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Refinance FAQ
How much money can I borrow with home equity line of credit?
Depending on your your income, credit history, and the amount of your debt, and if you refinace home equity lenders could lend you up to 80% of value of your home less the amount owed on your mortgages.
Is Home Mortgage Refinancing the right option for me?
Look at your financing related goals: are you looking to improve your monthly cash flow, reduce your mortgage term, do you need to take out cash utilizing the equity from your home? Obtaining the right loan for your particular needs could make sense even when rates are not at their lowest levels. First identify your goal and contact a mortgage professional for suggestions on lending programs that would help you meet your objectives. Then shop for rates after you have selected the appropriate program.
Will my interest rate for second mortgage change?
If your loan is fixed-rate, the interest rate is set for the duration of the loan. Many lenders will offer variable rate mortgages, and these can provide for periodic interest rate changes. If your contract lets your lender adjust the interest rate, make sure to understand when exactly can the lender change the interest rate and if there are any limitations on how much the rate can change.
What is an interest only home loan?
An interest only mortage is loan with which you can just pay the home mortgage interest or the interest and portion of the principal whenever you want during the pre designated amount of time. These loans can be 20-year fixed or adjustable rate mortgages. Check our bad credit home loan calculator to get a free online lending mortgage quote for interest only adjustable rate best mortgage loan.
What is a mortgage broker?
Mortgage brokers or a home finance company is like independent insurance agents. They have access to lenders, lead you to many different programs and could give you a free mortgage quote. In some cases, especially where credit is not poor, and non conforming property is involved, a broker can help find funding for you.
What is the best way to find mortgage lenders?
It is a good idea to contact at least three to five lenders or even a bank for input on programs and best mortgage rates. You can do all of your shopping on-line or by phone. If there are any usual twists to your scenario, it is best to disclose as much information up front as possible to be certain you are making an "apples to apples" best home mortgage rates comparison amongst lenders. When making low interest refinancing rates comparison you must be sure to compare lowest mortgage rate of similar terms. Or maybe you qualify for FHA or VA loans.
What can home equity credit line do for me?
If you need to borrow money, home equity lines just could be a great source of cash. It would provide you with a large amount of cash at relatively low interest rates and with some tax advantages not available with other kinds of loans.
Will the lender require a fee to lock in my home mortgage interest rate?
For a traditional 30-90 day rate lock, the lender will not require the borrower to pay a lock fee, but for the privilege of locking for a period beyond 90 days they may. Some lenders allow borrowers to lock and then float the rate down one time during the cheap mortgage process, typically a borrower is required to bring in a fee of ½-1% of the mortgage amount which is then credited (or refunded) to them at closing. It is a lock fee the lender requires to insure the transaction will in fact close. Sometimes you may even end up with a rate close to the prime lending rate.
If I lock my mortgage interest rate and rates go down, will the lender give me the current lowest rate?
It depends on the lender involved, prime rate and how much rate declined. Some lenders may re-price the mortgage at a rate closer to market if there has been a substantial rates decline and some may prefer that a mortgage is canceled rather than re-price it at a current market rate. Some lenders allow borrowers to lock and float the rate down one time during the mortgage process, generally a borrower is required to bring in a fee of 0.5-1% of the mortgage amount which is then credited or refunded to them at closing time. It is a lock fee the lender will require to insure the transaction will in fact close.
How do I choose a second mortgage lender?
If you are looking for a lender, make comparisons between them. Look for interest rates, and origination fees, closing costs and repayment terms. Check with your local banks, credit unions and finance companies about their bad credit home mortgage loan rates.
What is the current 30 year or 15 year home mortgage interest rate?
Interest rates always change, check with one of out featured brokers for the current rate, or you can check lowest home equity loan rates (featuring a free online mortgage calculator) to get a free best mortgage loan quote online.
How do I calculate home mortgage payments
Easiest was to calculate your rates and payments is to get a best mortgage refinance rate comparison check with one of our featured lenders or use our payment calculator above.
