Home Refinancing Tips

There are several different Home refinancing tips that people, experts, websites and other sources of media can offer. Here are some simple and easy mortgage refinancing tips that you can use.

• Firstly decide whether really need the refinance loan or not. This is extremely important, as by undertaking the refinance, you might burden yourself. Hence, just add up the total amount that you owe to your mortgage lender. Then add the total time period and compare it with your income projection. If you feel that the mortgages add up to some exorbitant figures that eat up a considerable part of your monthly income, then only you need a refinance.
• The second step is to calculate the amount that is payable. For this purpose, add up the principle amount of your loans, the applicable interests and finally miscellaneous expenditures such as late payments and fines. This becomes the principal amount of your loan.
• This step is the crucial one as you will need to negotiate an interest and time period with lender of the refinance loan. For this, you may calculate a debt to income ratio. The debt to income ratio goes as follows:
  
  Total Debt to Income Ratio = Total Debt Expenses / Gross Income
  
  For your convenience, you can also calculate a monthly debt to income ratio. Due to this ratio, you will basically realize the total amount from the monthly income, that is payable to the lender. Total debt expenses is basically the installment amount that is proposed by the lender. In case if you have other debts such as credit cards or auto loans, then calculate a broader debt to income ratio, with same formula.
• If you find the ratio comfortable, then you can avail the refinance loan and repay the installments quite easily. In theory, the total or rather broader ratio should not exceed 20 to 25% of the monthly or annual income.
• After you have availed the refinance loan, you can make a provision for the payment of installments. All you need to do is open a simple savings account with a bank and keep in putting in all the extra cash that you have into it. This way you will also restrict your unnecessary spending, and would have an emergency fund at your disposal. In a particular month if you are suddenly out of finances, then you can use this reserve to make the installment

Refinance Mortgages

At the end of October, the fed funds dropped from 1.5% to 1% at the late of October by the fed cut. We have not seen a lower rate since year 2003. in the previous two weeks, rates have been fluctuated with the result of news in our economy. Every fixed rates and 1-year arms as well as the 5-year arms have move from 31 points to 13 points. There is definitely one thing you should remember when looking into the numbers when rates are drop and real estate collapsed.
In this point, the 5-year and 1-year arms are something you have to get away from. The disparity for the 5-year arm is just like what you would defraying for a fixed rate of 30 years payment period. Then if the rates continue dropping even lower according to what we observe, then at that lower rates you frequently able to refinance. In the first impression the 1-year arm can seem very promising, but anyway, if there is increment in the rates, you will have the necessity of paying a bigger defrayment, with the last choice of doing more refinancing.
3 Things You Must Follow
Research
The better you understand, the more eminent you will be. Before you start the process of refinancing, do a research on mortgage lenders. You have to take into account of conducting online research, asking family or friends, or contacting and proposing questions. Then if they think they are going to get your business, they will be willing to help you understand.
Find out what the latest rates are
Find out what the latest interest rate you are defraying on your mortgage and what the moving rate is, so you can make certain for yourself what would be important for the pocketbook you have. Examine the mortgage terms. There cab be a dissidence of as low as $50.00 to cut from a 30-year fixed to a 15-year fixed rate.
Make It Ready
By the time you meet the lender to begin the process, make every information available as possible as you can. Grabb all this documents with you, from existing mortgage, as well the paperwork handed over to you from your first loan. This could give the lender and you an excellent idea of what could be most important for you. Bring along the tax return and the bank statements as well. This can make the process of the refinancing become faster and finer start.

