Alan Lim asked:


Are you part of the sub-prime home mortgage refinance scenario? Then it’s time to take a good hard look at current trends.

Rising real estate costs

The real estate market has seen a steep rise in the price of houses - with the result that the average home buyer cannot afford to spend such a high sum on owning a new home. Even those persons who are making monthly payments towards the home mortgage refinance are finding it increasingly difficult to cope with rising prices. Interest rates have shot up, further tipping the scales against the homeowner’s favor.

Why the sudden rise?

There are many reasons why interest rates and associated real estate expenses have escalated. For starters, the sub prime market borrowers typically comprise those who have already been rejected as per other more stringent eligibility criteria in the prime market. This means the sub prime home mortgage refinance lenders offer them loans at relatively easier criteria – some of them may even imply lesser documentation and background checks on the borrower. Even those borrowers who have a relatively lower credit score maybe approved under the sub prime market home mortgage refinance lending process.

The real estate segment is hurting

Delinquencies and default patterns are at an all time high. Foreclosure and Real Estate Owned is a common phenomenon these days in the home mortgage refinance scenario. Why this is happening can be predominantly attributed to the re-adjustment in rates. Usually the sub prime home mortgage refinance lenders attract borrowers with a low promotional rate. When this rate shoots up after the promotional stage, it’s a nightmarish situation for borrowers and lenders. The borrower finds it impossible to pay up and the lender finds it virtually impossible to recover the money. This is also known as predatory lending – it’s quite similar to hunting for a prey by luring with attractive rates of interest. Once the unsuspecting customer has been caught in the web, there’s no escape and the home mortgage refinance lender extract every possible penny from the borrower. What this means from a long term perspective is that investors lose trust in the home mortgage refinance lending company. This can affect the prime market and potentially qualifying borrowers may not qualify in the prime market. This way home sales deteriorate and real estate suffers.

Growing competition

With the recent decline in home sales, most home mortgage refinance lenders are skeptical on future profit margins. They prefer to be less optimistic about the future trends in the sub prime market. However this has not stopped lenders from fiercely competing with each other. In fact, competition has now escalated because in the dwindling home mortgage refinance market, every lender wants to make a quick buck or two.



Allison

d_guy67 asked:


I origianlly purchased my house and then refinance it at 100% on an arm. I purchased another house closer to work and am living in that house now. The intention was to rent out the first house to cover my payment. Now my payment has increased due to the arm. I cannot refinance since I no longer live there. The renters did not work out and the rent no longer covers my payment. I cannot sell because the house is no longer worth what is against it. Help!!!

June

needknow asked:


I borrowed a $300, 000 house with 20% down payment and a 5/1 ARM loan. The current sale price of the similar house is $330,000. I am wondering if I refinance the house, how many I have to borrow from bank: $240,000 [$300,000 (sale’s price) - $60,000 (my downpay)] or more (330.000 - $60,000)?
Thank you very much in advance.

A confused lady.

Yvonne

CL Haehl asked:


Refinance loans and home equity loans both give you an opportunity to get cash when you close on the loan. While both options can be a great way to save money and get money, there are certain things you should know before getting a refinance or home equity loan:

You Need a Good Reason to Get a Loan

It doesn’t matter if you are considering a refinance loan or home equity loan; you need to have a good reason for spending the money it will take to close on the loan. Good reasons may include the need for a better rate and terms or the need for cash to consolidate debt or pay other outstanding bills. Whatever it is, make sure the loan will save you money in the long run, and more importantly, make sure you can afford the new loan payments.

Refinance Terms Vary

Not every refinance loan is the same. Some have lower payments during the term and one final balloon payment at the end. Some terms last 30 years, while others only last 15. If you will be getting a refinance loan, make sure the terms will be manageable for you.

Home Equity Loan Terms Vary

Like refinance loan terms, home equity loan terms can also vary. Some loans are adjustable rate options, while others are fixed. Term lengths can also fall all over the map, so it is a good idea to evaluate all of the options available to you before making any final decisions.

Introductory Rates Can Be Misleading

Sometimes known as “teaser rates”, introductory rates look good on paper, but can be very misleading. Before being drawn into a loan with introductory rates, you should have a clear understanding of when the rate will adjust, what the rate cap is, and what your payment might be at its highest.