What is a super jumbo mortgage and how much higher than jumbo mortgage is the interest rate?
Usually super jumbo mortgage is a mortgage that exceeds $650,000. A super jumbo mortgage generally has a rate 0.25% higher than average jumbo mortgage.
What paperwork will the lender need to process my mortgage?
The answer depends if you have poor credit and the amount of equity you have in your property. On a typical fully documented house mortgage application (where an applicant is seeking to qualify based on an employee's salary), the mortgage lender will require: one month's current pay stubs, W-2's for the prior two years and bank and investment account statements for the prior 2-3 months. If an applicant is self-employed then additional documentation could be required. To apply also look at our online refinance home mortgage application above.
Is it possible to reduce my closing costs?
If you are refinacing, you could reduce some costs by asking your lender about them. Example: your lender could use your last home appraisal or your other credit reports or even recertify old documents for cheaper then getting new documents. Or trying looking into no closing cost refinance.
What are Mortgage Points?
Also known as discount points, they are fees the borrower pays the lender to lower the interest rate. Points are expressed as a percentage of the loan. Lenders charge points that are basically finance charges, to make a profit and borrowers buy points to lower their refinance interest rates and payments.
Is it a good idea to pay points for lower rates?
If you are refinancing or financing morgage, paying points is not always the ideal option. Points paid for refinancing can be deducted only in small amounts from your taxes, so it could take couple of years before you benefit from a lower rate.
How long will I have to repay the second mortgage?
Some 2nd mortgage loans could go for 20 years and some could require repayment in same year. You should discuss the repayment terms with lenders and pick one who offers the best terms for your needs.
What is a mortgage prepayment penalty and is it generally advisable to get a mortgage that has one?
A prepayment penalty allows the lender to charge a borrower additional interest, typically six months worth, when a mortgage is repaid during the penalty period, which is usually somewhere in the first three to five years of the mortgage. If a mortgage does have a prepayment penalty, this is clearly stated within the mortgage disclosures, mortgage note or prepayment penalty rider to the note. The advantage of taking a mortgage with a prepayment penalty is that it could carry a lower rate of interest or you may be permitted to take a it without paying for non-recurring closing costs.
Will the lender require an appraisal of the property? If so, will I receive a copy of it?
Yes, the property is the collateral for the mortage, therefore an appraisal is almost always required and if a borrower pays for the appraisal he or she is definitely entitled to receive a copy of it.
Can I avoid having to buy mortgage insurance?
Borrowers who have less than 20% equity in their home, can choose a mix of first and second mortgage (piggyback mortgage) to avoid mortgage insurance. The most common method of financing without insurance is to get 80% 1st mortgage, 10% 2nd mortgage and 10% equity.
What is the difference between 0 point and no cost mortgage?
With no cost mortgage, a borrower has accepted a higher interest rates, with the trade off that the lender or broker will pay for all their non-recurring no closing costs or at no charge. With 0 point mortgage, a borrower has opted not to pay points to buy their interest rates down but will still be paying for their base closing costs.
What is private mortgage insurance?
This is a special type of insurance that protects the lender if you default on your apartment, mobile home mortgage or manufactured home mortgage. It makes it possible for you to buy a home with as little as 3-5 % down payment.
What is a reverse mortgage?
A 2nd mortgage or reverse mortgage is the second loan against a house, manufactured or mobile home. It lets you borrow money against the left equity in your home. The maximum amount is determined as follows: (Appraised value of your house x a set percentage) - existing balance. Check our lowest mortgages refinancing rates calculator if interested in refinance 2nd mortgage loan refinance interest rates. You also may want to consider getting a home improvement financing loan.
What is a home equity line of credit?
It is a secured line of credit that lets you take advantage of the equity you have built up in your home. Home equity loan rate (lines of credit) are generally much lower than a credit card, and theinterest is even sometimes tax deductible.