Mortgage Modifications

There may be some room for argument, but essentially the Obama administration’s initial foreclosure prevention plan has failed. The Home Affordable Modification Program (HAMP) was designed to help three million homeowners and so far only about 170,000 borrowers have received permanent loan modifications. So, enter phase two of the plan.
Now the government is ready to help unemployed homeowners and those who are seriously underwater on their mortgages. Lenders will now be required to allow payment reductions for unemployed borrowers for at least three months and as long as six months. If these homeowners do not have a loan of more than $729,750 and are currently receiving unemployment benefits, they can have their payments reduced to 31 percent or less of their monthly income for that time period. The normal payments will resume when the borrower gets a new job or the grace term is up, whichever comes first.
The plan to help those who owe more than the value of their homes includes trying again to encourage lenders to reduce principal balances. In order to qualify, borrowers must owe more than 115 percent of the home value, use their home as their private residence and have a monthly mortgage payment that exceeds 31 percent of their gross monthly income. This program is strictly voluntary though, and while banks will be given $2,000 in federal money for every principal reduction modification that they make, they are not required to cooperate with borrowers.
Refinancing into FHA loans will be another possibility for struggling homeowners. As long as borrowers are current on their mortgages, have a credit score above 500, and can get their mortgage holders to write down at least ten percent of their loan principal, homeowners can refinance their current loans into safe FHA mortgages.
All together, the new plan could help as many as 1.5 million borrowers avoid foreclosure, according to Mark Zandi, chief economist for Moody’s Economy.com.
The real question is whether these new programs work better than their predecessors. While the incentive for lenders to reduce loan balance principal has doubled, it may not be enough to entice banks to lower profits for their shareholders. Even if the program does generate a lot of principal reductions, it might spur some intense anger across the country among those who have been making their mortgage payments on time and have struggled to keep their financial obligations. Principal reductions are often highly controversial because they are seen as rewarding mostly those who took out exotic or risky loans during the housing boom.
The mandatory payment reductions for unemployed homeowners will have a direct impact on the housing market, though. It will delay foreclosure for many, many borrowers. While some say that this process simply drags out the inevitable and delays true recovery, others say that the delays on some foreclosures will help the decline in home prices take place at a slower, easier pace.
Eventually the housing market will have to come back to equilibrium of price and demand. These new programs seem to be both delaying and forcing a return to that equilibrium at the same time. Hopefully the results of these initiatives will not cancel each other out.

Buying a Home With Resale Value

There are many things that should be considered when buying a home. Since most homebuyers expect to buy a bigger and better home someday in the future, resale value is an important factor in decision-making. You use the proceeds from selling one home to buy the next one.
While no one can guarantee that your home will grow in value, there are steps you can take that maximize your potential gain.

"Location, Location, Location"

"Location, location, location," is a common and almost hackneyed phrase in real estate literature. Your agent may even throw it at you when you ask for advice about buying a home. However, what does "location, location, location," actually mean? Why repeat it three times?
Mostly, "location" is repeated to emphasize that it is extremely important to the resale value of your home. The idea is to buy a house that will appeal to the largest number of potential future homebuyers. A careful choice of location can minimize potential negative influences on future resale value, and maximize positive influences.
Focusing on resale value requires you to make several different "location" choices. The first choice you have to make is "which community?" At the very least, you should narrow your choice down to just a few local communities.

Mortgage Rates and Pricing

What is your rate today?" prospective borrowers ask when they call up a mortgage lender shopping for rates. Well, there isn't just one rate. There is a choice of rates and the rates are very similar from one lender to the next - perhaps identical.

 

A Loan Officer's Rate Sheet

Every morning a loan officer gets a rate sheet - or a number of them. Mortgage bankers get the rate sheet from their company. Mortgage brokers get rate sheets from a number of wholesale lenders. They come in across the fax machine, across the computer, or through various secure web sites requiring confidential user names and passwords.
On volatile days, there may be revisions to the rate sheets. There have been times when rate sheets were revised more than five times in one day.
These rate sheets are not designed for public view. They are for loan officers' eyes only because they represent the "cost" of a loan to the loan officer, not the cost to the borrower.
Below is a sample of one section of a rate sheet for thirty-year fixed rate loans.

Rate	Cost
6.250%	2.000
6.375%	1.500
6.500%	1.000
6.625%	0.500
6.750%	0.000
6.875%	(.500)
7.000%	(1.000)
7.125%	(1.500)
7.250%	(1.875)
7.375%	(2.125)
7.500%	(2.375)

The rate sheet shows the interest rate and the "cost" to the loan officer, expressed in "points." One point is equal to one percent of the loan.

Pricing the Loan

Different rates have different costs. Higher rates don't cost as much as lower rates. This is because the lender is going to earn more in interest over the life of the loan, so it makes sense to charge less. Conversely, it makes sense to charge more for a lower interest rate, because the lender will earn less interest over the long term.
Zero points is called "par" pricing. Numbers in parentheses indicate "premium" or "rebate" pricing, meaning that instead of having a "cost," money is actually paid back to the loan officer and the branch for originating a loan at that rate.
Almost all loan officers are paid on commission. The amount earned by the loan officer and the branch is subject to a "split" -- just like real estate agents. Part of it goes to the loan officer and part goes to the branch. Any fees that are not part of the points go to the branch (or company) and are not subject to the split.

