Refinancing a home offers homeowners many benefits and options that can make life much easier if the refinance is done under favorable conditions. While refinancing is not the right decision in all circumstances, the benefits should be considered even if the ultimate decision is to stick with the mortgage already in place. Most of the benefits listed should be determined with the current financial situation in mind and how these things might impact those finances.

One of the most appealing benefits of refinancing is having a lower monthly mortgage payment. In the current economic climate most people are living from paycheck to paycheck and scraping by as best they can. Having the ability to find a refinance option that savings money on a monthly mortgage payment can greatly benefit most homeowners financial situation. If a refinance can be done at a lower interest rate then there can be a decrease in both the monthly payment and the amount of interest being paid every month. If there is less interest to be paid every month then more of the payment is going toward the principle, which usually means that the loan can be repaid quicker. Having a lower monthly payment often has this kind of ripple effect on other areas of concern with a mortgage.

Another common reason for homeowners to decide to refinance is for the purpose of consolidating existing debts. This is especially true when the existing debts are high interest debts like credit cards or certain kinds of loans. Using refinancing for debt consolidation means that a homeowner uses their existing equity on their mortgage as collateral to get another low interest loan that can repay other existing debts. So, the homeowners uses their mortgage to gain a larger loan in order to pay off the credit cards, student loans, or car loans that may be charging a high interest rate. Debt consolidation can mean that the monthly payments for all the debt is decreased if the interest rate is lower overall, but this is not the only benefit since it also simplifies monthly bill paying. It is much easier to manage paying one bill every month than five or six to different lenders. Making sure all of those payments are paid correctly, sent to the correct location and paid on time can be a headache so this is a common reason to use refinancing for debt consolidation.

The third common benefit of refinancing is for the homeowner to use the equity they already have on their home. If a mortgage is more than a few years old and is current then there is probably some equity in the home, some homeowners may even have a considerable amount of money available in equity. By refinancing, they can cash out some of this equity to use for other things. If there are home improvements that need to be done, starting a business, or simply taking a nice vacation then refinancing to have access to equity is a great benefit. However, a home equity loan is different from other loans in that the funds are not immediately disbursed. The homeowner will have access to the funds for a certain time, a draw period, and can withdraw the funds any time during this period.

Do you need to learn more about Refinance Home Mortgages

Article Source: http://EzineArticles.com/?expert=James_A_Jackson

No related posts.

Refinancing your current interest only loan is a good way for some people to get out from under their debt and begin to decrease the amount paid out each month. When the current interest is lower than the amount that you currently pay on your loans, refinancing helps to get a handle on your bills and begin to reduce your overall debt. Money that is saved each month with refinancing can be used to pay off more bills or to invest in opportunities that will bring more money into your budget. Refinancing your loans also changes an adjustable mortgage into a fixed mortgage, which will keep you budget on an even keel. This practice has been used by many people in recent years to get out of debt.

The refinancing a loan that is interest only is one of the best options for consumers with debt. Those who are dealing with an adjustable rate loan may wish to refinance with a fixed rate mortgage before the loan adjusts. It is a risky financial move to take another adjustable rate mortgage to gain more time for paying back the principle. However, this plan can lead to a bigger problem if the economy is in a continued decline.

Refinancing with an interest only loan is the right choice for someone who is expecting an increase in income or a large amount of money in the future. Some people choose an interest only loan when they plan to sell their home within a few years when the interest only portion of the loan is paid. In these situations, an interest only refinanced loan is a good financial decision. This is also a good financial tool for those who have an income that is based on bonuses or is not a steady weekly or monthly salary. To make the most of an interest only loan, the savings can be used to make improvements on the home to increase its value.

Before jumping into an interest only loan, there are a few things that should be considered. The length of time that the homeowner plans to live in the home and the amount of equity that has built up in the home are two factors to consider before an interest only refinance loan. Also, the closing costs and paying points should also be considered carefully before making the decision to refinance.

Those considering a refinance with an interest only loan should check with several lenders first before making the final decision. There is also a wealth of information available online for those seeking an interest only loan.

For more mortgage refinancing tips, visit my blog to learn more.

Article Source: http://EzineArticles.com/?expert=Deon_Du_Plessis

No related posts.

There comes a time in just about everyone’s life when they will try to obtain a mortgage. Becoming a homeowner is part of the American dream, but sometimes the excitement gets in the way of paying attention and not really understanding the type of mortgage you are getting. This is basically why there is now a high foreclosure rate and the industry of mortgage loans has become one that is in a heap of trouble. Paying attention to the terms of the mortgage you are getting, whether it is a mortgage to buy a home or a mortgage refinance, is one way to avoid future problems.

