Mortgage Refinancing How to do a Short Refinance

Mortgage Refinancing How to do a Short Refinance
by Helpnets.com

If you owe more to your mortgage lender then your home is currently worth then this short refinance situation could be perfect for you.

Short refinance is a process of negotiating with your current lender in hopes of having them agree to decrease the amount of your mortgage payoff and allow you to refinance into a new mortgage with a different lender at a lower loan balance.

How do we get a short refinance done?

This is a huge question because for many of you reading this it just won’t be possible to refinance your mortgage. Many lenders have taken the stance of ‘NO’ while a small handful of others will at least consider it as an option.

To be considered for a this process you must have a ‘need’ of some type.

This ‘need’ will normally fall within the financial category or at the minimum bleed over into that area. Most of those who get approved have demonstrated financial hardship, health issues or age related issues (fixed incomes).

In many major banks you need to fail to qualify for a loan modification first before even applying for a short refi.

This normally means you have the probationary period for a loan modification where you make the modified payment for around three months while your bank finishes up the approval process on their end.

It’s important to note that this probational period can be very misleading. Families who are making this modified payment are under the impression that their modification was approved and that they will have this new payment moving forward.

Where the rub occurs is when the bank comes back to them at the end of the probationary period to tell them that they didn’t get the final approval for the program and that they need to come in with the difference between what they had paid for the past three months and what they should have been paying.

In many cases this amount is quite excessive and causes mortgage defaults.

Now for the banks who have taken the ‘NO’ stance, you need to get creative. Given the circumstances that most families find themselves in being several thousand dollars underwater on their mortgage creativity is not just an option it’s a necessity. Most families don’t want to move but hate the amount they owe relative to their loan balance. The only options they have is to short sell or complete a loan modification.

Short selling is a great idea but you will need to find an investor to work with.

There could be an excellent opportunity to sell and buy it back from the investor at a predetermined price. This may sound like a risky option but when looking at the big picture, saving $100K on your mortgage may be worth a small amount of risk.

Get more information on short refinancing your mortgage and how to use a short sale agent to get the most out of your mortgage situation.

Copyright 2010 – Helpnets.com

July 10, 2010  Tags: Mortgage Refinancing  Posted in: Mortgage Refinancing  Comments Closed

Getting The Best Out Of Mortgage Refinancing

Getting The Best Out Of Mortgage Refinancing
by Helpnets.com

Mortgage refinancing can be an excellent move depending on your circumstances. It is important to understand exactly what refinancing means. If you think you can benefit by refinancing then you should investigate your options. Many mortgage owners are paying too much on their mortgages or are locked into mortgages that do not suit their current situation. If you feel that you apply to one of these situations then refinancing is a good choice.

Refinancing is a good choice it you are having difficulties making your monthly payments. What occurs is that with your new mortgage you pay off all of your old mortgage. This new mortgage then has a longer term and less interest. Therefore your payments are less each month though you may be making them for a few additional years.

If you are just looking for better insurance rates when refinancing then use a calculator to determine how much you would be paying with your old mortgage and how much you would pay over time with your new mortgage. You may find you are paying more money to the bank in the long run but if you are having difficulties making payment sit is worth it.

There are some dangers associated with refinancing a mortgage. One of the biggest issues is when a person is not know why they are refinancing and what they are trying to get out of the refinancing process. It is important to determine the pros and cons of each refinance options you have. You also have to realize that a mortgage broker makes a commission every time they get a new mortgage so they may not be looking out for your best interests.

There are different types of refinance loans and you need to know how they differ. An adjustable rate mortgage is one in which the interest rate with change throughout the term of the loan. The initial rate is normally fixed for a year and then after this time the interest rate can go up or down depending on the market.

A fixed rate mortgage is one in which the interest rate is set for the entire life of the loan. You will always be making the same monthly payment which can be much less stressful for many people. However fixed loans can be very strict as you may not be allowed to redraw on additional funds or make any extra payments.

A balloon loan has a fixed mortgage rate for a set amount of time, normally 7 to 10 years. However once this term is up you will have to repay the loan in full. You need to be careful with this type of refinance mortgage.

Copyright 2010 – Helpnets.com

May 31, 2010  Tags: Mortgage Refinancing  Posted in: Mortgage Refinancing  Comments Closed

Four Truths About Mortgage Refinancing

Four Truths About Mortgage Refinancing
By Mike Hamel

Many home buyers close their loans, make their payments and don’t think about their mortgages again. They don’t consider refinancing when they should. If you are among these inattentive homeowners, here are four truths about mortgage refinancing that may surprise you.

Truth #1 – Mortgage Refinancing can save you money.

If interest rates have dropped since you got your original loan, refinancing can reduce your monthly payment. When you refinance, you can also choose to shorten your loan term, meaning you will pay less money in interest over the life of the mortgage.

You could also save money by switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. The interest rate on an ARM is based on an index such as the LIBOR or the U.S. Treasury Bill. If they go up, so do your payments. By refinancing to a fixed-rate mortgage, you can prevent payment increases. (Your monthly payment might still increase due to changes in property taxes or insurance, but your principle and interest amounts will stay the same.)

If your original mortgage was for more than 80 percent of your home’s value, you are paying private mortgage insurance (PMI) as part of your monthly payment. As the value of your home increases and the principle on your mortgage decreases, you can get rid of PMI by refinancing for less than 80 percent of your home’s value.

Truth #2 – Mortgage Refinancing is a smart way to access your equity.

In the second quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances. Homes refinanced during this time had appreciated 33 percent on average since the original mortgage was taken out. The median age of the mortgage was 3.2 years.

“Borrowers who are looking for an inexpensive way to finance home improvements or business investments, or to consolidate high cost debt, are turning to cash-out refinance,” said Amy Crews Cutts, Freddie Mac deputy chief economist. “These borrowers are often willing to refinance into higher rates on their first lien mortgages. . . This is the second consecutive quarter in which the median refinance borrower increased the rate on their first lien mortgage.”

Truth #3 – Mortgage Refinancing is still very popular.

According to Frank Nothaft, Freddie Mac chief economist, “The staying power of refinance activity has been much stronger than we initially thought . . . borrowers are reacting to both incentives to cash out home equity through refinance and incentives to change their mortgage as they hit an interest rate adjustment.

Freddie Mac estimates that $500 billion in first lien mortgages will adjust this year and another $650 billion in second liens will see at least one rate change this year. Nationally, home values increased 10.2 percent over the last twelve months.

Truth #4 – Mortgage Refinancing is simpler than getting your original mortgage.

Mortgage refinancing is almost always simpler, cheaper and quicker than getting an original mortgage. The process can be handled online at sites like Simple Mortgage Refinancing [http://www.simple-mortgage-refinancing.com]. The site has helpful articles and offers free, no-obligation loan quotes.

Mike Hamel is the author of three business books and several articles about mortgage financing. His material is featured on sites like www.badcreditmortgagerefinancingnow.com [http://www.badcreditmortgagerefinancingnow.com]

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May 28, 2010  Tags: Mortgage Refinancing  Posted in: Mortgage Refinancing  Comments Closed

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