Refinancing Jumbo Mortgages Made Easier

Are you sick of all the advertisements proclaiming that interest rates are under 5%, when you can’t get anything lower than 6.5%? Jumbo lenders feel your pain, and there may be a way around it.

Your Big Fat Mortgage Refinance

What can you do to get a lower interest rate today on a jumbo mortgage?

First, look up conforming and FHA loan limits in your area. You might be pleasantly surprised.Depending on where you live, you may be able to get a jumbo conforming loan from Fannie or Freddie or an FHA mortgage with a better interest rate. Conforming mortgage limits in higher cost areas range from $721,050 in Honolulu, HI to loans from $426,650 in Providence, RI.

But you should also consider FHA. FHA limits may be higher than conforming limits in some locations. If you live in Alameda County, CA, you can get an FHA loan up to $729,750, but only $625,500 with Fannie Mae. And if you have a duplex, triplex, or fourplex, your limits go way up.

Supersize a Jumbo Hybrid ARM

Jumbo 30-year mortgage rates are so much higher than comparable hybrid ARMs, which may be fixed for three, five, seven, or ten years. On a $625,000 mortgage, you may find a 30-year fixed jumbo interest rate at 6.5%, but a 5/1 hybrid is at only 5.25%. The 5/1 payment is only $3,451, $499 less than the 30-year payment of $3,950. Over a five-year period, you’d save almost $30,000. Or you could put your savings toward principal reduction and lower your mortgage balance by an additional $33,000 over 5 years.

Mortgage Refinancing: Two Loans Are Better than One?

Refinancing one loan with two loans?! Why? You might get a better deal by combining a conforming first mortgage with a second mortgage. Do some calculations to see if this makes sense, for example: a homeowner has a $525,000 jumbo mortgage and lives in Baltimore, where the conforming loan limit is $494,500. With a $494,500 first mortgage at 5% and a second mortgage of $30,500 at 8%, the blended rate is 5.17%.

In addition, home equity lines are typically much cheaper to process than traditional refinances. So if you save a couple of points on $30,500, that’s another $261 for you.

Watch Out for Fees When You Refinance

If you last shopped for a mortgage a couple of years ago, there have been changes. The advertised conforming interest rates you see aren’t always what you get. Fannie Mae and Freddie Mac add risk-based pricing adjustments, and unless you have a lovely credit score and a low loan-to-value ratio, a conforming mortgage rate might not be any better than refinancing a mortgage with a jumbo lender.

Mortgage Modification Might Help

Making Home Affordable modifications are available up to $729,750. If your jumbo mortgage is causing you hardship, you could qualify for a modification. Check your eligibility and then contact your lender.

Jumbo mortgage refinancing can be slightly more complicated, but the payoff is bigger too. A small improvement in your refinance rate equals greater dollar savings on larger loans.

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Debt Management: For Homeowners Only?

The best debt solution for your circumstances depends on a number of things like your income and expenses, your outstanding balances, your employment, and residential status.A debt management plan is an informal debt solution that may also involve budgeting and debt consolidation. The best debt management involves counseling and learning budgeting skills, so that you don’t end up in hot water again. Normally, your counselor contacts your creditors and negotiates lower payments and interest rates on as many accounts as possible. Then you make a single payment to the plan, and the service distributes it to your creditors.

Do You Need to Be a Homeowner?

You don’t have to be a homeowner to start a debt management plan. You just have to show that your current repayments are unaffordable, and that you are able to commit to regular reduced monthly payments.

The advantage of being a homeowner is that you may be able to add debt consolidation to your plan. By taking a home equity loan or doing a cash-out refinance, you could pay off the higher interest credit card debt and lower your payments considerably. Keep in mind that by stretching out your debt over 15 or 30 years you could end up paying more interest over the life of the loan. Still, debt consolidation by home equity loan or refinance can give you some breathing room, and you can always choose to make extra principal payments and lower your interest expense over the life of the mortgage.

Debt Management Education

An expert credit counselor is key–many so-called counselors are just salespeople who push everyone into the same plan. You want someone who provides some budgeting and credit education as well as debt management services. A reputable company should charge $100 or less, spend time evaluating your finanical situation with you, and discuss spending and lifestyle changes first. Streer clear of agencies that give you a hard sell and push a debt management program without offering alternatives. Keep in mind that non-profit status doesn’t mean that a service is any better or lower-priced. You need to evaluate it on its merits. The U.S. Dept. of Justice keeps a list of approved counselors on its Web site.

Debt Management: DIY

It’s possible to arrange a debt management plan yourself. You can negotiate interest rate freezes or reductions with your lenders directly, and if you have a good payment history with them and a documentable hardship, they are often willing to work things out. The process, however, may be time-consuming and stressful, and perhaps embarrassing. That’s why many prefer to have a debt management company deal with the negotiating, paperwork, and distribution of payments.

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Home Loan Refinance or Mortgage Modification: Is HARP or HAMP Right for You?

