Refinance 2nd Mortgage

November 19, 2010

More and more home owners are looking for possibilities to refinance their second mortgage. Refinancing second mortgages offer borrowers funds that are placed against the equity of your home’s appraisal value. In order to have a better understanding on refinancing second mortgage, it is best to define what are second mortgage loans? Second Mortgage loans are loans being granted against the same assets of your first mortgage. A borrower has the option to refinance the first mortgage for a higher one or take out a smaller mortgage option.

For instance if your home is worth $300,000 and your loan balance on your first mortgage is $200,000, then the lender may qualify you for the 80% rule and allow you a second mortgage loan depending on your credit standing. After the first mortgage has been deducted ($300,000-$200,000) then you can still borrow $40,000 on your second mortgage. This is then recorded in county records offices and becomes a public record as there is a legal claim or hold against your property.

Choosing the Best Mortgage Deals

  • There are options to consider in refinancing second mortgage loans. The simplest option is refinancing from a high interest rate to a lower fixed rate loan which guarantees financial protection during inflation. You also have the option to refinance the first or the second mortgage or consolidate both in a single loan.
  • If you have multiple loans, it may be a wise decision to refinance your current second mortgage with your first loan into a fixed rate FHA mortgage. This can save you money by combining your first and 2nd mortgage together. You can also opt to take out a new 2nd mortgage loan and lock it into a fixed rate loan where its terms and payments are fixed for the duration of the loan.
  • Talk to your loan officer to get the best mortgage deals in refinancing. These people are qualified and knowledgeable about the loan process and its technicalities. They can give you a better deal accordingly.  Your loan officer can give you refinance guides and instructions on the process of refinancing 2nd mortgage loans. Part of their refinance guides are the required documentation that you need to provide. Be prepared with documentation that serves to show a good credit score and stable income history such as W2s and paystubs.
  • There are many cases that a borrower has a low credit score or has filed bankruptcy. This highly affects an application in refinancing. If this is the case, it is best to wait until you are able to improve your credit score or you should refinance within 6 months after your bankruptcy. Talk to your lawyer or your lender for other possible solutions.

In any refinancing or loan application, it is always advised to read the terms and conditions carefully so as not to be surprised at the end of the day. Learn to ask if you haven’t understood what is stated in the context. Therefore, it is important to have basic knowledge on loan processes and refinancing so as not to get lost in refinancing your second mortgage loan.

No Cost Refinance

November 10, 2010

No Cost Refinance is synonymous with the terms no free finances and no cost mortgage refinances. This new concept is a mortgage program or a loan transaction designed wherein the settlement costs are paid by the broker or the lender. These settlement costs include the usual fees such as but not limited to processing and underwriting fees, title search and title insurance, and attorney’s fees. However, this does not mean that you will no longer pay any fees because there will be some costs that the lenders will not undertake.

This may sound promising, but always bear in mind that lenders don’t give anything for free. There are three types of no cost refinance. First is no cash up-front but all the fees and costs are incorporated and clustered into the loan’s interest rate. Second is zero lender fees, but you will have to pay the third-party fees and the last one is the zero points, but you are required and obliged to pay the lender fees and the third party fees.

So this shows that no cost refinance is not really a true no cost mortgage after all. On a true no cost loan, a borrower should only expect to pay 2 kinds of payment. One is per diem interest which means that interest is to be paid from the day of closing to the first day of the following month. When it comes to refinance, the interest will only be paid from the first of the month to the closing day. The other kind of payment you expect to pay is escrows.

Therefore, based on the things mentioned above, why would a lot of people opt to apply for no cost refinance? This question will be answered by explanation hereunder.

Considering No Cost Refinancing

As a Refinance Guide, think carefully of the different steps and various considerations. You must first evaluate and ask yourself if it is right for you. Before jumping into a quick decision, consider first if it is advantageous to your situation.

Usually, it can only be a good deal if you refinance the loan in a few years but to be certain, compare the payments on a no free refinance with the traditional ones. If in case where before the breakeven point you were able to pay off the money borrowed then no cost refinance is right for you, otherwise it is not because it will cost you more.

Another one good reason why no cost refinance is preferable than the traditional refinance even if it will cost more because of the fact that you can use your cash to invest on any other profitable venture.

One more ideal reason is by transferring from ARM or Adjustable Rate Mortgage to a fixed-rate loan. The former changes with market condition while the latter offers a fix rate of payment even if the mortgage rate changes in the future.

