover the costs of the mortgage points purchases and start saving money with the interest rate reduction. It really depends on the loan and the lender but you can think of an average of 5 years in order to cover for the costs and begin the savings stage.

Thus, it is important for you to know, as far as possible, whether you�ll remain owner of the property for at least ten years or not. If you plan to sell and move out in the near future, you won�t be taking advantage of mortgage points and thus, it would make no sense to purchase the mortgage points at all and you should actually refrain from doing so.

Conclusion

Purchasing mortgage points can save you a lot of money over the whole life of a mortgage loan and can also provide you with lower monthly payments by granting a reduction on the interest rate you have to pay for the money borrowed. Mortgage points are a form of down payment that greatly reduces the risk of the transaction for the lenders and lets them provide lower interest rates.

However, it only makes sense to close on such deals if you plan to stay in that same property for many years. Otherwise, putting such high amounts of money down won�t be compensated by the interest rate reduction and the only ones obtaining any benefits from the transaction will be the lender and the next owner of the property.

—

Mary Wise, a professional consultant at Badcreditloanservices.com with twenty years in the financial field, prevents consumers from falling into the hands of fraudulent lenders. In her website you will find more useful tips and interesting financial articles on this and many other related topics.

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Things To Consider Before Signing That Mortgage

staff — Tue, 27 Mar 2007 10:59:56 +0000

If you are looking for mortgage, and signing a contract for your mortgage has come, do not be so excited that you will just sign it in. At this moment of time, you need to give some attention and take a look at the contract seriously and attentively.

The document you about to sign are something that you will be committed at for the next 30 years and more. You see, it is your money you will be spending and it involves your biggest expense, so it is just necessary to take this seriously, you have to make sure that your interests are being looked out. There are some things you need to consider when you are checking out your possible mortgage contract.

The first thing you have to do is to take time in reading what is written in the document before you sign it in. You see, you have to be informed well, in terms of having contracts. You have to know the details written in that document. It is advisable to learn more about mortgage and how it works, in order for you to understand it. So take time to read the document, better to ask questions to the banker or mortgage broker, any questions you may have. Besides, you deserve to make sure that you�ll be having a good deal.

Indeed, anyone may want to have a good interest rate. But it doesn�t mean having a good interest rate will be the best mortgage for you. You see, you have to look beyond the interest rate. The numbers on mortgage are interchangeable. The best thing to do is learn more about mortgage and understand its term, in order for you to know what are necessary and not.

You have to watch out for the fees or added expenses with your mortgage. So you really have to be informed in order for you to detect such concern.

In terms of planning and considering a huge purchase, definitely, you want to have the best offer and to have the best deal. So it is recommended to know about the different types of mortgages before you apply. It would be better if you compare the interest rates and the fees of each type of mortgages.

You see, in applying for a mortgage for the plan of purchasing a home, you have to be extra careful, and give time about it. In order to come up to the best offer and deal, you have to gain the information needed about mortgage, you have to be an informed customer. Learn about the facts of mortgage, take time to know about the types of mortgage, these can help you in coming up to the right options in getting a mortgage.

You have to do your homework and research about mortgage; this would be helpful in your plan of applying for mortgage. And if case, you have come up to the right option, you believe is right for you, do not just sign the contract. This article mentioned earlier the things you have to consider, these are the things you have to do before signing the contract, in order to make sure you�ll be having the best deal.

If you want to know more about mortgage and get a lot of information, you can visit our mortgage site which is listed below.

Article Author Eliza Maledevic from Jump2top.com, a SEO Company.Know more about Florida Real Estate & Mortgage at http://floridamortgagebroker.us & http://florida-mortgage.xon.us

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Frequently Asked Questions About Mortgage Refinance

staff — Mon, 26 Mar 2007 03:46:57 +0000

Should I Refinance My Home?