A traditional refinance, a Home Affordable Refinance Program (HARP) refinance, a Home Affordable Modification Program (HAMP), or a non-government modification–these are all options for improving your mortgage interest rate. But which is right for you? The HAMP program offers the best deal if you qualify–think of it as a refinance with a rate as low as 2% at almost no cost to you.

HAMP Help

HAMP is there to help homeowners with hardships avoid foreclosure. Qualifications include:

• House is your primary residence
• Mortgage is less than or equal to $729,750
• Mortgage taken out before January 1, 2009
• Total house payment exceeds 31% of household gross monthly income
• Hardship — a substantial loss of income or increase in expenses that’s not your fault AND
• Sufficient income to make a modified payment

If you qualify, contact your lender. Document your income, assets, debts, and hardship to get a trial modification and hopefully a permanent one. The average HAMP modification saves borrowers about $500 a month.

HARP Refinance

HARP is for borrowers who would be qualified to refinance except that they lack sufficient home equity. You can owe up to 125% of your home’s current value and still refinance under HARP. To qualify:

• Your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac
• You can’t have been more than 30 days late on your mortgage payment in the last twelve months
• Your first mortgage can’t exceed 125% of the value of your home

If you qualify, contact your loan servicer about a HARP refinance. You can get a HARP refinance from any Fannie Mae or Freddie Mac lender as long as your application is approved by Fannie’s Desktop Underwriter or Freddie’s Loan Prospector automated underwriting systems. If not, only your current lender can approve you under HARP. Another obstacle is mortgage insurance–with a new lender, you may not be able to obtain it.

Non-Government Help

If you don’t qualify for HAMP and don’t need HARP, a regular refinance may be your best bet–it allows you to shop for the best rate. An FHA refinance might be your best shot if you don’t have much equity.

Finally, if you’re having mortgage trouble but can’t get HAMP (say your house is a rental), call your lender. Homeowners get modifications when the lenders feel that they will lose less with modification than foreclosure.

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Your Adjustable Rate Mortgage: Blessing or Bomb?

As a loan officer I used to plot several graphs for my clients considering adjustable rate mortgages (ARMs). I’d routinely show them the best case, worst case, and most likely scenarios, and let them decide if they wanted the savings of the ARM or the safety of the fixed loan. If you’re trying to decide whether to keep your ARM today or refinance it, you can perform the same kind of analysis yourself.

First, Look at the Terms of Your ARM

Your paperwork should contain an ARM rider that should give you these pieces of information: Your start rate, your index, your margin, and any rate or adjustment caps and floors. For example, you might have a 3/1 ARM with a start rate of 4%, based on the 1-year LIBOR index, with a margin of 2%, annual adjustments capped at 2%, a lifetime cap of 10%, and a floor of 3%. Your 4% mortgage is set to adjust in a month; what will it do?

Check Your Index

You can find index data on most financial Web sites. The 1-year LIBOR index as of February 2010 is .85158. If your mortgage were adjusting today, you’d add your margin of 2% and get a rate of 2.852%!

Check Your Caps and Floors

But wait, there’s more. Your loan has a floor of 3%, which means that your rate can’t drop below 3% no matter what the LIBOR does. So you’d be at 3%, which isn’t bad. And that 3% is your best case scenario. So what’s your worst-case scenario? Check your caps–your rate can’t increase more than 2% per year. So, if you adjusted to a 3% rate next month, in a year the highest your rate could be go would be to 5%, then the following year to 7%, then 9%, then it would top out at 10% and stay there. So much for worst case.

What’s More Likely?

Best and worst case scenarios are extremes and unlikely to resemble the progress of your actual loan, especially over the long term. But you can predict a more likely and reasonable course for your mortgage. Here’s how: a search of “historical average 1 year LIBOR” online gets me the data I want. I dump it into a spreadsheet and I discover that the average of the 1-year LIBOR since its inception in 1990 is 4.623%. So we can add that to your margin of 2% for a total of 6.623%.

Yes, I could be a statistical stinker and make you calculate the expected value, but an average is a fairly good substitute and no one ever committed suicide trying to calculate an average. It’s a fairly safe bet, then, that your loan will adjust to 3% next month, 5% the following year, and then it may fluctuate around that 6.623% rate over the years–there’s no guaranty, but the longer you have your loan, the more likely it is that your rate will behave itself.

So, Should You Fix Your Interest Rate or Not?

That depends. Fixed rates today are about 5% if you have good credit–less than the average LIBOR ARM rate of 6.623%. You’d probably save money in the long run by refinancing. But what if you’re not in it for the long haul? If this house is a starter, or you have job transfers every five years or so, leaving your ARM alone is probably a safe bet. You know your rate won’t exceed 7% for at least three years.

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Can I Refinance a Second Home?

Refinancing a second home with Fannie or Freddie Mac doesn’t cost any more than refinancing a comparable primary home. There are no risk-based pricing adjustments for second homes. While financing an investment property at 80% of its value can add 3.75 points to your fees, that’s not the case with a second home that meets eligibility requirements.

