I want to make another case for home refinancing because with the uncertainty of the times, it is a good idea to always know what kind of options you may have when it comes to financing. One of these options may be to take advantage of your home equity through refinancing.

Refinancing?

Home mortgage refinancing means taking out a new loan with a new set of conditions, terms and interest rate and uses it to pay off an existing mortgage. This service is usually offered by a lot of financial institutions, and your current mortgagor may also offer this. A best way to go is to research aggressively for offerings that will give you the best possible interest rate.

Advantages of a Home Mortgage Refinance

Why should you consider refinancing? Could there be any benefit? Yes there are several! Here are some:

(1) Lower monthly payments – you achieve this by extending the terms of your loan. By taking your existing 10 year loan and refinancing this into a 30 year term, you can lower your monthly payments considerably, thereby increasing the cash that you have at the end of each month which you can use for more important causes.

(2) Lower interest rates – with the current credit crunch, loans may be harder to come by, but if you can do it, you can take advantage of such historically low home mortgage interest rates now available in the market.

(3) Instant Cash – Yes, you can get a nice lump of cash by refinancing and applying for a loan larger than what your current mortgage owes. Of course, this is still money you owe, so it would be smart to put this to good use, like renovating your property.

(4) Shorter mortgage – If you have some extra money to spend and you’re not comfortable with having such a long-term, you can use refinancing to take out a shorter-term loan and at the same time take advantage of the lower interest rates that these loans offer.

Of course, refinancing your existing mortgage is not without its disadvantages or cost. We will tackle this more in a later feature.

Should I Refinance?

Answer: YES

Should I refinance?

STEPS TO BE TAKEN CARE OF: Most banks are much stricter on their lending criteria and only those with excellent credit and equity in their homes will get access to these record low rates. Here are the some of the main considerations and hurdles you think about when refinancing your mortgage:

• STEP1: You must have a Credit Score greater than 720
• STEP2: Your “credit utilization” ratio, which reflects to the amount you’ve borrowed as a percentage of your available credit, accounts for 30% of your credit score. No bad credit home loans here.
• STEP3: Must have at least 20% home equity.
  You should have at least 20% equity, based on your home’s current appraised value (not what you bought it for). If your home has dropped in value, and your loan is greater than the value of your home (i.e. you are underwater on your home) you will almost certainly be unable to refinance.

Home Mortgage Refinance

• STEP4: No other mortgages or lines of credit.Should I refinance?
  If you have a home equity loan or line of credit, you’ll probably need to pay it off before refinancing, which means you need to do a cost/benefit analysis of whether refinancing makes sense for you. Before a lender will refinance your first mortgage, it typically needs approval from the lender that holds your second mortgage.

Thornburg Mortgage Inc., the “jumbo” home lender racked by the collapse of U.S. mortgage markets, said it plans to file for bankruptcy protection and shut down.

Remaining assets will be sold or liquidated to pay bondholders and creditors, according to a statement today from the Santa Fe, New Mexico-based company.
Continue reading Thornburg Mortgage – Bankrupt!

A mortgage can be defined as a legal document which uses real estate as a collateral against a loan. This legal document can also be called an instrument and is a document that is written that states the rights and liabilities of the people involved in that transaction.  It is noteworthy to remember that a mortgage takes place between two parties whereas a deed of trust includes a trustee, although the two are usually considered one and the same, depending on your location and situation. But the question is should I refinance home?

Question/Scenario:

We currently have a 20/80, 30yr fixed loan. Together the rate is about 7.5%. We still owe over 270,000 on the loan. Would it be wise for us to refinance?

Continue reading Refinancing advise