Low Interest Rate Mortgage
A low interest rate mortgage is the fondest want of every possible homebuyer. How do you get a low interest rate mortgage? Well, while you may be able to attempt to negotiate yourself with a commercial lender, you may also want to think about a mortgage broker. A mortgage broker will do many of the footwork on your behalf. A mortgage broker might know about smaller lending institutions what are offering a more competitive interest rate than a big bank or finance company. but, mortgage brokers won't essentially work with all possible lenders. they're also not totally unbiased because they might prefer certain lenders who give them with the best commission. , you can generally have to do many checking of your. Having said that, a mortgage broker might find many great opportunities for you to get the lowest possible interest rate. Once a mortgage broker identifies many good low interest rate mortgage opportunities it is up to you to make sure that the mortgage, and its alternatives, match your needs. Also, do not just take the broker's word for it that a company is a good one…check! you must remember that the mortgage broker will be to get a commission if you take your mortgage with the company they recommend. Since they get a commission they aren't totally 'unbiased'. For instance, they could recommend a company what gives them a better commission level. , check before you say yes. In the end, if you use a broker, do many research yourself. you will be more confident when you do sign on the dotted line. More importantly, you may find a better low interest rate mortgage deal than the one you are offered.
Adjustable Rate Mortgage
Adjustable rate mortgages do what you'd expect the rate 'adjusts'. It works like this: With a fixed rate mortgage your monthly payments will be the same over the life of the mortgage. you will generally know what you will have to pay. In contrast with an adjustable rate mortgage (sometimes called an ARM) your payments will change over time. The mortgage payment will be 'adjusted' when the interest rate is adjusted. you may be able to expect the interest rate to be adjusted at regular intervals. Usually, you start with a period of a year at a fixed rate. This rate is often quite low, as an incentive to get an adjustable rate mortgage. Then, after the initial fixed period the interest rate is typically adjusted yearly to reflect the current rates. If the rates go down do your mortgage payments. But if the rates go up, your payments will go up. here is an example: a "3/1 ARM" is fixed at an initial low rate for the 1st 3 years, , then changes every year depending on an index. Common adjustable rate mortgages are: 1/1, 3/1, 5/1, 7/1, and 10/1. These adjustable rate mortgages stay fixed for 1, 3, 5, 7 or 10 years , then change every year. In general, if you're interested in an adjustable rate mortgage take a comparatively short fixed term 3 years is probably the best; depending on the interest rate you're offered for the fixed term. The benefit of ARMs is you have periods of fixed interest , then opportunities to take benefit of current interest rates. If rates go down, you benefit. The problem is that you might find your rate adjusting throughout periods of increasing interest and this can mean higher payments and more money out of your pocket. But these do give you many of the advantages of variable rate mortgages with more stability for those who want to mitigate the risk of a variable rate mortgage. but, as with all good deals check the good print. on occasion, an adjustable rate mortgage can cost you more in the long run, particularly after the initial incentive interest rate is replaced by an adjusted rate. Know what you're to get into.
Assumable Mortgage
You've put in an offer on a house. The real estate agent says that the seller of the property has a mortgage on the property that is 'assumable' and it's at a great interest rate. What do you do?
Assumable mortgages are loans that can be passed from one owner to another. It can be an advantage to assume a mortgage if the interest rate is very good compared to negotiating a brand new mortgage. Keep in mind that you cannot assume a mortgage unless you have a big enough down payment to cover the difference between the value of the house and the amount of the mortgage. Otherwise, you are in the situation of negotiating a second mortgage - which you should generally avoid. Second mortgages are often at much higher interest rates and any savings you get from assuming the first mortgage could be lost. Also remember that when you assume a mortgage you assume it 'as is'. This means that it may not have the options you want, like prepayment privileges and payment frequency options. Read the fine print on any mortgage contract - but especially if you want to assume a mortgage. Be sure it's the best deal for you.