You Need Equity to Refinance a Second Home

You might have been able to purchase your second home with only 10% down, but you won’t be able to refinance it with only 10% home equity. That’s because for loans of more than 80% of your vacation home’s value, you’ll need mortgage insurance, and that can be hard to get.

You’ll Need Income to Refinance Your Second Home

Lenders prefer that your first mortgage (principal, interest, taxes, insurance, and homeowners’ dues) doesn’t exceed 31% of your gross monthly income. But your second home had better cost a lot less than that. Your second home payment is counted in with all of your other debts, like car loans and credit cards. Those payments, plus the loan on your primary residence, make up your total debt-to-income ratio. The lender on your primary residence isn’t so worried about those, because if your income decreases, you’ll likely use the first 31% of your income to keep up with your mortgage even if you have to miss payments to the other guys.

However, the lender on your second home IS one of those other guys. So while a first mortgage lender is often okay with you having a debt-to-income ratio of 45%, the second mortgage lender won’t want to see it over 40%, and that’s if you’re otherwise very well qualified.

Second Home vs Investor Property

Financing a second home is cheaper and easier than financing a rental. But what if you have been renting out your vacation home? Can you still refinance it as a second home? That depends. If your rental activity shows up on your tax returns and your lender requests them to verify your income, no way. Ditto if the appraiser the lender sends is met by a rental agent. Here are Fannie Mae’s official second home requirements:

• Must be located a reasonable distance away from the borrower’s principal residence. You can’t vacation in your home town.
• Must be occupied by the borrower for some portion of the year–ski cabin, beach house, whatever.
• Must be a one-unit dwelling (no duplexes, etc.).
• Must be suitable for year-round occupancy–tree houses and igloos don’t cut it.
• Must not be rental property, a timeshare arrangement, or controlled by anyone but you.

So, if you qualify, you should be able to get the best mortgage rates available and save money–and that means more barbecues, more cold drinks, more marshmallows around the fire, more hikes, more sailing, more of whatever you love most at your vacation hide-away.

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Choosing and Using a Debt Management Program

A debt management service acts as a liaison between you and your creditors. They negotiate a single for you, collect a single monthly payment, and distribute it to your creditors. The service charges a commission, usually a percentage of your monthly payment, and may also get rebates from your creditors.

How Debt Management Affects Your Credit

If your debt management service negotiates reduced interest rates or balance reductions on your behalf, it may show up on your credit record because you won’t be paying as agreed. However, the effect on your credit is much less damaging than late and missed payments.

If you made a timely monthly payment to your debt management service, but it doesn’t make your payments to your creditors on time, find out why. If the service neglects to pay your debts on time, your credit will suffer. Also, if the service charges you more than expected and applies your monthly payment to fees instead of paying your creditors, discontinue the service and contact your creditors directly.

Debt Consolidation Is an Alternative

It is not unusual for a debt management service to charge a commission of 10 percent on your monthly payment. The firm may also obtain a rebate from your lenders on the amount of each monthly payment they make on your behalf, which actually creates a conflict of interest since they are supposed to be working for you but are getting paid by your creditors.

There are unethical debt management services that encourage people to sign up for services which are not in their best interest, and non-profit status is no guarantee that a service is ethical. Look for services accredited by the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.

Instead of debt management plans, you may want to consider a debt consolidation loan. This gets you a single monthly payment, but there are no service charges and your debts are discharged immediately. Then all you have to do is make the monthly payment to the debt consolidation lender. Another alternative is to try to negotiate lower interest rates and payments with your creditors on your own.

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My Lender Won’t Give Me a Good Faith Estimate!

The new GFE is expected to save borrowers an average of $700 per mortgage transaction, according to HUD. It makes shopping for a mortgage refinance easier and more transparent, putting the terms of your home loan upfront where you can easily see them, and including a worksheet to compare different home loans. But many lenders don’t like to give out GFEs to people until they are required to by law, and the law doesn’t apply to casual shoppers looking for mortgage rate quotes. So how can you get a GFE that commits the lender to the rate and fees it quotes you?

GFE = Increased Risk to Lender

Every time it issues a GFE, the lender assumes some extra risk. That’s because even fees charged by third party providers like title companies must be guaranteed within certain tolerances. And a mistake by an employee can cost a lender the entire profit on a mortgage transaction. For example, if someone prepares a GFE and mistakenly inputs title charges of $800 and the actual charges end up being $1,100, you have to pay only $880 (the estimated charges plus an allowed 10% tolerance), and your lender has to pay the remaining $220.

Easier for You = Harder for Some Lenders

While many lenders have no problem at all with issuing GFEs, and most welcome the transparency which makes it harder for the bad guys to compete unfairly with bait-and-switch tactics, some prefer not to disclose interest rates and fees upfront. The longer you are involved with a lender, the less likely you are to shop around for your loan. An article in Mortgage Professional Magazine counsels loan agents to avoid issuing a GFE until it’s required by law and also advises them not to guarantee an interest rate more than one day.

So, How Do You Get a GFE?