The second step on refinancing guide is consider the loan process since you will have to start all over again and undergo with the same process when you took your current mortgage. Make sure to prepare all your records and the lenders will do you a favor of an easier qualifying process especially if you have a good payment history.

The third guide is Loan choices. There are several of loan choices that you can select from. You can choose a fixed rate loans with a period of 15 and 30 years, or an adjustable rate mortgages with varying adjustment periods. The government also provides loans like the FHA or Federal Housing Administration and VA or Veterans Administration, there are also conventional loans and jumbo loans, and also those that require PMI or Private Mortgage Insurance.

To wrap it up, follow the steps on how to refinance your mortgage.

First, know what will affect the rate that you will receive by considering the elements such as : your loan size, your credit score, what is the paid points, period of loan closure, the floating or the locked rate and the amount of debt to income ratio.

Second, know that the rates being advertised are not reliable.

Third, Think over and decide what type of loan you want that will suit your circumstance.

Fourth, shop around for the best rate and for the choice of credible lenders. Be on guard and be cautious of the marketing strategy of the lenders about no closing cost refinancing. This may sound good but there’s always a catch. Others use it to cheat and trick the borrowers to accept the hyper-inflated rates.

Lastly, know the mortgage terms especially if it would be your first time to engage in this kind of loan.

Refinancing with Bad Credit

October 19, 2010

With an all-time low in mortgage rates, refinancing offers are being snapped up left and right. Everyone is taking advantage of the appealingly low rates in order to get new loans with better terms. Of course, the ones having the time of their lives are the people with good credit scores. Refinancing with bad credit is often thought of as a horrible deal. For the most part, it’s true.

Can I Refinance with Bad Credit?

Yes, of course. Banks are all about the business. Refinancing is merely one part of it and they will never say no to your money. Most people who try to refinance with bad credit scores end up turning away after being shown just how high the fees or points will have to be in order to accommodate their needs. Ordinarily, brokers or lenders would be offering people with bad credit high rates on loans. However, with mortgage rates so low on the market, they’ve also decided to take advantage of people’s willingness to reduce their home and auto loans. What’s a little fee for the chance to get better terms and potentially huge savings on payments? Nothing except for the part where the fees are actually pretty high. Still, it isn’t impossible to get a good deal.

Refinancing Home Loans and Auto Loans

In general, the two most common loans that undergo refinancing are the ones for your house and your car. A home refinance with bad credit will cost you more than normal but an evaluation of future payments might make you realize that it will all be worth it in the end. The same goes for a bad credit auto refinance. If you have mortgages for both, though, it would be wise to choose only one to refinance. High rates and fees will be hard on you especially since other loans will also be affected by your bad credit. Calculate the total savings for each kind of loan and take into consideration just how long it will take until your refinancing costs break even with your saved mortgage payments. It is entirely at your discretion which mortgage you’ll refinance. If you can’t decide but are still confident about your math, you can always go for both.

How to Refinance with Bad Credit

The key to success in this area is persistence. If you look hard enough, there will be a bank or some other financial institution with an offer of pretty reasonable deals. Shop around different banks, their rates will vary but you’ll be able to draw a baseline of what’s a good offer and what’s not. These aren’t the old days where they’ll just turn you away for having bad credit. Some banks actually cater to individuals with bad credit scores as this means that high rates or fees won’t be a problem come agreement time. There are even lenders with ‘subprime’ rates that specifically go after people with bad credit. A refinance guide is nothing without instinct. Choose wisely and you may be able to refinance your mortgage without too much trouble. Or, at least, with less trouble than what you were expecting.

Refinancing Guide

October 18, 2010

Refinancing basically means that you’re securing a new loan in order to pay off your previously existing loan. In this economy, refinancing is endorsed and encouraged by financial advisors of all sorts; all of them saying that this is the best time to do it. President Obama himself has remarked that everyone should take this opportunity to refinance as it might save them thousands of dollars on their mortgages.

Refinancing is a good way to rework your loan into something with a longer term and, perhaps, better rates. Indeed, mortgage rates haven’t been this good in quite some time. No doubt it is a direct result of the downtrodden economy seeking to secure investments in all sectors but most importantly in real estate. Real estate is a prime investment to hold onto. It is secure and tangible enough that most people, banks and owners alike, feel safe enough to divvy up a good portion of their investment money and put it into these holdings. Learning how to refinance is an important thing if you want to take advantage of this option. [Read more]