Fees Need to Be Compared

When most people are looking for a refinance or a home equity loan, they compare interest rates. While this is a smart thing to do, interest rates aren’t the only thing that should be focused on in the comparison process. Because lending fees and closing costs can vary from lender to lender, you also want to take time to make comparisons between these variables.

Loan Interest Isn’t Always Tax Deductible

Contrary to popular belief, the interest paid on a home equity loan or a refinance loan isn’t always tax deductible. Before automatically assuming that you will be able to get tax savings, you should speak with a qualified accountant. An accounting professional will be able to look over your situation, as well as the potential loan to determine whether or not you are eligible for tax deductions.

There is No Such Thing as a Free Loan

Don’t be fooled by lenders who offer no closing cost refinance loans or home equity loans. There is no such thing as a free loan. If you don’t pay the costs upfront, you will pay for them later on in the loan. While this may not seem so bad, you need to remember that you will also be paying interest on anything not paid upfront.

Negative Amortization Loans are Risky

Though they are not as popular as they once were, negative amortization loans are still offered by lenders. These loans present a great risk to the borrower because loan payments aren’t always enough to cover the required interest payments. Any unpaid interest will be added to the unpaid principal, making it very difficult to pay the loan off in a timely manner.

Tax Assessment Aren’t Genuine Appraisals

If you are thinking about getting a refinance loan or home equity loan, don’t assume that the local tax assessor’s appraisal represents the actual market value of your home. Tax assessments aren’t genuine appraisals. Your home may be worth quite a bit more or quite a bit less than the amount indicated on your tax assessment. The only way to find out how much your home is really worth is to contact an independent real estate appraiser.

You Can Back Out

Federal law gives you the opportunity to back out of a refinance loan, a home equity loan, or any other type of loan that will be using your home and property as collateral. You have a total of three days to change your mind after the loan has closed. If you are unsure about the loan for any reason, this window of opportunity is your chance to get out before it is too late.



Joanne

newjerseydaniel asked:


I have filed bankruptcy in the last year and dont have the best credit but i need to refinance so i dont lose my home. Does anyone know of any companies out there that will work with me?

Lillie

Alan Lim asked:


A home mortgage refinance may just be the best financial decision you can make. However, refinancing is not for everyone. It is mostly a matter of right timing. This result to the unending question for homeowners everywhere: when is it exactly right to refinance?

There are many guidelines which can determine whether now the best time to get a home mortgage refinance is. However, despite all these guidelines, what actually determines “right timing” is dependent on your own financial situation. There are a number of signs which are indicative of ideal refinancing conditions. Here are some of them:

Refinancing to cut costs. When interest rates are dropping, it may be good to take on a new mortgage. The rule of thumb states that a difference of at least 2% should be followed for a home mortgage refinance to be worth it. Refinancing will result to either lower payments you need to pay monthly, or a shorter loan term to repay the entire money you owe. Either of these can save you money in the long term. However, take note that interest rates should never be the sole determining factor to influence your decision. Make sure you consider closing costs, fees and charges and find out if you will be end up paying more in the long run.

Home mortgage refinance for better loan terms. Many homeowners decide to refinance in order to get out of their current loan. If you have a pending balloon loan payment due soon but do not have the means to pay for it, or if you have an adjustable rate mortgage which is increasing, you may resort to refinancing to spare yourself of an even bigger trouble. You can choose to revert to a fixed rate mortgage to minimize risks.

The decision to take on a home mortgage refinance should also depend on how long you intend to stay in your home. If you expect to sell your home soon, refinancing may not make sense at all. Also, if you are already halfway through your existing loan, you will barely save anything with a new mortgage loan. However, if you plan to stay in your home for at least the next five years, you will probably have enough time to recoup the refinancing costs you have incurred and actually save you money.

Ultimately, finding the right time to refinance is mainly a matter of proper calculation and estimation based on your individual circumstances and parameters. It should depend on how long you will stay in your home, your financial goals, the current interest rates and good deals offered by lenders.