Pass up any lender that doesn’t feel it’s interest rates will stand up to comparison. If you provide the following information, it triggers the requirement for a GFE within three days:

• Your full name
• Your monthly income
• Your Social Security number
• The property address
• The loan amount
• The property value or sales price

Once the lender has all of this information, you get to have a GFE and all the guarantees that come with it. Other factors that can change the price of your mortgage are the property use and property type. Verify how long the mortgage rate is guaranteed–mortgage rates change with financial markets all day long so don’t expect a rate to be in force for long unless you lock it in.

A new GFE can be triggered by changes in income, property value / sales price, loan program, locking your rate, or your lock expiration. The final GFE is the only one that must essentially match your settlement statement. To be thorough, shop now, and then shop again when you prepare to lock your refinance interest rate.

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Can Debt Management Improve Your Financial Health?

Debt management (not to be confused with debt settlement) involves restructuring your debts to lower your payments and interest rates. The idea is to help you pay off your consumer debt faster. Debt management typically involves some counselling to help you learn about budgeting, making your payments on time, and managing your bills. Debt management may also involve consolidating your debts with a home equity loan or a personal loan. Lower payments on your consumer debt can make it easier to afford a home loan and may help you save up a down payment.

Debt Management Has Side Effects

However, debt management may also have some consequences you are unprepared for. If your credit report shows that you are in a credit counseling or debt management plan, for example, FHA lenders treat you the same way they would if you had filed for a Chapter 13 bankruptcy. You may be able to get a mortgage, but you’ll have to have been paying on your plan for at least twelve months. The effect on your credit score usually depends on who your creditors are and their policy for reporting your payments.

Citibank, for example, merely adds a note to your payment history that you are enrolled in a credit counseling program. And that notation has no influence on your FICO score. But First USA reports its cardholders as delinquent until they have made three consecutive on-time payments through their debt management plans. Those three late payments can torpedo a score by a hundred points!

So Should You Try Debt Management?

Despite the claims of some TV advertisers, enrolling in credit counseling or debt management is not for those who just want more favorable terms from their creditors. If you can make your payments, but just want a lower interest rate, don’t put your credit score at risk; just call your creditors yourself and ask for a lower interest rate. If they don’t budge, you can always move your account.

Conversely, if no plan could get you out of debt in five years or less, bankruptcy may be a better option. Most credit counseling or debt management plans are designed to retire your debts in two to four years if you stick to them. If your debt will stretch out for years and years, it’s probably time to talk to a lawyer. A bankruptcy trustee could put you in a Chapter 13 program that could get you debt free in three to five years.

Debt management is a viable alternative if you can’t make anything more than your minimum payments or your debt payments exceed your income. But skip the “as-seen-on-TV” outfits. Look for an accredited consumer credit counseling service that provides genuine help.

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Advantages of Refinancing Online?

With the advent of the Internet, people are selling everything online, and there is no exception with a mortgage refinancing. Online there are a plethora of companies out there vying for your business. If you look around and check a company out before sharing your personal information, online mortgage refinancing might be the right fit for you.

Many people are concerned about transmitting personal data over the web. Because of all of the identity theft going on, this is a valid concern. There are some practical ways that you can protect yourself. First of all, when you are considering a company, check them out on the Better Business Bureau's website. This will help you see how they treat their customers. Another thing that is an absolute must is to be sure that they have a secure website. The way you can know this is if you go to their site and the http turns into an https. The s means that it is secure. A secure website is one in which security measures have been implemented to prevent hackers from stealing your information. This may not appear until you are accessing a sensitive area of their site.

One of the advantages of refinancing your mortgage online is speed. There is little need to coordinate schedules or make an appointment. Everything except the closing is done via email or telephone. This is ideal for the busy working person who has little time to spend in a traditional mortgage office.

Another plus is the competitive rates available with online mortgage companies. Because there are so many places competing for your business, you could wind up with a very low interest rate. Many sites will give you quotes from several different firms and you can choose which one you like best. If one company is lower, but you would prefer to do business with another, ask if they will match the lower rate. Many online mortgage companies will do this in order to earn your business.

Getting a mortgage quote online is easy and quick. You can do it from the comfort of your own home, and avoid uncomfortable face to face meetings with pushy mortgage brokers. It is simple to find interest rates online and, many times, they are lower than the rates traditional mortgage companies offer. Just be careful of the quotes that are several percentage points lower than the majority of the ones you have received. If it sounds too good to be true, it usually is. Be sure you are dealing with a reputable company or your great deal may turn into great big headache.

Online mortgage refinancing is a wonderful choice for many people. More and more consumers are turning to the internet to take care of their finances. As a result, many great deals can be found that can better your situation tremendously. As long as you are cautious, refinancing your mortgage online can be a simple, painless and rewarding experience.

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Pros and cons of an adjustable rate mortgage

Many people have heard bad things about ARM, or adjustable rate mortgages, but there are just as many advantages to refinancing your home with an ARM as there are disadvantages. If you are considering refinancing your current home loan, and have a fixed rate home loan at the moment, an ARM loan is definitely worth looking at, as far as saving money on your repayments, and getting a better interest rate goes.

What Is An Adjustable Rate Mortgage?

