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.

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.

No Closing Cost Refinancing

October 18, 2010

A commonly misunderstood term is no cost refinance or no closing cost refinance. When people think of this or hear of this, they usually assume that costs or fees are waived entirely while still maintaining the low rates. This is wrong. There is no such thing as ‘no cost’ and there is certainly no such thing as ‘free’ in the business world. Everything has a payment of some sort though the manner in which you provide compensation might not be obvious at first. No cost refinancing is a sneaky way to attract customers with ‘zero-cost’ claims and then catch them with interest rates that might put them in deeper debt. In order to properly understand the implications of the term ‘no cost’, learning its definition with our refinance guide is in order.

What is No Closing Cost Refinancing?

No closing cost refinance is a transaction where you don’t have to pay upfront fees of any sort. The broker or lender will be the one to pay all the various settlement costs for the mortgage. It isn’t a new kind of refinancing option but it isn’t very well known either.

Pros and Cons of No Cost Refinance

A refinancing closing cost can often reach up to quite a lot of money, especially for upfront payments. A lot of people would probably think twice before handing over a big chunk of their cash and actually deciding if refinancing for cheap mortgages is really worth the price. [Read more]

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]