This is not to say that ideal conditions assure you of a risk-free decision. Refinancing does take some risk as all financial decisions do. However, as in all risks, you can minimize losses if you do your own research and make a wise assessment of how your home mortgage refinance will lead you to. Refinancing is indeed more than just a matter of timing.



Francis

Kevin Clark asked:


Getting your car financed seemed to be a great way for you an year back but now when the rates have fallen, you feel you are paying too much on the interest. This is what hurts most that money is being paid without its worth being felt by the borrower. The borrower can save money on the interest of car finance by availing car refinance.

It may be very possible that the federal rates of interest have fallen and current car financers charge way too less an interest from what you were charged. You too can lessen the loan amount by taking up another loan called as car refinance which will repay the remaining installments of your original car finance. With this you are left with only the new loan which is already borrowed at a lower rate than the original loan. This saves money of the borrower that he would have paid as interest.

Even if you have a bad credit history, you can still avail Car refinance. This is possible as when you had car finance, a high rate would have been charged due to your bad credit. But now that you have been paying regular installments, the credit score must have risen and you can get better rates now on car refinancing.

However, there are some situations when it is not considered viable to take up car refinancing. This is so when the remaining repayment is less than $7000 as this amount is not suitable economically for the lenders. Also, if you wish to sell off the car in an year or two, it is not suggested to take up car refinance. To sell off the car, it will be required that all repayments have been made and dues are clear and the sale can be delayed due to remaining repayments in case of car refinancing.

The benefits of car refinance can be duly availed if the borrower acts at a correct time. As a result, a lot of money can be saved with car refinance.



Stacy

bwauby asked:


In 2001 i got a 30 year fixed rate on 63k for 7%
What % rate am i looking for to refinance at ?
Better yet, Whom should i consault. to steer me in the right direction.?

Tamara

Ava asked:


I pay extra principle each month on it and would like to refinance enough to pay off my vehicle and to do some remodeling on my home, painting, etc. I would appreciate all insight. Thanks!!

Annie

Daniel Riley asked:


To refinance is to pay off an existing mortgage with funds obtained from a new mortgage loan. There are numerous great reasons to refinance your mortgage, among them the following:

Lower Interest Rates: A prime time for many people to choose to refinance is when interest rates drop lower than the rate they’re currently paying. By taking out a new loan with a lower interest rate, not only do your monthly payments decrease, but so does the total amount you pay over the life of the loan, in the thousands of dollars.

Fix That Rate: If you currently have an adjustable rate mortgage, you may seriously want to consider refinancing to a fixed rate mortgage. Adjustable rate mortgages are far riskier to the borrow than fixed rate mortgages. The payments are unstable with a tendency to increase dramatically over time, making budgeting your monthly housing payments increasingly difficult.

Build Equity Faster: Buy refinancing to a loan with a shorter loan term, you pay off your loan faster and therefore build up equity in your home faster, equity that you can then use to make improvements to your home, pay for a big purchase or an emergency, or obtain additional credit. Borrowing against home equity through a refinance mortgage usually comes with a lower interest rate than other forms of credit, such as consumer loans and credit cards.

Own Your Home Free-and-Clear: It’s a phrase every homeowner covets, when they can finally be done paying off the money they borrowed to buy their home and own it outright. Refinancing is an excellent way to own your home free-and-clear sooner than you ever could have otherwise. One way to accomplish this is by reducing the loan term, or the amount of time you have to pay off the loan. A shorter loan term generally involves larger payments, but if you can afford to make them, it could be a wise and rewarding decision to refinance your current mortgage to one with a shorter loan term.

Get Cash in Hand: If you already have equity built up in your home, then you can refinance for a larger amount than you currently owe and take that additional amount out in cash. This is also known as a cash-out refinance.

Consolidate Debt: As home mortgages generally carry far lower interest rates than other forms of debt (ie.

credit cards, car loans, or student loans), many people choose to refinance their home loan in order to consolidate their higher interest debt into a lower interest mortgage. An additional benefit of consolidating debt this way (or any other way, for that matter), is that borrowers pay a single monthly payment that is usually much smaller than the sum of the many various payments otherwise made to each individual creditor.



Pedro