One of the major reasons the foreclosure rate has skyrocketed over the last several years is due to the obscene amount of ARM’s that borrowers have taken on. An ARM is an adjustable rate mortgage. This type of mortgage was mostly given to sub-prime borrowers, meaning they were given to people who had less than perfect credit. While they may seem like a good deal at the time, these adjustable rate mortgages usually present future problems. Many unfortunate consumers are now dealing with and are why the foreclosure rates have been so high over the last several years.

An adjustable rate mortgage starts with a low rate, but that rate is only valid for a specific period of time. Typically, the term of the initial rate is anywhere from 90 days to 36 months. Once this period is over the interest rate on the mortgage will be based on the prime rate at the time plus a couple of percentage points, which all depends on the terms of the mortgage note you have signed. Not only have these loans affected home buyers, but also those who have taken out mortgage equity loans and even those who have done a home loan refinance.

What many fail to realize is that once the interest rate goes up, so will the monthly payment. Depending on the new rate, this could mean paying hundreds of dollars more each month. For example, instead of paying $1200 per month, once the rate changes the payment could be $1500, $1600, or more. This is what has brought about the inability of many consumers to continue to make their mortgage payments and sent the foreclosure rates through the roof.

Another problem that has effected those who have taken out mortgage loans in the last several years is that of balloon mortgages. These loans can also present a problem because similar to an ARM. The terms of this loan change once the balloon payment becomes due. With this type of mortgage, you can get a good rate to begin with, but after a specific number of months there are no longer monthly payments that are required on the mortgage.

Instead, the total loan amount becomes due. This means that if you can not refinance the mortgage prior to the balloon payment coming due, you will be required to somehow come up with the money to pay off the entire loan. How many people can actually accomplish this? It’s no wonder the foreclosure rates have gotten as bad as they are.

To avoid the pitfalls of these mortgages. You need to know what you are signing and make sure the terms of the mortgage will not hurt you in the future. It doesn’t matter if you have good credit or poor credit. Shopping around for a mortgage and making sure the terms fit your needs not only now, but in the future, is important.

Things can go wrong no matter if it is a purchase, mortgage refinance, or mortgage equity loan. There are many mortgage companies that want your business, so shop around. Don’t get sucked into a deal that seems to good to be true or just because you trust that your mortgage rep knows what is best for you. Doing your homework will help you find the right mortgage without having to subject yourself to something that will come back to haunt you in the future.

Article by: Nick Messe

Article Source: http://EzineArticles.com/?expert=Nick_Messe

No related posts.

Article Source: http://EzineArticles.com/?expert=Katelyn_Tuttle

No related posts.

In many ways, unemployment has hit older Americans the hardest. If you are unemployed and over 60, your chance of being rehired is less than somebody 20 years your junior, despite your experience. It’s tougher to hang onto your home.

There is a way for you to keep your home and stop making mortgage payments for the rest of your life if you meet key conditions.  If you are at least 62 years old and have enough equity in your home you occupy, you can draw on it through a reverse mortgage.  A reverse mortgage is not a home equity loan, or home equity line of credit. These latter loans have to be paid off monthly. With reverse mortgages, borrowers never have to make any payments while they live in their homes. The loan is paid off when the borrower moves, dies, or the property is sold.

Borrowers can choose to receive monthly payments, a lump sum, or line of credit. A credit line will give a borrower the most money. A lump sum will provide quick cash, while monthly payments are the most secure. A borrower will receive them for as long as she lives in her home. FICO scores and proof of income don’t factor into the granting of these loans. The size of reverse mortgage is determined by the borrower’s age, the loan’s interest rate and the value of the property. The older the borrower, the more can be borrowed.

There are three types of reverse mortgages:

• The Federal Housing Administration’s Home Equity Conversion, HECM program,
• Fannie Mae’s Home Keeper program, and
• Those offered by private lenders.

Available for 25 years, they’ve become more popular recently. In 2007, reverse mortgages insured by the US Department of Housing and Urban Development topped 100,000.

Reverse Mortgages are complex financial intruments.  HECM and Home Keeper loans require that borrowers get counseling before taking them out. If you are going through a private lender that doesn’t demand counseling as a precondition, you should still get professional help you can trust. Click here for a list of local free or low cost HUD approved counseling agencies .  Here’s a list of HUD approved lenders . You can also call HUD toll free for the same information at 1(800) 569-4287.

