Refinancing your home mortgage loan is different from getting a home equity loan. While both allow you to cash out equity in your home, these two types of home financing serves different purposes.

Refinancing Your Home Mortgage Loan is basically replacing one mortgage loan with another. Typically, refinancing lowers mortgage payments through lower interest rates or longer loan terms. You can also cash out part of your home’s equity while refinancing. The real reason behind it is simply you have been offered a better interest and you will save money on the long run. You may in fact choose to shorten your mortgage by paying a bit more or the same (you pay less interest more capital repayment). Refinancing requires paying closing fees. To recoup these costs, you usually need to stay in your home for a few years. However, you will save money with better terms than if you choose a home equity loan (second mortgage).

Second mortgages have slightly higher rates than mortgages, but you have less or no closing costs. In the case of second mortgages, you keep your existing mortgage and borrow more on top of it. So your new interest rate only applies to the additional amount you borrowed while first mortgage remains the same. If you want to tap into your equity to make some home improvements but plan to sell soon, then a second mortgage would be better than refinancing your mortgage. Second mortgages also are a better choice when your current mortgage interest rate is lower than those being offered by refinancing lenders.

When deciding which financing option to choose, consider the purpose of the loan. If you want to reduce monthly payments, then refinance. If you simply want to tap into your home’s equity for a small amount, then apply for a second mortgage. As these two mortgages are separate, you will be able to pay your second mortgage earlier than your main mortgage.

Also, consider how long you want to stay in your home. You can lose money refinancing your mortgage if you don’t stay in your home long enough to recoup the closing costs with the savings you made from refinancing. Only you know which loan fits your financial needs best.

Filed under: Home Equity Loan, Refinance Home Mortgage Loan by JS Lee
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A bad credit mortgage is a financial product that specifically designed for people with bad credit report. If someone has a bad credit score that usually means the person has been finding it difficult to pay their bills, credit cards, loans and other commitments. In other words, they are bad risk for the lenders. That is why traditional mortgage providers rarely offer their mortgage products to people with bad credit. It would be a bad business for them to lend tens or hundreds of thousands of dollars to someone who can not keep up with day to day bills.

However there are specialist lenders who mostly deal with bad credit mortgages as they have specialist knowledge and safeguards in place to cover themselves. They have calculated the risk and decided that the reward of charging higher interest rate makes it a good business for them.

People with bad credit history should not look for high street lenders or the best interest rates advertised on the press. Applying for too many mortgages and getting rejections will make their credit score even worse. Instead they should start looking at the bad credit mortgage market.

The recent increase in the number of people with bad credit leads to high demand in those specialist lenders products. Consequently, the bad credit mortgage market is growing. Although the larger lenders will not still accommodate those applications, there is still competition in the bad credit mortgage market. As a result, customers suffering from poor credit can find a range of mortgage products to suit their needs and that help them get their finances back on track. A bad credit mortgage can help people find an immediate solution to their problem and allow them to get over their difficulties in the long term.

Interest rates on these mortgages are typically marginally higher than for traditional mortgages. This is because the risk to the lender is higher. There may be some additional conditions on your mortgage, which are placed there to give security to the lender. These might include a larger arrangement fee at the start of the mortgage, or stricter redemption penalties. They will be required to put much higher down payment as well. The higher down payment gives extra security to the bad credit lender who worries about the credit worthiness of the applicant.

People looking for a mortgage with bad credit history are well advised to see a specialist bad credit mortgage broker who is experienced to handle such applications.

Filed under: Home Mortgage Loan by JS Lee
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Knowing what the lenders are looking for to determine your application helps you to prepare for it well in advance. The information the lenders require may increase time to time. Nevertheless, it will not be less than what I listed below. You could say that these are the minimum information required. These factors are valid for home purchase loan applications and even for car loans or credit card applications for that matter. I will list them here in brief details as I have detailed explanation of them in my home page to read further.

Your Income Level: This is usually called household income and includes your partners income as well if you are buying (or owning) your home jointly (your friend’s income if you are buying with a friend). There is a metric called income multiplier which lenders decide.

Down Payment: You will need to put down certain amount of the property value. The higher the down payment, the easier the process becomes. Your application gets accepted easier, you are offered better rates and your payments become more affordable.

Credit Score: It is wise to say that you should not start the process of mortgage application without checking your credit score. There are many free credit scores available, but I would suggest that you get a copy of your credit report and go through it. This would at least give you an insight to how it works.

Your Income and Expenditure Statement: Most refinance home mortgage loan applications will have a section to put your household income and expenditure or there will be an additional form.

Your Residence Verification: Lenders would want to verify your residence for at least 3 years. If you are in the voters’ registrar or some government data readily available to the lenders, you just need to put your addresses for 3 years. Otherwise, prepare the utility bills for these addresses, you will be asked.

All being well you should get an offer in the post.

External Factors: These are the factors that you can not affect. I am just going to list some of them, so that you know. General condition of the economy has direct effect on mortgages and loans. When the economy is good, everyone including lenders are optimistic and this effects their decision. They look at the applications negatively or positively. Rising or falling house prices have a positive or negative effect on your application, too.

