Posts Tagged ‘does it pay to refinance’

Refinancing? Do Your Homework

Plan Your Mortgage Refinance Wisely

There are many reasons to refinance a home mortgage, but when the refinancing process is done in the wrong way, it may cost you a lot of money! The best advice before refinancing a home loan, is to do your homework. Check and plan all the things that needs to be taken care of, make all the refinancing calculations prior to the decision. In this short review we will try to clear out the things you need to know before you go into a refinancing procedure.

Should You Refinance Your Mortgage

This is the first question you should ask yourself, “should I refinance my home?”, there are several reasons why to refinance, as there are several reasons why not to. The main reason to refinance is to lower your existing mortgage interest rate. If your current mortgage rate is 2% higher than the best national mortgage rates, then refinancing may save you a lot of money.

Other reasons to refinance:

• You may be to lower the monthly payments by extending the new loan.
• You can choose to leave the monthly payments unchanged, but with a lower rate, the mortgage will end sooner.
• If you can afford it, you can pay higher payments each month and shorten the mortgage life span even sooner.
• You can take cash out for other needs – By refinancing a larger sum than is still left on the mortgage, you can get cash money to renovate, invest, use as downpayments, close credit debts, pay other loans or just take a trip to Hawaii.
• Change the type of interest rate from fixed rate to adjustable rate mortgage -ARM (or vise versa).
• Consolidating several mortgages on the current home into one new mortgage.

Homework You Need To Do

Your homework is not difficult, but it is not that simple. First you need to decide about your financial gaols. Where do you want to be after the refinancing ends? with lower monthly payments or with less payments due to pay? With a different type of mortgage rate or with the same? Do you plan to cash out?

If you are uncertain about which goal to choose, here are some questions to ask yourself, they will help you get a direction:

1. Which lender – Are you going to stay with your current lender? There are many advantages as the lender knows you and has all your documentations. Moving to another lender means sometimes paying more fees.
2. What are your debts – How many other debts do you have on your balance? Credit debts, car loans? student loans?
3. What is your FICO score – How high (or low) is your current credit score? A low score may mean getting higher refinancing rates, which can ruin your plans. See further below about simple credit plans that fix credit fast enough to refinance this year.
4. Do you have savings – The refinancing process is not a ’no money down’ deal, there will be points, fees, appraisal costs and other closing costs to pay. Even when some of these fees can be added to the new mortgage, some are still POC paid outside of closing.
5. Make some overall calculations – Will the lowering of the interest rate, save me more money than the fees and closing costs? How much in total will I save with the new mortgage compared to my current mortgage?

Refinance Homework At The Bank

One more step you should be doing is a very thorough ‘rate shopping’. Some people invest more time buying a Valentine gift or a Sony 3D camera than investigating about the new mortgage rates and terms. One more refinancing homework task will be to request two documents from the lending banks:

Good Faith Estimate - This document is issued by the lender and has an estimation of the fees and costs which will be included for the refinancing process. Once you ‘shop’ for the best refinance home rates, you need to have at least 3 ‘good faith estimate’ forms. This will be helpful later on when you will need to negotiate the refinance fees and costs. 

Truth in Lending Statement - This document is a mathematical calculation done by the lending bank, that states all the financial figures of the refinance program. This ‘truth in lending statement’ will show the monthly payments expected, the length of the mortgage, and the overall money you will need to be paying back over time. This is very important part of your mortgage ‘shopping trip’ as its the document that has the actual price tag of the loan.

Do Your Homework – Raise Your FICO Score

The first thing to begin with, should be the action item that usually takes the longest time to accomplish. Before going to any bank and requesting information on refinancing, you should get your credit raise in a few points! The first thing the lenders will do, once you leave their office, will be to investigate your credit score.

Even a small raise in your credit score (30-50 points) can mean lower interest rates, and thousands of dollars saving per year! Credit repair takes time, it is not an instant ‘hocus-focus’ therefore it should be planned ahead, and be the first thing in your refinancing homework to-do list.

Paying hunderds of dollars for professional attorneys services for credit repair may be a waste of money, many people buy today online credit repair plans or software, and do it themselves. It is wiser to invest $97 on a credit repair software than to stay with the current score and get 0.3% percent higher interest rate on your mortgage!

• Here is a credit repair software you can use.
• Here is a 37 Days Credit Repair Program.

Should I Refinance My Mortgage Now? 2011

Should I Refinance My Mortgage Now? 2011

2011 Refinance calculator

How much will I save if I refinance my mortgage today ?