How much cash could you get? AARP offers this handy online reverse mortgage calculator to find out.

Beware of Scams
Older Americans are especially vulnerable to fast talking, high pressure, financial manipulation. Make sure that you are dealing with a reputable organization, that you have professional help and that you fully understand everything that you are signing.

The most common scam is perpertrated by supposed estate planning services which lock you into a contract that takes between 6 -10% of the amount you borrow. All you get for that cut  is information readily available directly from HUD.

Another common scam is by purported money managers who convince seniors that easy riches can be at hand if a lump sum taken out on a reverse mortgage is put into a speculative investment. You won’t be evicted from your home, but could easily lose all your equity.  

Illinois Attorney General Lisa Madigan initiated lawsuits this month against Hartland Mortgage Centers of Woodridge, Illinois, and American Advisors Groupof Irvine, California for deceptive reverse mortgage marketing practices, so be careful there are sharks out there. Still, if used wisely, reverse mortgages can ease your cash flow and financial anxiety as you age.

No related posts.

As winter retreats, signs point to an easing of the foreclosure crisis. According to figures released by RealtyTrac yesterday, foreclosure filings, which include notices of defaults, auctions, and bank repossessions, retreated 2% from January. Bank repos dropped 10% compared to the month before. Default notices increased by 3% compared to January, but they were 25% lower than their April 2009 peak. 

Six states accounted for 62% of the nation’s foreclosures.  In California 68,562 properties got notices while 53,032 were filed in Florida; Michigan 20,028; Illinois, 17,312; Arizona, 16,718; and Texas, 12,638.  Although Nevada led the national foreclosure rate yet again, the state saw a month to month decline of 7%.

RealtyTrac credits the drop to “Foreclosure prevention policies and government legislation [which] are artificially distorting supply and demand equilibrium in the housing market.” RealtyTrac, is in the foreclosed property marketing business.

Bank of America, the nation’s largest mortgage lender, locked in almost 8000 distressed borrowers to the Obama Administration’s Home Affordable Modification Program last month. 20,666 of the bank’s customers now have permanent loan mods up from 12,761 the month before. Another 22,303 permanent modifications are approved and pending, waiting for borrowers’ sign offs.

According to Jack Schakett, loss mitigation strategies executive for Bank of America Home Loans. “We have a strong pipeline of modifications in the trial payment period, under review for conversion to permanent status, and out for final signature.”

The figures are noteworthy because many of Bank of America’s mortgages originated with Countrywide Mortgage which specialized in sub prime or Alt-A home loans for borrowers with less than perfect credit, who weren’t able to get a home loan elsewhere. When Countrywide started showing unsustainable losses in the mortgage meltdown, B of A acquired the home loan giant in 2008. Since the start of the government’s foreclosure prevention program, the Bank of America has lagged behind the norm in converting temporary trial loan modifications to permanent mortgage payment reductions. It’s good to see the mortgage giant catching up.

But can the good economic news be sustained?

• The US Department of Labor reported that first time unemployment claims fell by 6,000 last week to a seasonally adjusted 462,000 the second weekly decline in a row.
• Today the US Commerce Department reported that US retail sale rose 0.3% in February despite a drop in demand for cars and snow storms that hampered store access on the East Coast.

One gloomy note was sounded by Fitch Ratings in a new report, which credits the improvement in the housing market to the low interest rate caused by the Federal Reserve Bank’s purchase of $1.25 trillion in mortgage backed securities and the homebuyer’s tax credit. The $8,000 first-time home buyers’ tax credit and $6,500 credit for current homeowners in a new purchase, have a signed contract deadline of April 30.  The Fed’s purchase of MBS is phasing out at the end of this month. The Fitch report doubts whether home values can be sustained by the market alone without being propped up by the government. The report draws a parallel between the mortgage default rate and decline in home value.

No related posts.

Not all distressed borrowers can save their homes. As mortgage relief triage, the Obama Administration has emphasized loan modification  and refinance , yet the effort is falling far short of the 9 million at risk homeowners that the administration set out to help. More than five million borrowers are currently behind on their mortgages.

One of the biggest factors that leads to mortgage default is when a homeowner owes more in a mortgage on his residence than it is worth, being underwater with a loan. According to First American CoreLogic, by the end of 2009, nearly one in four mortgagors were underwater with their home loans. Many of these homeowners are not eager to keep throwing good money after bad.

