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Refinance Articles Steps to getting 100% Refinance Mortgage with Bad Credit. There Are Many Reasons to Refinance Now 7 Reasons The Basics 4 reasons not to refinance Refinance
Your Way Out Of Debt Steps to getting 100% Refinance Mortgage 1.The first thing you need is your tri-merge credit score. I would suggest going to MyFICO.com because it will NOT affect your credit going there. Reminder, make sure you run the tri-merge with all three credit bureau’s 2.What is your credit score? 3.Is your middle credit score is below 580, you can either go to a credit repair company or do it yourself. Doing it yourself is easy and I have included articles here which will help you repair it also. Remember, it is easy, just takes time. Before you know it, your credit will be cleaned up. 4.Do you have a bankruptcy or foreclosure in your past? Has it been 2 years since it was discharged? If it has, great but remember to check on the credit report to match up accounts on the bk are also stated bk. Most subprime lenders will give you a 100% loan if your bk is 2 years old. If your Bk is only 18 months out, you can get a 95% loan. 5.You will need to document 12 months of recent mortgage or rental
history. If you rent from a property management company we will need
a Verification Of Rent completed. The form will be supplied by your
mortgage lender or broker. 6.Look at your credit report. Do you have a credit line that has a 12 month history reporting? If so and as long as you have no more that 2x30 day late payments then move on to the next step. You will have to document why the late payments were made with the underwriter when the time comes 7.Look at your credit report again. Do any of your credit lines have a high limit of at least $2,500. If so, move to the next step. * $2,500 is what most lenders want to see on your credit 8.Now take one more look at your credit report. You will need 1 more additional open credit line reporting on your credit report. (It does not matter how long it has been open or how much the credit line is for). Well, congrats! You made it this far which means that your credit might qualify for a Zero Down Mortgage. The loan program you qualified for is subject to change and is subject to additional conditions. There are always exceptions to guide lines and yes, they are changing all the time. If you us this as a general guide line, you will have a better understanding of zero down loans than loan officers in the business. This article should not be construed as an advertisement to lend. These are the steps that I go through when trying to pre-qualify a client that has credit problems. There are many more factors to determine so please discuss this with a qualified mortgage professional. You are probably asking yourself what you are supposed to do with the information that was given to you in this article. You can contact me direct at DanielDoane@msn.com or contact a mortgage company close to you. By Danny Doane There Are Many Reasons to Refinance
Now Interest rates for long-term fixed-rate mortgages have continued to
hover around 5.5 percent for 30-year loans and
around five percent for 15-year loans. These low
rates open up an array of opportunities for homeowners, particularly
for those who are nearing the end of an adjustable rate mortgage and
are considering refinancing. For years, fixed-rate mortgages (FRM) have
been the loan of choice for most American homeowners. They’re
considered safer than other mortgages because the monthly payment remains
the same month after month, year after year, allowing homeowners to
budget their housing payments over the long term. The challenge for
some homebuyers is that FRMs require larger down payments than other
loan types and typically carry a higher interest rate. In recent years,
lenders around the country have been reporting a shift towards alternative
mortgage options, such as the adjustable rate mortgage (ARM). During
2004, Adjustable Rate Mortgages accounted for about 30 percent of all
new loans which is almost double the percentage they represented in
2003. This is because over the last few years, the interest rate on
ARMs has been up to 2.5 percent lower than fixed rate mortgages, putting
homeownership within the reach of many buyers who could not afford the
financial output required for a 15 or 30 year loan. But times are changing,
which is demonstrated by the fact that the yield curve between adjustable
rate mortgages and fixed rate mortgages is flattening. According to
Freddie Mac, as of January 20, the current interest rate for a 30-year
fixed rate mortgage stood at 5.6 percent with 0.7 points. By comparison,
the interest rate for a five-year adjustable rate mortgage averaged
5.05 percent this week, with an average 0.6 points. What this means
is that the differential between ARMs and FRMs isn’t as
steep as it once was, making fixed rate loans more
attractive to potential buyers and homeowners looking
to refinance. The question every homeowner needs to ask themselves is
how long they intend to stay in their home. Adjustable rate mortgages
have provided phenomenal opportunities for many buyers, but for those
who are two to three years into a five-year ARM, and they plan to stay
in their home, it might be worth renewing to a new five-year ARM or
refinancing to a fixed-rate mortgage before the existing loan rolls
into a one-year ARM. This would also be a good time for homeowners to
consider consolidating first and second loans, such as home equity loans.