These factors determinining your refinance home mortgage loan application have been explained in detail on my homepage at Refinance Home Mortgage Loan

Filed under: Home Mortgage Loan, Refinance Home Mortgage Loan by JS Lee
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Green shoots in the economy are not likely to grow into fruit bearing trees soon to rescue straggling people in time. Foreclosures continue to gain speed like an out of control train. Despite administrations efforts, reports suggest that there will be millions of foreclosures in the coming years. Home owners who are facing foreclosure need to act early to avoid foreclosure proceedings. We will discuss the ways to avoid foreclosure in this article. Here is what people could do to keep their home;

Home owners anticipating difficult times ahead could act much earlier and refinance their property. Refinance home mortgage loan may reduce the overall debt payment by consolidating several higher interest loans in one mortgage. Furthermore, home owners may cash out some of the equity in their home to weather the difficult times ahead. Refinance could be a solution at the very early stages of the problems. It needs anticipation of the problems and acting early on before they start becoming a real problem. Once homeowner starts missing the mortgage payments, refinance option my no longer be feasible.

Loan Modification is a bit further down the line. If the home owners have already fallen behind the mortgage due to sudden unforeseen circumstances and need assistance in catching up with the loan, they need to contact their lender. The existing mortgage lender may agree to modify the loan should a compelling case presented to them. Homeowner needs to put a good case together explaining why the mortgage payments were missed and how they will be paid in the future. Should the lender be convinced that the problems were temporary and the home owner could get out of trouble with a little help, they could modify the loan. With the loan modification the borrower may be allowed longer time to pay the arrears, their rate may be reduced and the payment term may be extended to reduce the immediate burden. People with mortgage arrears should not wait until the mortgage lender takes action, they should take action themselves to resolve the problem.

Third option is mortgage forbearance agreement. This is a payment plan agreement between the lender and borrower. Homeowner contacts bank and a mortgage payment plan drawn out to bring the payments up to date in a certain period of time. As long as borrower keeps up with payments in the plan mortgage company is happy not to proceed with foreclosure. A forbearance agreement can be a good option for homeowners who had problems in the past, but they can now start paying their monthly payments and a bit more towards the past arrears.

If the home owner convinced that they can not keep the house or keep up with the payments, they may get out of the debt by selling the property. In some cases, it may be a better option. They will still need to take action, even the value of the property is lower than the loan amount, to protect their credit score falling even further and being chased by the mortgage company for years. The solution could be a short sale agreement which allows borrowers to sell their property for less than owed on the loan. It may be best to work with a short sale specialist or real estate lawyer to complete this complex process. The homeowner should try to get the bank agree to accept the sale price as a full settlement of the mortgage loan.

Deed in lieu of foreclosure is last option available to borrowers facing mortgage foreclosure. Basically, borrowers give the property back to the bank and walk away. Like short sales, some banks issue deficiency judgments when property is sold for less than owed on the loan and some may not see the point and write of the loss. Debtors should not be resentful. Even though they have handed the keys, they should communicate with the bank. Convincing the bank officers that they have nothing left to be taken away may let them off the hook for the shortfall. Under no circumstances property should be knowingly damaged or left for vandalism.

Homeowners need to know that they are not the only people with problems and they may find the lenders cooperative. Mortgage lenders do not want further foreclosed properties in their books. They would rather the borrower stayed in their property and keep paying. So many lenders are prepared to cut the interest rates or extend the payment period, if they are convinced that this may stop the foreclosure. Homeowner may need to do some explaining and convincing to keep their home. If they can not see a way out of the problem, they still need to communicate with the bank and take action. Last two options could still be a better outcome than foreclosure.

Filed under: Home Mortgage Loan by JS Lee
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If you currently have two mortgages on your home, you may consider refinancing both mortgages into one loan. This will allow you to make only one monthly mortgage payments. If you got your 1st or 2nd mortgage before the home loan rates started declining, you are likely paying an interest rate that is at least two points above current market rates. If so, by refinancing both mortgages with a low interest rate, you may save quite a bit on your monthly mortgage outgoings as well as having the convenience of one mortgage lender and make only one payment.
Combining 1st and 2nd Mortgages, further benefits people whose 1st and 2nd mortgage is adjustable rate and they would like to fix their mortgage rate. Refinancing both loans at a fixed rate may save you in the long run. Even if your current rates are low, these rates are not guaranteed to remain low. As market trends fluctuated, your adjustable rate mortgages can rise. Higher mortgage rates will cause your mortgage payment to climb considerably. Refinancing both mortgages with a fixed rate will give you peace of mind of knowing how much you will pay every month during the duration of fixed term.
While combining both loans into one mortgage is convenient, and may save you money, there are other issues to consider before going ahead. Refinancing a mortgage involves the same procedures as applying for the initial mortgage. So, there are closing costs and fees to pay. Although many lenders will allow you to add the closing costs onto your mortgage providing you have enough equity in your home, this only means that you will pay for these costs later. In this case, no closing cost at the time of refinancing may not necessarily mean no cost at all. You need to take into account how long you are going to stay in your home. Refinancing is best for those who plan to live in their homes for a long time.
Another issue to look into is your credit score. If it has dropped considerably within recent years, lenders may not approve you for a low rate refinancing. You would better check your credit score before you get the ball rolling. Furthermore, refinancing your two mortgages into one may result in you paying private mortgage insurance (PMI). PMI is required for home loans with less than 20% equity. To avoid paying private mortgage insurance, homeowners may consider refinancing both mortgages separately, as opposed to consolidating both mortgage loans. Get your calculator out and do the math. There are a few additions and subtractions to be made before you reach the bottom line in the refinancing decision. Do not hesitate to look into it in your earliest convenience. If you decide not to refinance after all, then you will probably have a good reason for your decision. That is the right thing to do instead of guessing what is what.

Filed under: Debt Consolidation by JS Lee
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