Aug
31
Refinancing a mortgage is in some ways similar to getting your first mortgage, with a few important differences. Since you already own the home, you don’t have to go through a pre-approvals process or find a realtor and a home to buy. Unfortunately, you’ll still have a lot of paperwork to do, but savings thousands of dollars over the life of the loan is worth it.
There are very specific steps you should take to have a successful mortgage refinance
Step 1: Determine if Refinancing is Right for You
There are tools like mortgage calculators to determine whether a mortgage refinance loan will save you money. Factor in your current interest rate, future interest rate if you have an adjustable loan, and closing costs. If you want to take cash out, include that amount in your new mortgage balance for the calculations.
Remember, refinancing creates a new loan, usually with a full loan term. If possible, you can make extra payments to finish the loan at the same time as your original loan, and that will save you more money than the calculator predicts. For the calculation, assume you’ll only be able to pay the amount due.
Step 2: Check Your Credit Reports and Scores
Even if you already own a home, your lender will still use your credit scores and credit reports to determine which rate you qualify for. Order scores and reports for each spouse if both of you will be on the mortgage. You want to get best rate possible. Ideally your scores should be above 720 to get the absolute best rate, but 680-700 will get you a good rate. You can still refinance if your scores are low, but it might cost you more, especially if your scores were high when you got the first mortgage. Carefully review your credit reports for errors. 80% of all reports have errors. Common errors include listing accounts that don’t belong to you, late payments that weren’t really late, and items that were supposed to be removed. Follow the instructions at each credit agency to correct the errors.
Next, do what you can to fix black marks like recent defaulted loans, recent collections, and high credit card balances. You may have to spend a little more money to accomplish this, but it’s worth it if it saves interest on your mortgage, which will ultimately cost you more over 30 years.
Step 3: Research Rates, Fees, and Lenders
Before you contact any lenders, research current interest rates and fees for the type of loan you’re interested in. Comparison shop to see which banks is offering the best rates. Note the terms, closing costs, and whether or not the rates are fixed or adjustable.
In addition to rates and fees, check reviews of the lender online and at the Better Business Bureau. If the lender has a history of making late property tax or insurance payments or providing poor customer service, find a different lender.
Step 4: Contact Your Current Mortgage Servicer
Your current lender wants to keep you as a customer. If they still own the loan, they may be able to modify your current loan to a lower rate with just a little paperwork and a low fee. Unfortunately, most lenders sell their loans to larger mortgage servicers, so it’s unlikely that you’ll be able to take advantage of this. If you want to pull cash out, refinancing is the only option.
If you can’t modify your loan, your lender or mortgage servicer may offer a streamlined refinance. You’ll get a new loan at a better rate, but with fewer fees and a little less paperwork. It may also take less time to close. Of course, you may not want to accept their offer if the rate is higher than what you found at other lenders. Consider the closing costs when deciding which mortgage refinance loan will save you more money. Using your current lender could save on closing costs, but a higher rate could cancel out the savings. If you found a better rate elsewhere, ask your current lender to match it. If they want to keep you, they might do it.
Step 5: Contact Other Lenders
If your current lender can’t get you the best refinance rate, contact other lenders about refinancing with them. Your goal is to find the best rates with the lowest fees and closing costs (without adding those fees to your loan balance). Some lenders now offer refinance loans with 25 and 20-year terms so your new loan will end at the same time as your original loan. If it will save you money and you can afford the payments, consider the offer.
Refinancing to a lower rate can save you a lot of money over the life of the loan. A mortgage refinance loan can also help you get much-needed cash to remodel your home or pay down credit card debt. It’s not hassle-free, but saving money is worth the effort.
For more articles on mortgage refinance visit http://www.bills.com/mortgage-refinance-loan/
Aug
28
Shared Equity Mortgages Help First Time Buyers Get Their First Property
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Shared equity mortgages help borrowers not able to afford to purchase all of a home. For those that don’t mind not owning a house outright they can take on a partner and give a stake of the equity in exchange for lower monthly payments.
There are a number of avenues you can explore for a shared equity mortgage. If you have a family member that can offer you help, you could go for a family shared equity mortgage. A parent or someone else in your family would take equity in your property allowing you to take on a smaller mortgage with affordable repayments. This type of scheme, personally I think is better as family normally love to be able to help their sons and daughters and as a bonus can benefit from any increase in house price.
You could also approach your local housing association. Many offer shared ownership schemes. It is a combination of renting and buying in that the housing association takes an equity stake in the property to again assist you with the purchase of the property.
The latest scheme for those residents in Scotland is the LIFT mortgage scheme. LIFT stands for Low Cost Initiative for First-Time Buyers. The Scottish Government administers the scheme with applicants applying through assigned social landlords. In Edinburgh Link Homes is the appointed social landlord.
You apply for funds through a social landlord to help with the purchase of a home. You do need to be on a low or moderately low income to be successful in gaining funding. This type of the shared equity mortgages would see the Scottish Government take an equity stake in the property. There are conditions, you do need to be the majority stakeholder but you hold full title deeds whatever equity stake is taken.
Although the Scottish Government is a stakeholder you will probably feel the home is yours as they won’t interfere like a family member may do should you want to redecorate, change house designs, renovate a room or have a family dispute. You do need to consult the government should you wish to take on a lodger but apart. All fees associated with the house purchase will have to be met by you, normal things like, legal and valuation fees and mortgage repayments, payment of utility bills and repairs. If you want to add an extension the whole cost does have to be met by you.
Aug
28
First of all, let’s define the term, shall we? Mortgage refinance rates are the lowest rates, homeowners can get when trying to refinance their mortgages. Simple, isn’t it? Maybe so, but obtaining the very best mortgage refinance rate may prove to be a little more difficult. You see, mortgage refinance rates can vary a lot depending on your credit rating.
Customers with outstanding credit will be eligible for the best rates when refinancing their home mortgages, while people with poor credit will end up paying higher interest rates. This is why it is very important for you to seriously consider if refinancing your mortgage is indeed your best choice. In fact, there seems to be a consensus among experts on the fact that homeowners should only consider this option when the mortgage refinance rate is at least two points lower than their current interest rate.
One more thing to consider is that there are many mortgage lenders out there, including banks and all sorts of mortgage loan companies and associations. Therefore, you should spend some time carefully selecting that you will be doing business with, particularly since you are prone to encounter the good the bad and the ugly while shopping around. Some lenders will go as far as waiving all sorts of fees and closing costs in order to attract potential customers. Mortgage refinance rates under these conditions, however, are usually higher and many homeowners don’t realize this until it is too late. Once again, patience and listening to those who have already been where you are now will be your best friends.
Also, there are now a myriad of resources online that will allow you to get a free quote for any kind of situation. All you need to do is go to one of the many sites around the web dealing with these matters and fill out a short survey. That’s it. As soon as you provide all the answers you are requested you will receive a report with the best options available to you. Refinance mortgage rates depend upon your credit rating – as stated above – but also upon your history regarding mortgage payments, the amount subject to refinancing and your employment status at the time. Even then, there are both a minimum and a maximum for a mortgage refinance rate. All of these factors are taken into account when determining the rate applicable to each individual customer, making the process no easy task. Once again, consulting with a specialist on the subject is always your best choice.
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 refinance 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, which you can use to improve your lifestyle and financial well-being. In fact, mortgage refinance rates can become one of your smartest financial moves.