For homeowners who are considering refinancing, there are a number of
options to consider. One option is a no-fee refinance loan, which has
a slightly higher interest rate in lieu of paying closing costs, such
as appraisal, title insurance, and origination fees. The lender pays
these costs and in return offers the homeowner a slightly higher than
market interest rate. Another option is to add the refinance fees to
the total amount of the loan. This option does not impact the interest
rate, but could lead to higher monthly payments because the amount of
the loan is increased. A benefit to these first two options is that
mortgage interest is tax deductible, but loan fees are not, therefore
if the fees are wrapped into the total amount of the loan they become
tax deductible. The last option for homeowners is to simply pay the
refinance fees up front and secure the current market interest rate,
however keep in mind, the fees in this case are not tax deductible.
According to the National Association of Realtors, interest rates are
expected to rise gradually in 2005 to 6.5 percent by the end of the
year. With that in mind, now is a great time for homeowners to consider
their long-term plans, and if it’s appropriate, take
advantage of historically low interest rates while
they can. 7 Reasons 1. Refinance because Interest rates have dropped below your current mortgage rate. You want to lower your monthly payment. Keep in mind, if you plan to stay in your home for a relatively long time, the decrease in your monthly payment will help offset the costs associated with refinancing. 2. Refinance to lower the total cost of your loan by reducing the term. For example, if your current mortgage rate was 7.5% for 30 years and you refinanced at 6.5% for 15 years, your monthly payments might increase a small amount, but you would save tens of thousands of dollars on total interest over the course of the mortgage. 3. Refinance your Adjustable Rate Mortgage (ARM) that is about to go up and you want to lock in at a fixed rate. (Some ARMs come with a no-charge, lock-in feature; if yours doesn't, you may have to refinance to get a fixed rate.) 4. You want an Adjustable Rate Mortgage (ARM) with better features than your current loan. Know the caps, or limits on the amount your interest rate or monthly payments can increase. You should also look at the indices that determine your overall rate. As the mortgage market changes it may be time to move to an ARM with more flexible features. 5. Refinance to Pay Off Credit Cards And Other Debt The difference
between credit card debt and a mortgage can, financially speaking, mean
thousands of dollars. Why? Credit card debt is compounded where the
interest on a mortgage is simple, and often tax deductible. Using the
equity in your home rather than credit cards to finance expensive purchases
can save you money paid in interest in the long run. 6. Refinance Home Improvements If you choose cash-out refinance, you can use the money you receive to fund renovation and remodeling projects to add value to your home. 7. Refinance to Access Cash Think of the equity in your home as a savings account that you could access through cash-out refinance. You may want to finance an important home improvement that will increase the value of your home, pay for college or pay off high interest credit card debt. Whatever your reason, this may be the right option for you. 7 Myths About Refinancing Your Mortgage Many times, what we know about securing a mortgage comes from what our trusted family and friends know. But this information can be outdated - or even completely wrong! There are seven common misconceptions consumers have regarding refinancing mortgages: Myth #1 Myth #2 Myth #3 Myth #4 Myth #5 Myth #6 Myth #7 The Basics Here's how to properly weigh the risks and costs of a new home mortgage. When interest rates hit 30-year lows, the Los Angeles lawyer was ready to refinance his mortgage, but he lamented a few hours too long about some of the details. Meanwhile, rates popped back up, making the refinance less viable. In today's bumpy interest-rate environment, homeowners may want to take heed. Mortgage rates sometimes change in the blink of an eye. Making decisions in advance about whether, when and how to refinance a mortgage can allow you to move quickly when market rates are in your favor. That can spell significant savings. How do you decide whether refinancing make sense? Answer these questions and see. How much would you save on monthly payments? Consumers save about $30 for each half-percentage-point drop in interest rates on a $100,000 loan. The savings would be twice as much for a $200,000 loan -- or if the percentage drop were 1% instead of 0.5%. You can use this as a gauge to estimate the savings for your loan. If you want a more accurate estimate, use the Web-based calculators at Bankrate.com. What are the upfront costs? How long would it take to recoup the upfront costs through the monthly