Balloon Mortgages
There is many of talk recently about balloon mortgages. How is the buyer to separate the fact from the hype? The interest rates look good, but what’s the catch? Let’s start with many facts about balloon mortgages, in plain English. Then we’ll discuss how they may be to your advantage. Balloon mortgages are generally a mortgage what must be paid in full at the end of the term. Over the course of the mortgage, you can pay a regular payment depending on a common amortization schedule. Then, as the mortgage term ends, the full total comes due. The final payment you make is called the balloon payment. This payment is generally the full balance of the mortgage loan. So, why could you think about this kind of mortgage? Isn’t it a huge gamble? Not essentially. Balloon mortgages may be an excellent choice if you're looking both for a lower interest rate and are probably to be in the home for a defined period. what would happen if you choose to stay in the home you first intended to sell? You may also refinance when the mortgage comes due. Let’s look at a scenario. If your company usually moves you from one workplace to another, at a regular and predictable schedule, then a balloon mortgage can work for you. You’ll get the lower interest rate up front, and the trick is to time the end of your mortgage with the time in what you could usually sell your home! Then you may be able to easily make your final balloon payment with the proceeds from your home, rather than have to refinance. Balloon mortgages are usually available for similar time periods as other mortgages. you can probably be looking at a term of either 5 years or 7 years. As a result, these loans are usually portrayed in financial jargon as 5/25 or 7/23. but, don’t count out balloon mortgages if you need a longer or shorter term. you may be able to get terms as short as 3 years or as long as 10. What’s the difference between a balloon mortgage and your common ARM (adjustable rate mortgage)? usually, an ARM will change the interest rate on either a semi annual or yearly basis. If interest rates are going up, your rate will be going up regularly too. but, a balloon mortgage will usually only be subject to an interest rate adjustment once after the initial rate is set. Another plus of a balloon mortgage is those lower initial interest rates. depending on how the rates are calculated for balloon mortgages, you may be able to sometime save as much as one or more percent. but, there are disadvantages. With the common ARM you may be able to usually negotiate another mortgage with the same lender when the mortgage term is over without much difficulty. With a balloon mortgage, you may be making your refinancing procedure more challenging and costly. If interest rates on mortgages rise significantly, you may be setting yourself up for extra costs and possible problems. If rates rise more than 5 percent above the balloon interest rate, you may be needed to to re qualify and have the home reappraised. This can cost you money and put the new mortgage in jeopardy if the assessed value is less than projected. Having said that, it never hurts to comparison shop. Certainly, it’s worth to get pricing on a balloon mortgage and an ARM mortgage at the same time. This gives you the chance to compare the alternatives available to you and choose what is best in your circumstance. So, you’ve decided to get a balloon mortgage? How do you do this? you can continue exactly as you could for any other mortgage. you're still shopping for your best alternatives and you may want to be asking a similar set of questions as you could ask for any mortgage: * “What’s the interest rate?” * “When will the balance come due?” * “What kind of refinance alternatives are accessible to me?” * “How can my refinance alternatives be lost or forfeited and under what conditions?” (If a refinance choice is included) * “Will I have to re qualify for a mortgage when the balance comes due?”