If you are asking your self now at 2011 these kind of questions, then this refinancing calculator is perfect for you. There are some terms that when all are fit refinancing a mortgage is a great opportunity to save a lot of money, or shorten the mortgage month left till all money owed to the lenders are payed.

Before you check this “should I refinance calculator” you need to make sure you are doing the right move, and doing it for the right reasons.

Do you know what is your current credit score ? Do you know if your current mortgage loan has a penalty when prepayed ? Do you plan to stay at your current house for the years to come ?

Those two simple facts can throw your refinancing plans to the recycle bin for a year or two.. So before you take quick financial acts, try to find out if NOW is the right time for you to refinance.

Which of the next sentences, describes best what you are trying to do ?

1. I want to lower my interest rate.
2. I want to lower my monthly payments.
3. I want to refinance in order to cash out my home-equity.
4. I wish to refinance into a fixed-rate mortgage.
5. I am planning to consolidate my debt (with all my credit cards).

Refinancing can bring you closer to one of these.

This calculator will answer your question when does it pay to refinance your mortgage. If you can get a lower loan rate that will reduce your monthly payments, or shorten the month left, or combine two mortgages together than it is worth the effort.

Should You Refinance Your Mortgage

With the refinancing calculator you could also find out if it pays to change the mortgage you have from a fixed rate mortgage to an adjustable rate mortgage (ARM) and backwards too.

Run a few calculations on all your possible refinancing scenarios before you go to the bank or lender and apply for a refinancing program.

In case you didn’t know there are some government loans for home buyers you might want to check, most of them for first time home buyers but not all. And you might wish to learn more on the Obama housing plan – Home Affordable Refinance Program (HARP).

Is it worth to refinance a mortgage 2011

What To Do When It Is Time To Refinance a Mortgage?

Like everyone else, you probably heard that everyone is speaking about ‘refinancing their mortgage’.. You probably too asked your self some of the most common questions home owners with a mortgage ask: Should I refinance my mortgage ? I NOW the right time to refinance my home loan ? What does it mean  ? who can do it ? Is it really worth to refinance my mortgage ?

So here are some of the major guidelines for learning “Does It Pay To Refinance My House“.

Is It Worth To Refinance My Mortgage 2011

1. Do you want to save and check if your monthly payments can be reduced. While refinancing your payments will be reduced if you get a lower interest rate. The monthly payments can be reduced also if the lime length of the loan is extended.  If you think on going on the extended term possibility, just bear in mind  the interest rates you will be paying will be higher during the life of the loan. This alone is when refinancing really pay.

2. Do you want, or can you reduce the number of payments left ? This means finishing off the mortgage sooner than originally planned. If you shorten the length of your mortgage by reducing the term of the loan, the mortgage will end sooner but your monthly payments will go up.  Make sure you can stand the raise. Use one of the mortgage payment calculators. Though the payments rise you still will be saving some of the loan interest rates, and will be a ‘free home owner’ sooner.

3. Compared to the mortgage rates the credit card rates are much higher ! So in case you have huge credit cards depts, you have a possibility to refinance and borrow more than the current loan balance. It is up to your home owner financial education and ability to use the extra cash wisely. Pay off high interest debts such as credit card balances or bank or lenders installment loans. If that loan is the only mortgage you have, you will be able to continue deducting the mortgage interest from your Federal income taxes 2011 while it acually payed off your other depts.

4. A refinancing program might allow you to consolidate 2 loans into one. This means that instead of paying back 2 separete loans, now at 2011 they will be both combined into one new loan to pay. In many cases when you get the best mortgage rates the payments will be lower in the over all.

5. When thinking of a refinancing solution for your mortgage, refinancing will help you convert an Adjustable Rate Mortgage (ARM) into a Fixed Rate Mortgage (FRM). At Fixed Rate Mortgage (FRM) the lender can not increasing your monthly interest payments over the life of the loan. Which he can and does usually at the ARM home loans. This means your monthly payments will not change dramatically over the years which will help you plan your financial moved some time a head.

It is worth to check what the government can help you with the Home Affordable Refinance Program  – HARP. These are some of the best out there for those who qualify.

Before you refinance, you must know, improving your FICO score even by 30-40 points makes you a better negotiator with the lenders.  You will get better rates, and save a lot of money on monthly payments.

Learn how thousands of homeowners improved their FICO score in 37 days.