An adjustable rate mortgage is a home loan that has significantly lower interest rates than any offered fixed rate mortgage at any given time. These adjustable rates on an ARM can change over the life of the loan in accordance with current markets and trends, unlike a fixed rate mortgage where the rates are never subject to change over the life of the loan.

What Are The Benefits?

By far the greatest benefit of refinancing, using the adjustable rate mortgage option is the savings gained by having a lower interest rate. It is hard to believe, but a small difference in interest rates, such as half a percent, over the course of a year can equate thousands of dollars.

What Are The Risks?

There are risks involved when you refinance with an adjustable rate mortgage loan. The riskiest type of ARM loan is the type that has no fixed term attached to it. Although the interest rates will be even lower than the average rates offered on a fixed term ARM loan, the rates on an ARM loan that isn't fixed are subject to change monthly, or yearly. An ARM loan that is fixed for a particular period, such as 5 years, is much safer, because you are getting a very low interest rate, locked in over a period of five years.

Who Will Benefit From An Adjustable Rate Mortgage?

Almost anyone can benefit from a fixed rate ARM mortgage. According to financial statistics many American families either sell their homes, or refinance after four years. If you are like many others, having a 5-year fixed ARM loan there is very little risk, with a much lower interest rate on offer.

The only risk is that after the 5 years is over on a fixed rate, if you can't refinance, or choose not to sell, and interest rates do get higher, you will have to pay more on your repayments. The ARM rate is especially helpful to lower income bracket families, or for those who want to pay their home off quicker than they are already.
By keeping your monthly repayments the same, and refinancing to an adjustable rate mortgage with a much lower interest rate, the money that you are saving because of the lowered interest rates can be coming directly off your principal each month. This can mean you are shaving years off your mortgage, without paying anything more than you were before you refinanced.

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When is the best time to refinance home mortgage loans?

You may be wondering when the best time to refinance home mortgage loans. This can be tricky, as there are many factors surrounding refinancing that will have a bearing on whether now is the best time, or whether you should wait.

Economic Conditions

Interest rates are dictated by economic conditions. Often, the government may use higher interest rates to level out inflation, and dictate consumer spending. When consumers are overspending, causing prices to rise, interest rates will get higher to increase prices, which will slow down spending. However, when the economy slows down, interest rates will drop to encourage consumers to spend again, and take out low interest loans. So one of the best times to refinance your home loan will be when the economy is at a slow point, and interest rates are lower.

Your Credit History

Even though you have had a loan before, and are now thinking about refinancing it, you still need to have a good credit score to get the lowest possible interest rates and the best deal on your refinance. It is always better to get your credit report from the three major credit reporting bureaus before applying for your refinance to make sure that there are no errors in it, and to get an idea of what your credit score is likely to be.

How Long You Have Had Your Loan

The amount of time that you have had your loan is also an important factor; some lending institutions don't like it when borrowers refinance soon after getting a loan. As a rule of thumb, it is best to wait at least 4 to 7 years before considering refinancing.

Other reasons To Refinance

Often, an increase in the market value of housing can be a great time to refinance, especially if you plan to consolidate some debt, or get some equity from your home. If your income has increased, or if you have been repairing your credit, refinancing may also be a good option for you, as you may be able to get a much lower interest rate, or renegotiate the terms of your home loan when refinancing.

Make sure that interest rates are lower than 2% of what you are already paying, and calculate the costs of the new refinance carefully, as well as look into any penalties or charges that may be added by your lender. Before refinancing your existing mortgage, make sure that you shop around for the best deal, and compare the interest rates, as well as terms and conditions offered by these lending institutions.

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Why and How to Refinance with Bad Credit

Over half of Americans are buried in debt and desperate for some help in gaining control of their outgoing money, while finding ways to keep enough to pay the bills. What was once considered impossible, refinancing with bad credit can now be done without the overwhelming hassles.
A bad credit refinance could actually help your credit in a number of ways.

• With the many other default loans on your record, refinancing to deal with it will show that you have taken steps to take control of your situation. This proves to other lenders you are capable of making the right decisions with your money.
• Refinancing means that you are aware of your financial problem and would like to start putting some of your money, now going to interest, in places that will really raise your credit score.
• When exploring the options of refinancing with bad credit you will notice that most lenders are happy to consolidate, meaning you only make one payment a month. No more late payment penalties, miscalculated interest, and keeping up with too many statements; bad credit refinance and you will be taken care of.
• Some people can actually refinance and get a lower interest rate at the same time. This can be a blessing when it comes to having a little extra cash saved up at the end of the year.

Now that you know how refinancing could help you with your debt situation you need to know what it will involve. The truth is, you will be surprised at how easy it really is but don't expect it to be free. Bad credit refinancing usually costs a little, but getting your score up and under control will be well worth it. Here are a few of the things you may need to know before applying for bad credit refinancing.