savings? How long will you remain in the home? Can you get better loan terms? Do you have other needs for cash? Are you willing to take a chance? The benefit of these loans? Even with mortgage rates at historic lows, refinancing a home doesn't make sense for everyone. Here's how to figure out what you want, run the numbers and decide for yourself. By Liz Pulliam Weston Mortgage refinancings keep hitting record highs as interest rates dribble to generational lows. That doesn’t mean everybody should join the party, however. "Out of every 10 calls I get, probably three of them really shouldn’t refinance," said mortgage broker J.J. Sims, owner of ABC Mortgage in Minneapolis and a member of the National Association of Mortgage Brokers’ board of directors. "A lot of people get caught up in the hype of lower interest rates and don’t really think it through." The most obvious case of when refinancing doesn’t make sense is when the homeowner won’t live in the house long enough for the savings from a refinancing to outweigh the costs of getting a loan. (I’ll tell you exactly how to figure that out below.) Any of the following also can be red flags: Is your credit worse than the last time you got a mortgage? If you’ve missed payments, run up big credit-card bills or otherwise stressed your credit, you may not qualify for a low enough rate for refinancing to make sense. Have you already stripped all the equity out of your home? To get the best rates, you’ll need to keep your borrowing to less than 80% of the value of your home. Refinancing might not make sense if you’ve already borrowed 90% or more of your home’s value in mortgages and home equity loans. Do you have a spending problem? Taking out extra cash during a refinancing to pay off credit-card debt is a popular tactic these days -- and a huge potential mistake. You’ve turned what should be short-term debt into long-term debt, which can cost you more in the long run despite the tax advantages from being able to write off the interest. You’ve also put your home at greater risk and compromised your financial situation should you ever have to declare bankruptcy. Cut up the cards In fact, "people who take out money to pay off credit cards and have no intention of changing their credit-card behavior" are No. 1 on economist Doug Duncan’s list of those who shouldn’t refinance. These overspenders usually continue racking up big debts and sucking out more of their home’s equity, leaving themselves vulnerable to bankruptcy and foreclosure. Duncan, chief economist for the Mortgage Bankers Association of America, believes people with big credit-card debts need to learn to live within their means before they even consider tapping their home equity. I’d make the caution even stronger: You need to be willing to cut up your credit cards and live on cash, so you don’t find yourself underwater in a few years. To determine whether refinancing makes sense for you, you’ll first need to jettison the idea that there’s some rule of thumb that can make the decision for you. It used to be, back in the day when everybody got 30-year fixed mortgages and refinancing costs were high, that interest rates had to fall at least two points below your current rate for refinancing to make sense. Now there are so many different kinds of mortgages -- 20-year fixed, 15-year fixed, adjustable rate and hybrid mortgages that are fixed for three to 10 years before becoming adjustable -- and so much competition driving down costs that rules of thumb don’t really work anymore. Set goals, read up, calculate Here’s how to know if you should refinance: Define your goals. Do you want to lower your monthly payments? Build equity faster? Get money for a home improvement project or other cause? Each goal will affect the kind of loan and terms you’ll face. "Once the goal is established it is pretty easy to see if (refinancing) makes sense or not," said mortgage broker Allen Bond of Palos Verdes Funding in Palos Verdes Estates, Calif. "Some people are actually going from a 30-year to a 15-year loan and increasing the payment, but saving considerably over the long run. For those that just want (lower monthly payments), that would not make sense." You may be able to accomplish more than one goal, though. Duncan, for example, recently refinanced from one 15-year loan to another at a lower rate. He