Awesome O asked:


I’m looking for the best plan as in:

- Not getting my face ripped off in closing cost
- Not increasing my current interest rate of 5.8 to something over 8%
- Not having to pay thousands in points

It seems I’m having the same dilemna as when I bought my house and rates were supposedly “low” 4 years ago. I know I can’t win, but I simply can’t afford my current mortgage payment of $1500+ a month on a house I mortgage $185K for.

Todd

John Thompson asked:


VA Streamline Refinance often the best option in declining real estate market

The VA loan streamline refinance program called the Interest Rate Reduction Refinancing Loan (IRRRL) is one of the last great opportunities for borrowers in declining value market areas. While only borrowers with a current VA loan are eligible, many still do not know about it.

he streamline refinance does not take into consideration a sinking real estate market. Every week the big banks are cutting back loan availability in the numerous real estate markets which have suffered declining values. One of the best remaining opportunities to take advantage of lower rates is for borrowers who happened to have a VA guaranteed loan.

Any veteran or active duty serviceman should consider a VA loan when purchasing a house. And if they did obtain a VA loan over the last few years, chances are their current interest rate is higher than what is prevalent in the first half of 2008.

here are several reasons why someone should take a good look at the VA streamline refinance option.



1) There is no appraisal. So even if the house lost some value, the borrower is still eligible.



2) There is very little underwriting. There is no need to go through the regular process of proving income, assets, and credit worthiness.



3) Get a low fixed in interest rate. If the borrower originally received an adjustable rate mortgage when you bought your house, you can secure your payment stability by converting it to a 30 year fixed loan with most likely a similar or lower interest rate.





The closing costs on a streamline refinance are very reasonable as well. While it can vary from lender to lender, often times you can get a fixed rate with no out of pocket costs. The fees that are involved are relatively low compared to a traditional refinance. Also, if the veteran has any service related disabilities they would be exempt from the funding fee on a streamline refinance.

If a VA borrower is in a declining home value market this is the only reasonable way to take advantage of the mini-refinance boom that is going on at the time of this article’s publication.



Diane

Alan Lim asked:


If it has been at least a year since you purchased and financed your home, it could be a good idea to consider refinancing your home. A home loan refinance offers great financial advantages under the right circumstances. In order to make sure you get the most benefits of refinancing; however, it is important to make sure you consider whether now could be right time to refinance your mortgage.

At one time, financial experts recommended that you only refinance your home if interest rates had dropped at least two points below the interest rate you obtained on your mortgage at the time you purchased your home. Today, that rule is no longer applicable. Even if the prevailing interest rate has not yet reached the benchmark of being two points lower than your mortgage interest, you can still take advantage of lower payments and interest savings.

The key to taking advantage of these benefits; however, is in balancing the cost of your home loan refinance with the amount of money that you will save. Certain costs are associated with refinancing, including application fees, credit reports and a possible title search.

Generally, it is a good idea to go ahead and refinance when you think you will be in the home long enough to offset the cost of the refinance with the amount of money you will save each month over the long run. For most homeowners this is about two years; however, that time frame could be largely dependent on exactly how much money you are able to save every month with a home loan refinance and how much it costs you to refinance. If you find that you are able to save more money when you refinance your mortgage, it will not take you very long to recoup the cost of the refinance through your savings.

Let us consider an example. Suppose you have a fixed rate mortgage for $150,000. Your current interest rate is 7%; however, you are able to achieve a 5.5% interest rate with a home loan refinance. On the original mortgage you would be paying $998 per month on a 30 year loan. At the new interest rate for the same length of time your payment would drop to $851 per month; amounting to a savings of $147 per month. If; however, your original interest rate was higher at 7.5% then you would save almost $200 per month. With an average closing cost of $3,000 on your home loan refinance, it will take just 15 months to recoup the costs of refinancing your home. After that time has elapsed, you can begin really enjoying the savings offered by refinancing your home. If you plan to be in your home for a long period of time, this provides you with the opportunity to take advantage of substantial savings.

In some cases; however, it can still be advantageous to refinance your home even if you think you will be selling in the short-term. For example, if you believe that your home has appreciated in sufficient value so that you will make enough profit on the sale of your home, it could very well be worth it to go ahead and consider refinancing to take advantage of the monthly savings in the interim.



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