• Interest rates when refinancing with bad credit are typically much higher. If you are looking into consolidating this may be worth it but otherwise you should make sure it won't be worst then your current interest rates.
• When refinancing with bad credit there will more than likely be fees to pay, along with penalties of paying loans off early or in one lump sum. You should explore all your options and investigate each loan thoroughly before heading to the bank.
• Loan application fees are standard whether doing a bad credit refinance or you have perfect credit. Check into several lenders before choosing the one that fits you best. You can easily explore your options further online.

The bottom-line is you never know what you may be able to do until you try. With the great competition between lenders, more are willing to assist you in refinancing with bad credit just to have another consumer on their side. Investigate all the possibilities and you will more than likely find the perfect lender to help you out.

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Watch Out For Refinancing Costs and Fees

Refinancing your home can often help ease the burdens of interest you currently pay but you must also be aware and recognize all of the refinancing costs that could put you out in the short-term. When working to refinance your home, it should be thought of as starting from square one meaning refinancing costs will be similar to those when first buying the home. All appraisals, inspections, and loan applications will still be required meaning you must pick up these as part of your refinance costs.
When preparing to refinance there are several things that will determine the overall refinancing cost. First you must take into consideration:

• The length of time you have spent in your home : This will be important when lenders view your past record of payment, ability to stay on time and up to date, and some lenders even place guidelines on how long you must be in the home before refinancing.
• The remaining balance on your original mortgage : The typical rule of thumb is the higher your remaining balance the higher the refinance cost will be. This is due to fees, penalties, and interest amounts.
• The value of your home in today's real estate market : This will be one of the key elements to determining your refinancing costs as it changes very quickly and could be much higher or much lower than the original price.

After going over your current loan status you will be required to pick up the costs that are involved in the initial home buying process. Some of these costs and fees include:

• Licensed Appraisal Fee: $250 - $600
• Loan Application Fee: $75 - $300
• Land Survey Fees: $124 - $300
• Attorneys Fees: $75.00 - $200.00
• Title Search & insurance $400.00 - $600.00
• House Inspector: $175.00 - $350.00

The final steps to determining the refinance costs will include the additional costs involved with most refinancing such as:

• Early Payoff Penalties and Fines : Many, if not most, mortgage companies set in a place fees for paying your mortgage off early. This will be your burden and will have to be paid before moving any further in the process.
• Remaining Balance Costs : Some mortgages will not pay your interest amount off for you, leaving it as another amount to add to your refinance cost.
• Homeowners Insurance : If your homeowners insurance will be added into your monthly payment it will typically not be a part of your refinancing costs but for those paying annually it will need to be taken care of.

One thing to keep in mind when exploring the option of refinancing is that the final refinancing costs will be determined by each individual situation with the list outlined above only serving as a general idea. Each area, lender, and market will represent different policies with unique fees. While refinancing costs are well worth it in the long run, some may find the refinancing costs due up front are not in their budget. Regardless, it is important that you investigate all of your options before signing any binding documents.

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The 7 Habits of Highly Effective Mortgage Brokers

Honesty is the most important aspect in dealing with mortgage brokers. Unfortunately not all brokers are honest. Being aware of the following good practices will help you pick the best mortgage broker and get the best refinance deal.

Habit 1: Not favoring their own loan product

You need to be aware if the mortgage broker is also a lender, i.e. do they have their own loan products? If they do, and they offer there own product, there needs to be a clear, understandable reason why their product is the best choice for your situation.

Habit 2: Unbiased lender choice

Mortgage brokers get commission from the lender you end up borrowing from. You will need to ask them to be up front about the amount of commission they are receiving from the lender. The best mortgage brokers are honest and won't mind you asking this question. The dishonest ones will think twice about doing the wrong thing by you.

Habit 3: Giving you the real cost of the mortgage

Make sure the broker provides you with the annual percentage rate (APR), when looking at or comparing any home loan products. The annual percentage rate shows you the real cost of a home loan by taking into consideration all the foreseeable fees and charges associated with the loan. This is so you can easily compare home loan products.

Habit 4: Providing all the information

You need to know the whole deal. What is the whole service provided by the broker. Do they provide ongoing service and assistance after you secure your loan? If so, find out for how long. Also, what are the fees involved? Theirs and the lender’s. The best mortgage broker will make this clear before any papers are signed.

Habit 5: Insuring client understanding

You need to understand what the benefits and the drawbacks are for you. The best mortgage brokers will explain this to you in a clear way, so you can understand it. This is so you can weigh it up and decide for yourself if refinancing is actually in your best interest. As stated inDangers of Refinancing there are some bad practices out there, e.g. churning. Making sure you understand the benefits and drawbacks will make it impossible for you to fall victim to this practice.

Habit 6: Being insured

The brokers need to have their own professional indemnity insurance? This protects professionals against liability claims resulting from negligent work. All lenders will have it. However the brokers should not assume they are covered by the insurance of an umbrella organization. The broker needs to know for sure if they are or are not protected.

Habit 7: Being qualified

Is the broker qualified to give you lending advice? All countries have reputable organizations that regulate their mortgage industry and can provide brokers with membership or certificates of credentials, provided they undertake certain courses. Make sure the broker your dealing with has the proper membership or credentials and is qualified to refinance home mortgages. In the United States the American Association of Residential Mortgage Regulators (AARMR) and National Association of Mortgage Brokers (NAMB) are two such companies.