Fixed Rate Mortgage
A big most of people decide the fixed rate mortgage. This mortgage guarantees some interest rate for a time period. The most popular fixed mortgages are 3,4 and 5 years. but, you may be able to have a fixed mortgage for as short as 6 months or as long as 10 years. The biggest selling feature of fixed mortgages is the 'guarantee' of the payment that you can be paying. but, if you pick a long term fixed mortgage say 5 years you will pay many for the opportunity of having your interest rate locked in. overall, unless interest rates are steadily climbing you will pay more in interest costs over the life of your mortgage if you decide long term fixed every time. Why? you will really pay a much higher interest rate over a longer period unless interest rates go up pretty significantly. In my own case, I stayed with terms of 6 months on my fixed mortgage and found that I was averaging from ¾ to 1 full percentage less in interest rates than those who had locked in at a five year rate over the same time period. but, there are many caveats: 1. This approach works best when interest rates are staying pretty stable (within 1 percentage point or so) or are falling. 2. you may want to have a mortgage lender who will allow you to lock in to a longer term mortgage if rates go up and without a penalty. If you have these two features through your lender go ahead and get a short term fixed mortgage. The only downside is signing papers for your next term on a more frequent basis. When looking at fixed rate mortgages do not be fooled by cool promotions like cash back and other things. These incentives are typically restricted to 5 year and longer fixed rate mortgages. The lender can pay for to give them because you're going to be their buyer for a long time. Further, they do not decrease your interest rate what is the one thing that will really benefit you. Your other best bet in an interest market where rates are staying the same or dropping is typically many form of 'variable' or 'adjustable' mortgage. These mortgages will allow you to get a better rate now overall (while the total of your mortgage is higher) and will allow you to take benefit of fluctuating rates (which are hopefully moving in your favour). Again, you have to have the choice to lock in if rates go up. This will allow you to manage your risk. Simply keep a sharp eye on interest rates. Pay attention to what the analysts are saying about the short and longer term future of rates. Then lock into a fixed rate mortgage from your variable or adjustable one. This gives you the best of all possible worlds, as well as the lowest interest rate now and alternatives afterward. But you must be sure that you have the choice. Read the good print. And make sure to ask your lender if it's possible before you sign the fixed rate mortgage papers.
Interest Only Mortgage
An "interest only" mortgage is like a line of credit. you may be able to pay only the interest on the mortgage. This can greatly decrease your payments in time of financial stress. but, it also means that the debt will never be paid off. Refinancing With an interest only mortgage, you pay only interest for the 1st 5, 10, 15 years of the loan. This can lower your monthly payment by a pretty lot. And that looks to have increased the popularity of interest only mortgages in the past not many years. The interest only mortgage is an interesting mortgage type. All you pay over the life of the mortgage is the interest on the balance. but, there are alternatives once this interest only period ends. You either begin to pay interest and principal at a faster rate than if you’d done that from the beginning, or you may be able to decide the balloon mortgage approach, what means the total loan principal becomes due at the end of your term. When do interest only mortgages become more popular? usually, as interest rates rise and the cost of housing increases, more people will look at this kind of mortgage. Why? At issue for many buyers is the size of their mortgage payment and making that payment lower. At the same interest rate, an interest only payment is less than a payment of both interest and principal. A lower payment can mean that you can have a higher budget for home shopping. And that makes a big difference for many home buyers. Many interest only mortgages have an interest only period (5 to 15 years) , then you begin to pay both interest and principal. If your interest only mortgage has a term of 30 years, after your initial interest free term, you could begin to pay interest and principal. You could begin to pay principal and interest to pay off the balance by the end of 30 years. This really means that your payments will be considerably higher than they could have been if you’d paid off principal all along. Other interest only mortgages are like balloon mortgages. but, most balloon mortgages could ensure that you're paying down the original principal over time. When you pay your final balloon payment, it could be less than the original loan total because of your payments of both interest and principal. With an interest only balloon mortgage, your final payment should be exactly equal to your original loan total. All you’ve paid is interest; all the principal of the loan remains. When could you think about this kind of loan? The situation to think about this kind of loan could be distinctive. typically, a family with a single wage earner shouldn't be considering this kind of mortgage. Your exposure to financial risk could be too high. but, investors may be interested. The advantage with an investment property, that you expect to go up in value, is that the interest you pay is tax deductible. so, you may be able to subtract the interest paid from your taxes, while you own the property. At the end of the period of the loan, you could then sell your property (hopefully at a profit) and take the returns to pay out the mortgage. but, this is a gamble. There’s no guarantee that the property appreciates in value. And there’s no guarantee that you may sell it when you choose to. If you can’t sell the property, you could have to refinance (unless you have made enough from the property to pay out the balance of your mortgage) and refinancing could cause you many challenges. The other advantage to this kind of mortgage is that you may save or invest the money that you could have paid in principal on the loan. Again, this situation will typically favor investors of one kind or another. Interest only loans come with many of the alternatives of other types of mortgages. With many, you may be able to lock in a fixed interest rate for the full term, while others resemble adjustable rate mortgages (ARM), what carry a fixed rate for some number of years , then change every six months to a year. What kind of savings are you looking at on your monthly mortgage payment? They may be important. Let’s look at an example: You borrow $200,000 using an interest only loan with a 4.75 percent rate and no principal payments due for 5 years. Your monthly payment will be just $791, or about $250 a month less than if you went with a regular 5-year ARM with the same interest rate. This can really work for you, if your property appreciates in value. Of course, there's never a guarantee that prices will go up. And if you don’t sell your property as planned, your monthly payment jumps drastically after your interest only period. You’ll must be prepared for that. Interest only loans may also seem right for people whose earning is sporadic, either because they're paid on commission or because they get a important part of their earning in yearly bonuses. In this case, you have the choice of only paying interest many months, but can pay above and beyond the total due when they get their bonus checks. There is usually no prepayment penalty on interest only loans. This gives you flexibility in applying extra money to your mortgage when you have it, and still keep monthly payments low.