There are many reasons to refinance your home. It�s always wise to keep an eye on interest rates and compare them with the rate you�re currently paying. If you can save money, you might want to take a look at a refinance loan. Or perhaps you have a variable-rate loan that you�ve decided to change to one of a fixed rate. Also, if you need some additional cash on hand for a large home project or if you need money for some other reason, you might want to get some cash for your home equity.

Should I Refinance If I�ll See Only A Small Rate Change?

Yes. A lower interest rate will always save you money, and refinancing can be done with minimal costs to you. When considered over the life of your loan, even a small rate change can make a big difference. Plus, even if you will only see a small rate decrease, perhaps you have other debt that you�d like to roll into the equity of your home to get a lower interest rate. A mortgage refinance can save you money in multiple ways.

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How Much Will Refinancing Cost?

It�s really up to you. There are many ways you may be able to refinance your mortgage at little or no cost to you. Many programs are available to those who don�t have any up-front money to refinance. Or, you may choose to pay for closing costs, and often you�ll enjoy even larger savings in your monthly mortgage payments!

Recommended Refinance Lenders Online - We maintain a list of recommended mortgage companies online and update the list regularly.

List of Suggested Refinance Lenders for Borrowers with Poor Credit- See our list of poor credit mortgage refinance lenders online.

5 Ways To Reduce Your Mortgage When Buying Your Home

staff — Fri, 23 Mar 2007 01:51:19 +0000

Just about everyone takes pride in the home they bought - especially is this true when you know you have the best deal around. If you are looking to find a way to finance your new home, then there are a number of things you can do in order to save some serious money and reduce your monthly mortgage payments. Here are some tips about how to reduce your mortgage when buying your home.

1. Compare Mortgage Offers

This is probably one of the greatest ways that a lot of money can be saved. Instead of assuming that a single lender is offering you the best deal, it will benefit you greatly if you compare a number of offers from different lending agencies (banks and mortgage brokers). By making informed choices, and asking questions about the various fees and terms, you can wisely choose the best deal for your situation. This simple procedure could save you thousands of dollars each year.

You also want to learn about the various kinds of mortgages that you can get. Depending again on your situation, and how long you intend to stay in your house, different types of mortgages may be available to save you money if you are not intending to stay for many years. This could include balloon mortgages, interest only mortgages, and possibly assumable mortgages.

2. Make A Larger Downpayment

The amount of money that you put down on your mortgage determines the amount of interest and type of deal that you can get. Obviously, then, it only makes sense to put down more, if you are able, and this will allow you to reduce your interest rate, and monthly payment, too.

3. Avoid Private Mortgage Insurance (PMI)

While this may not be possible for everyone, it is certainly something that you want to think about. This point really goes along with the above thought. In most cases, a lender will require you to get PMI if you are putting down less than 20%. A lender looks for those that are borrowing 80% or less of the value of the house and will give to them the best deals. PMI can be avoided if you put down 20% or more of the value of the house.

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4. Get A Package Deal

Here is an alternative way to reduce our mortgage, not have to pay PMI and save money on taxes, too. By getting a piggyback mortgage package, you can reduce your mortgage and save a lot of money. If, for example, a home costs $225,000, then a package deal could involve paying down 10% ($23,000), getting a first mortgage for $180,000, and a second mortgage for the balance of $22,000.

Because the first mortgage is equal to or less than 80% of the house’s value, PMI is not necessary. A second mortgage, can also be tax deductible - depending on the particular arrangement you get and how it is used.

5. Get Longer Terms

This feature is more of a trade-off than anything. Mortgages these days now offer extended time frames beyond the normal 30-year period. This means that you can now get a mortgage on your new house for 40 or even 50 years. It is a trade-off because, while it definitely will lower your monthly payment, it will add to the amount of interest that you are paying. So, while it gives you a reduced payment - which may be what you are looking for at the present time, it also will tend to keep you in debt longer.

Joe Kenny writes for the Loans Store, offering re mortgages offers, or view the latest adverse credit remortgage at NationsFinance.co.uk.
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