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Learn If You Should Refinance Your Mortgage?

If you've ever asked yourself the question, "Should I refinance my mortgage", the answer is, you should DEFFINTLY look into it. Not only could it give you more to live on month to month, but it could also save you thousands off your loan in the long run.

A recent survey produced some disturbing results on the state of mortgages in the United States. The report showed that more then half of property owners are either paying too much for their mortgages or are locked into mortgages that are clearly unsuitable for their needs, income level or financial goals. "Should I refinance my mortgage" is clearly a questions more americans should be asking themselves.

Research also indicates that the average percentage of some ones income that goes to mortgage repayments has risen 12.6% from ten years ago. That's not leaving today's property owners much to live on.
If you don't relate to these circumstances, there are plenty of other reasons why refinancing could still be in your best interest.

Let’s face it, things have probably changed in your life since you originally obtained your home loan. What worked for you then might not be working for you now. Refinancing allows you to change the terms of your mortgage to suit your lifestyle now.
Here are the main reasons why you should look into refinancing.

Save thousands:

It is possible to pay thousands less on the life of your mortgage by refinancing to a better deal. Whether you are able to secure a home mortgage with a lower interest rate, fewer fees or more features to repay quicker, saving money in the long run is a real possibility.

Lower your monthly payments:

Are you struggling to pay your monthly mortgage payments? Well, aside from changing to a lower interest rate, there are a few other options. One is to refinance the remaining principal at the original length of the loan. For example, say you borrowed $200,000 on a 25 year term and you are 10 years down the track with only $125,000 left on the mortgage. If your monthly payments are too much, refinancing the $125,000 back on a 25 year term loan will greatly reduce them. If it relieves you of the stress of meeting your bill month to month it could be a very worthwhile option.

Consolidate your debts:

Are you struggling to manage your debt? Paying way too much in interest? One of the easiest ways to handle credit card and high interest debt is to refinance it into your mortgage. Simply refinance what you owe in total, including credit card debt and all other high interest loans, and only pay the low interest rate incurred by your home mortgage. Let’s say you still owe $100,000 on your home mortgage and in addition owe $20,000 in other debt. You then refinance for $120,000. This way you can pay off the $20,000 that was incurring a high interest rate, at the low rate of your home mortgage. Not only will this ease your financial situation, it will save you a lot of money from interest you now no longer have to pay.

Provide spare cash:

Do you need some money? Want to renovate to add value to your property and/or improve your living arrangements? Well, refinancing is a great way to gain access to the equity sitting in your home. Consider a switch to a Home Equity or Line of Credit loan as a way to do this. This would allow you to renovate your home, buy that new car, or do anything you like with the money.

Pay off your home mortgage sooner:

Want to own your home as soon as possible? Or have you had an increase in salary and want to get your money working more effectively for you. Why not refinance to a 100% Offset or an All in One home loan? These types of loans can greatly reduce the amount of interest you pay on your mortgage. In addition to this, the option to pay more each month can greatly reduce the time it takes you to own your home.

Gives you flexibility:

Want options? Need to minimize how much you pay each month and have the option to borrow more when you need it? Then consider refinancing to a Line of Credit loan. Mainly an Interest only loan, this allows you to tap into your equity, and will give you ultimate flexibility with your finances.

Increases your financial security:

Worried about interest rates rising? If you’re on a Adjustable Rate home loan you might want to refinance to a fixed rate loan. This will give you peace of mind and financial security, especially in volatile times knowing that your monthly payments will remain the same.

Provide Opportunity to invest:

Want to invest? Get your money working for you? By refinancing you can gain access to the equity you have built up in your home. A switch to a Home Equity or Line of Credit loan would allow you to draw on the equity you have built up. You would then have the money you need to invest.

So you can see why there are many reasons why refinancing can seriously benefit you. Next time you ask yourself the question: "Should I refinance my home mortgage?", you owe it to yourself to check it out. However the ultimate answer to the question is in the maths. If the numbers add up, and are in your favor, then it is obviously worth it. Use our refinance loan calculator to if you will benefit from refinancing your mortgage.

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Refinance to an ARM?

Borrowers who took out adjustable rate mortgages three or four years ago have seen their loan rates move with financial indexes to about 3%. However, with analysts predicting that rates on mortgage loans of all types should increase in the coming years, even happily ARMed homeowners are contemplating a switch to a fixed-rate mortgage, according to a recent report in The Wall Street Journal.

Are ARMs Dead?

Maybe.

Data compiled by MortgageDataWeb.com, a Virginia-based marketing firm for the real estate industry supports this. The number of newly-originated ARMs is down, but so is the number of new mortgage originations of all types–from 322,390 in May 2005 to only 77,222 in November 2009. However, the number of ARM originations has plunged like a Hummer off a cliff–from 146,852 in May 2005 to a paltry 2,225 in December 2009.