As of April 5th, the Obama Administration is adding a new option to its efforts, Home Affordable Foreclosure Alternatives, HAFA, to allow borrowers to avoid foreclosure through a short sale or a deed-in-lieu of foreclosure option. With a short sale, the mortgage servicer lets the borrower sell the property for less than the outstanding mortgage. In a deed-in-lieu transaction, the borrower relinquishes the deed on the property in exchange for a release on the outstanding loan obligation. In these cases, the lender allows the borrower to walk away from the property without a cash contribution or promissory note. The lender also agrees not to pursue a deficiency judgment against the borrower. Both sides avoid the expense and trauma of a foreclosure.

The HAFA program provides financial incentives when a short sale or dead in lieu are finished, i.e.

• $1500 in relocation assistance to the distressed homeowner
• $1000 in reimbursement to the mortgage servicer
• $1000 for release of a second mortgage with a total of up to $3,000 in short sale proceeds to be distributed to those who hold subordinate liens.

The program will be made available to borrowers who meet HAMP loan modification requirements but can not successfully complete a trial loan modification. HAFA is designed to streamline the process by using standardized paperwork while drawing on the information collected by HAMP. HAFA will allow borrowers to get pre approval for a short sale before listing a property and prohibits lenders from seeking a reduction in the real estate sales commission.

Much of the recent slowing in foreclosures has been blamed on lenders being hesitant in flooding the market with depressed properties. Although HAFA is considered a positive move by many, it could paradoxically lower real estate values, by streamlining property liquidation moving bank owned homes on the market sooner than they are now. The HAFA program is due to end the last day of 2012.

Related posts:

1. Short Sale Incentive Added to Obama Program
2. Why is Making Home Affordable Falling Short?

About half of the borrowers  at foreclosure risk are carrying a second mortgage. When the Obama Administration’s Home Affordable Modification Program was unveiled, it took months to address the second mortgage problem. Now lenders working with first mortgages under the program must modify any second mortgages they hold on the property at the same time. Lenders also get financial incentives, a payment in advance of $500 with additional remunerations of $250 a year for up to three years on second mortgage mods. Lenders are also offered a financial incentive for forgiving the second lien of up to $1000.

Still second mortgages remain a stumbling block for loan modification. Congressman Barney Frank, the chairman of the House Financial Services Committee, sent a letter last week to the to chief executive officers of Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo, the four biggest US banks urging them in “the strongest possible terms to take immediate steps to write down these second mortgages.”

The Massachusetts Democrat went on, “Large numbers of these second liens have no real economic value – the first liens are well underwater and the prospect of any real return on the seconds is negligible.” He states that “Many homeowners are eager to save their homes despite being ‘underwater’ but find that lenders and servicers are unable or unwilling to make necessary modifications. These homeowners are increasingly deciding to walk away and thus foreclosures continue to mount deepening the crisis.” Frank explains that he wrote the letter to the four top bankers because the problem “has reached a critical stage and requires immediate attention from your institutions.” Chairman Frank plans to follow his letter with phone calls this week.

Second loans can also trip up short sales where the prime lender agrees to accept less than an home is worth in a sale to avoid the expense of a foreclosure. A second mortgage holder can effectively block the sale if the second lender continues to press a claim.

Next month, the Obama Administration is due to further modify its foreclosure prevention plan for those who can’t afford a loan modification. The new plan puts a greater emphasis on short sales and deeds in lieu of foreclosure. Holders of second mortgages would be eligible for 3% of the unpaid loan balance, to a maximum of $3,000, in exchange for relinquishing all claims in a short sale. The program would be voluntary, so it’s unclear how many lenders would participate. According to the Federal Reserve Bank, about $1.05 trillion in second lien mortgages were held by American Banks as of the end of the third quarter 2009.

Related posts:

1. Second Mortgage Modification Strategy

It would be nice if there were a clear dividing line between economic contraction and expansion, but that doesn’t seem to be happening. Data remains mixed. Still it looks as if the economy is starting to heat up as the weather does.

Today the Bureau of Labor Statistics announced that in February the economy lost 36,000 jobs, 10,000 more job losses compared to January, yet the nation’s unemployment rate stayed steady at 9.7%.  Due to the bad snow storms that hit the East Coast the number was expected to be worse. The picture varies widely according to the sector. In the month 47,500 temporary workerss were hired. This is a good sign since these jobs often become permanent. Since the year began, 100,000 temp workers have been hired.

In construction however, unemployment is now at 27.1%, up from 24.7% in January reflecting a monthly loss of 64,000. The underemployment rate of those who could only find part time work, rose 16.8% up from 16.5% in January. The change led to a drop in the average work week to 33.8 hours. Still the pace of job loss slowed to the smallest number since the official start of the recession in December 2007.