Quoting Rates to You

Before quoting you an interest rate, the loan officer will add on how much he and his branch want to earn. The branch or company sets a policy on how little that can be (the minimum amount the loan officer adds on to his cost) but does not want to overcharge borrowers either (so they set a maximum the loan officer can charge) Between that minimum and maximum, the loan officer has a great deal of flexibility.
For example, say the loan officer decides he and his branch are going to earn one point. When you call and ask for a rate quote, he will add one point to the cost of the loan and quote you that rate. According to the rate sheet above, seven percent will cost you zero points. Six and three-quarters percent will cost you one point.
In our example, at 7.125% the loan officer and branch would earn one point and have some money left over. This could be used to pay some of the fee

Live your dream retirement with a reverse mortgage

Every year, it's the same: The weather warms up, and people flock in masses to vacation destinations the world over. With summer in full swing, kids are out of school, parents are planning visits with family, and vacation deals are being advertised. Many retirees are unaware they are passing up a great money-saving option that could help them afford more travel: a reverse mortgage.

The truth about reverse mortgages

While many are skeptical of reverse mortgages, One Reverse Mortgage is different. Specializing in client care and quick, efficient, easy-to-follow loan processes, a reverse mortgage has never been easier or more cost efficient. The experts at One Reverse Mortgage can help you get the most out of your home's equity, and you're free to use that money for bills, house repairs, unexpected expenses, or simply securing your financial future. Or do as California client Bart H. did and reunite your family ... tax-free!

"As great-grandparents, we like to visit, like to travel. We've done various things in our lives, but one of the best things we've done is collect our blended family. My wife is previously married, I was also. So our reverse mortgage has meant travel ... visitation time, all over the United States."

California client Willie Brown had the same idea, using the money he received from his reverse mortgage to clear his debt, paint his home, and visit his grandkids. "It's such a relief, and really exciting," Brown says. "I like hearing 'Grandpa.' I love that."

4 reasons to refinance your mortgage now

There are no two ways about it: mortgage rates are low right now. In fact, they're lower than they've been in decades, making this not only a great time to consider buying a home, but also an opportune time for homeowners to refinance.

But is refinancing always the right thing to do? It depends.

When interest rates change in your favor, it's important to keep in mind your long-term personal finance goals. First, you'll want to take stock of your financial situation and reflect on where you want to be in the long run. With a clear vision of your needs and intentions, you can wisely consider some reasons to refinance, and clearly evaluate the decision in relation to your personal financial objectives.

Here are some great reasons to refinance:

1. Refinance to maximize your monthly budget

By refinancing, you can lower your monthly payment. This means there's more money each month for you and your family to spend on other expenses. Maybe you have a life changing event approaching - such as a new baby on the way - or need to save for a new car. Whatever the case, refinancing is a great way to squeeze more juice out of your income.

2. Refinance to get out of debt

Debt such as credit card balances and student loans are often at much higher interest rates than current mortgage rates. It's wise to shift your debt to a lower interest rate via your home's equity. With a cash-out refinance, you can pay down those high-interest credit cards, and you'll pay less interest to banks in the long run. With rates for 30-year, fixed-rate mortgages hovering in the 5 percent range, and the average consumer credit card rate hitting nearly 15 percent, shifting your debt could save you thousands of dollars in interest, depending on your current debt load.

3. Refinance to position yourself for the future

Maybe you're one of the lucky homeowners who is comfortable with your current payment, and are relatively debt free. Even so, the fact remains that mortgage rates are low. Locking in a low rate now could pay off for years in the future. Right now could literally be the chance of your lifetime to get the lowest rate possible.

If you have an adjustable rate mortgage, it's especially important to consider locking in a low rate now to avoid a higher adjustment later. While it's true that adjustable rate mortgages are currently adjusting down, this trend may reverse in coming months if the economy rebounds as expected.

4. Refinance to cash in on your assets

If your home has equity, that's an asset you could be putting toward other expenses or investments in your life. Refinancing allows you to turn your largest asset, your home, into cash that might be better used for other things.

Cashing in on the equity of your home can allow you to make strategic moves, not only for your own financial bottom line, but to help you meet your goals for self-improvement and happiness.

In your journey toward your goals, don't forget that refinancing your mortgage to a low rate can be a valuable tool in your personal finance arsenal.