Five years ago, in March 2005, 45.75% of all purchase home loans were ARMs. But by December 2007, only 7.21% of all new mortgages were, and that share hasn’t exceed 9.0% in any month since then. ARM originations hit a low of 2.85% in February 2009 before bouncing back at the end the year to 4.52%.

ARMs are no longer a popular refinance vehicle either–the number of homeowners seeking an ARM mortgage refinance has deflated from over 60% in early 2005 to less than 1% at the end of 2009, even though mortgage lenders were offering 5/1 ARMs (fixed for five years, and adjustable annually thereafter) at rates as low as 3.25% to highly-qualified borrowers.

ARMs Are Still a Viable Choice for Many

According to Pew Research, 63% of people do not remain in their home towns, most frequently citing economic opportunity as the reason for moving. And the more educated or affluent you become, the more likely it is that you will move. Furthermore, younger people may change houses even if they stay in the same community–as they start families or earn more, many desire a change of address as well. So if the odds are that you’re going to change homes in the next five years or so, why not opt for a hybrid ARM and save a full percent on your interest rate?

How Much Can You Save?

On a $350,000 mortgage, the difference between a 4% mortgage and a 5% mortgage is $208 a month. Over a five year period, that’s $12,480–a good start on your future kid’s college fund!

In mortgage lending, there’s no one-size-fits all home loan. Make sure your lender considers your unique situation when making recommendations.

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Mortgage Refinancing Steps

Before you refinance your mortgage, it's a good idea to make sure you understand all the in's and out's of the process.That the whole aim of this site - to get you up to speed on refinancing with good unbiased information. This is the by far the best way to make sure you get the best deal and have a happy home refinance.

Step 1: Should you refinance your mortgage?

There are many situations where home loan refinancing can be a benefit to you. From saving thousands, consolidating debt to tapping into your home equity, refinancing could be the solution to your problems. Read our article Should I Refinance My Mortgage to see if refinancing your home loan is for you. You can also use our Refinance Loan Calculator to see if the numbers add up and it is in your best interest to refinance.

Step 2: Be aware of the dangers of mortgage refinancing

As in any industry there are some bad eggs in the mortgage broker community. These dishonest brokers put their personal profit before your financial well being. To make sure you don't get ripped off make sure you read our article Dangers of Mortgage Refinancing and become aware of the how to avoid this potential pitfall.

Step 3: Learn how to pick the best mortgage broker

To get the best mortgage refinancing deal you need to deal with an honest broker that genuinely has your best interest in mind. These brokers usually follow certain practices when dealing with their customers. Read our article How to Pick the Best Mortgage Broker to find out what these practices are.

Step 4: Understand the different mortgage loan types

Home loans come in many shapes and sizes. Each home loan type serves a different purpose. What loan is best for you depends on your situation, and the reasons why your refinancing your mortgage. Flexibility and having the option to repay your mortgage faster might be more important then having stability of your repayments. Read this list of the most commonHome Refinance Loan Types to understand what your options are.

Step 5: Find a mortgage broker

Armed with this essential home refinance information you can now safely find a broker to refinance your home loan. If you want, feel free to take advantage our Refinancing Right team's hard work and use one of our Recommended Brokers.

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Refinance Home Loan FAQ's

It is important to know exactly what to expect when applying to refinance home loan or mortgage loans. Here are some FAQ's or frequently asked questions and concern about how to refinance home loan or mortgage loans.

Refinance Home Loan FAQ

Q. What are the benefits when you refinance your home loan?
A. Refinancing allows many homeowners to lower monthly mortgage payments by reducing their interest rate, extending the loan repayment period or a combination of both. It also allows you to lock in a steady mortgage rate that won't go up or down over time if you select a "fixed" interest rate.

Q. Can I obtain additional funds when I refinance my home loan?
A. Yes, if you have extra equity built up in your home it is often possible to obtain a "cash-out refi" that provides cash at closing. The additional cash can be used to pay off high interest credit cards or car loans, put a child through college, remodel your home, take a vacation or almost anything else you desire. A cash out refinance is not available to everyone; in general you will need a substantial amount of equity in your home and above average credit in order to qualify. In some cases you may also need to begin paying PMI if you take too much equity out of your home, so explore your options carefully.

Q. Do I need equity in my home to refinance it?
A. It is possible to refinance a home loan with little to no equity but not all lenders write this type of loan. Much depends upon your individual situation, credit score and the value of the home.

Q. Do I need a new appraisal and survey if I want to refinance my home loan?
A. Yes, in most situations the lender will require a new and up-to-date appraisal and survey on the property prior to writing a new loan. If your existing survey is recent and no improvements have been performed on the property it might be possible to use an existing survey but it depends upon the lender.

Q. Is it better to modify my existing loan or apply for a mortgage refinance?
A. It depends. While some people may benefit from modifying an existing mortgage, most lenders usually extend the repayment period while adding interest without adding additional fees or closing costs associated with mortgage refinance. On the other hand, if you refinance your mortgage, you may be able to get reduced interest rates. Use an online mortgage calculator to compare the costs of each type of refinance home loan procedure.

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