In responding to the news, President Barack Obama said today that the job losses are “more than we should tolerate.” He called on Congress to address the matter. This week the president signed a bill extending unemployment benefits for a month after Senator Jim Bunning dropped his filibuster in opposition to the legislation .

On Thursday in an attempt prime the jobs pump, the House of Representatives passed a $15 billion employment program. The Senate is due to vote on the bill next week. The legislation has a number of provisions designed to increase hiring such as:

• Exempting employers from paying Social Security taxes on new hires who were unemployed
• A tax break to businesses for capital improvements
• Additional funding for highway, transit, and capital construction projects for states and cities

In January according to the Federal Reserve Bank total consumer borrowing rose by a seasonally adjusted $5 billion for the first expansion  in a year. The  increase was not in revolving credit like credit cards but rather in student, personal and auto loans which rose at a 5% annual rate. The numbers do not include any real estate loans.

In February retail same store sales grew by 4%overall according to Thomson Reuters, which looks at 30 major chains. It was the strongest gain since November 2007. Ford Motors leapt in first place in auto sales with a 43% gain selling 142,006 sales for the month, about 300 more than GM while Toyota’s woes take their toll.

The economic news played well on Wall Street.Today, the Dow Jones Industrial Average soared 122.06 points today, up 1.2%, to 10566.20, for its best one day gain since February16th

Related posts:

1. Unemployment Hits Hard
2. Happy New Year
3. Economic Snapshot

Last week in the US, responding to lower borrowing costs, mortgage applications rose for the first time in a month. The average rate on a 30-year fixed loan fell to 4.95% from 5.04% the week before. More of the demand was driven by refinancing, a 17.2% increase compared to the rise in new home purchases which was up 9%. Refinancing made up 69% of the applications. The results were no surprise after new home sales fell in January to the lowest number on record.

According to Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association, “Mortgage applications rebounded last week, particularly refis, as rates dropped back below 5 percent. Purchase activity remains subdued, with application volumes remaining within the narrow range seen in the last few months.”

The purchase market weakness is due to high unemployment and a lack of consumer confidence. Still it is a prime time to buy a home:

• Home prices have bottomed out in many markets, already on the rise in California. In most areas it’s a buyers market where purchasers can negotiate. This is especially true at the upper end where homes worth over a million dollars have seen severe differences between asking and selling prices.
• Interest rates remain low. On a 30 year fixed rate mortgage, at the current rate monthly borrowing costs for each $100,000 of a loan would be less than $534.
• The homebuyer tax credit is still in effect, up to $8000 on a first home, $6500 if you’re moving to a new principal residence after spending 5 out of the last 8 years as the homeowner at one’s current address. Remember, to qualify a binding contract has to be signed by April 30, 2010.

It is also an excellent time to refinance because mortgage interest rates are likely to rise by the end of this month when the Federal Reserve Bank stops buying mortgage backed securities. Refinancing is always your best way of lowering your mortgage payment, because it increases your credit score. Remember, to make a refi worthwhile you need a current mortgage interest rate of 6% or over.

Servicer Suggestions

Not everybody can get refinancing. For many distressed homeowners the best way to reduce monthly mortgage payments is through a loan modification. In testimony today, before the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee, Ocwen Financial Corporation President Ronald M. Faris, expressed his support for the government’s Home Affordable Modification Program, HAMP. He did acknowledge that it’s falling short, “Almost a year into HAMP, too many homeowners facing foreclosure are having difficulty getting their loans modified.“

Mr. Farris suggested the following changes:

• Lower the housing-to-income ratio for borrowers to below 31%. “One out of every four HAMP applicants is rejected for failing to meet this standard,” according to Mr. Farris. He suggested lowering the HTI to 28% or providing adjustments for dependents.
• Mr. Farris broke ranks with other mortgage servicers and urged that more borrowers be granted principal reduction on their loans. According to his company’s experience, negative equity increases the risk of mortgage default by 150 - 200 %
• Increase government funding to housing counseling agencies.
• Mandate that servicers falling short outsource their distressed loans to servicers that deliver as expected on HAMP. “Whether for lack of effort or just an inability to handle the volume, too many banks are not producing the results needed to achieve program goals. Treasury should be empowered to redirect servicing to those with a proven track record and available capacity to execute trial modifications and convert them to permanent solutions,” Mr. Farris said.

Related posts:

1. Interest Rate Rise Adds Urgency to Acting Now
2. The 31% Solution for Mortgage Modification
3. Mortgage Modification Milestone