not only lowered his payment but got cash out to help pay for a child’s college education. (He did have to pay a slightly higher rate than had he simply refinanced what was left of his mortgage balance -- typically taking cash out of a refinance will increase the rate you pay.) Educate yourself. Read about how the refinancing process works, get a copy of your credit report and score so you know how lenders view you, and start shopping for rates and terms. Start with your current lender, who has an incentive to try to keep you as a customer. Don’t stop there, however. "There are 7,500 lenders out there," Duncan said. "If you’re talking to just one, you’re not taking advantage of the competition." Web sites such as E*Loan can give you a good idea of what the costs are for refinancing to a variety of different loans. You can also call several lenders or use a mortgage broker (preferably one who’s been in the business several years and who is affiliated with National Association of Mortgage Brokers) to help you review your options and the associated costs. Working with a good broker can be especially smart if you have troubled credit, since the rates typically quoted on Web sites may not apply to you and you’re at greater risk of being a victim of so-called "predatory lenders." Ask about all the costs of a loan, including all the points and fees you’d be expected to pay. Technically, lenders aren’t required to disclose their charges in what’s known as a "good faith estimate" until three days after you actually apply for a loan. But reputable lenders will be happy to disclose their costs if you ask. And don’t, by the way, buy the idea that there’s such a thing as a "no cost" refinancing. Loans always have costs, although they can be disguised as a higher rate or fees that are added to your principal. Run the numbers. Once you’ve got some options, you can compare them to the costs of the loan you have now using one of the mortgage refinancing calculators available on the Web, such as the one at Bankrate.com (see link at left.) This can show you your "breakeven" point: when (or if) the savings from the new loan would offset the costs of refinancing. If you’re going to be in the house long enough to reach that breakeven point, you might want to proceed. There are two caveats here, however. Sims, for one, doesn’t believe in spending money on a refinancing if the breakeven point is more than three years away. That’s too long to wait for a payoff, he says, and many homeowners will end up selling their homes before they reach that point. Look at the total costs Rasik Desai, a New Jersey homeowner, discovered he wouldn’t be much better off refinancing his mortgage, even though he could get a much lower rate and lower his monthly payment. In 1993, Desai got a 30-year mortgage for $97,500 with a 6.75% fixed rate. Four years later, he began making $200 extra payments each month to pay down the principal. Even though he can get a 15-year mortgage on the remaining $68,000 balance for a lower rate -- 5.5% -- he discovered he’ll pay less over the long haul by keeping his current mortgage. "If I do not refinance and continue to prepay $200 a month extra, I will be paying off my mortgage in 110 months," paying a total of $91,670, Desai said. If he refinances and continues prepaying the mortgage, it would take longer to pay off the loan -- 117 months -- and cost slightly less: $88,457. But add in the $2,600 costs of the refinance, and his pre-tax savings would be just $614. Desai has decided it’s not worth the bother. Stretching out your payments just makes matters worse. People who are 20 years into a 30-year mortgage will find they can spend tens of thousands of dollars more over the long run if they refinance into another 30-year mortgage. Once you’re far into a loan, "most of what you’ve got left to pay is principal anyway," Sims notes. "You might as well keep paying (on your old loan)." Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money.
Sometimes it makes good financial sense to use the equity in your home to consolidate debt. Depending on your financial goals, it may be just the thing to do if you want to: Refinance to Pay Off Credit Cards And Other Debt The difference between
credit card debt and a mortgage can, financially speaking, mean thousands
of dollars. Why? Credit card debt is compounded where the interest on
a mortgage is simple, and often tax deductible. Using the equity in
your home rather than credit cards to finance expensive purchases can
save you money paid in interest in the long run. Refinance can make your debt tax deductible |
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