Reverse Mortgage
A reverse mortgage is not really a mortgage at all. don't want the reverse mortgage loan you may be able to cancel it. But you have to do this inside three business days after closing. "Business days" include Saturdays, but not Sundays or legal public holidays. Also note, if you do choose to cancel you have to do it in writing. Your lender might give you with a form. You may also send your letter by hand delivery, fax, mail or telegraph company, but it must be sent before midnight of the 3rd business day. You can not cancel in person. make sure that you obviously indicate, in any correspondence, that you want to cancel your reverse mortgage and include any loan number if possible. Reverse Mortgage Debt Limit How do you know how much you will owe the lender at the end of the reverse mortgage? The total you can owe equals all the money you get from the reverse mortgage (including any you used to finance the loan or to pay off previous debt), plus all the interest that's added to your loan balance. If that total is less than your home is worth at that time, then you (or your estate) keep whatever total is left over. here is the good news: you may be able to never owe more than what your home is worth when the loan is repaid. The lender might not seek repayment from your earning, your other assets or from your heirs. The lender is gambling on the value of your home in giving you the loan. The technical term for this is a "non recourse limit." It means that the lender doesn't have legal recourse to anything other than your home's value when seeking repayment. Back to top Reverse Mortgage Debt Payoff Reverse mortgages usually must be "first" mortgages. What that means is that the reverse mortgage must be the primary debt on your home, and the debt that's paid 1st. If you now owe any money on your property you typically have two options: 1. Pay off the old debt before you get a reverse mortgage; or 2. Pay off the old debt with the money you get from a reverse mortgage. In most cases, you can be best off to pay any home debt with a lump sum from your reverse mortgage. This will consolidate your debt in the reverse mortgage. Back to top Reverse Mortgage Financing Fees Many, if not most, organizations providing reverse mortgages will charge many fees for the loan. you may be able to either pay these fees out of pocket or use the money you get from the loan to pay them. Your lender might refer to "financing" the loan cost and this usually refers to you adding the cost of the fees to the loan. Remember that if you do this you can also be paying interest on the extra loan total. Back to top Reverse Mortgage Loan Amounts The total of money you may be able to get depends most on some things and each company offering reverse mortgages might have their own programs and approaches. but, the total will typically rely on your age and your home's value. In general: 1. The older you're the more of your home's value you may be able to mortgage, and 2. The more your home is worth the more cash value you can access. 3. Keep in mind that the particular total that you might get might also rely on interest rates and average closing costs on home loans in your area. Back to top Reverse Mortgage Repayment Typically, reverse mortgages must be paid in full when the last surviving borrower dies or sells the home. Reverse mortgage lenders may also require repayment if you: 1. Fail to pay your property taxes; 2. Fail to maintain and fix your home; or 3. Fail to keep your home insured. Since the lender is gambling on the value of your home they'll typically have these conditions particular in the contract. After all, all of these problems can influence the value of your home (and property taxes will usually be paid 1st out of the sale of a property, what reduces the net proceeds.) Other default conditions include: 1. Your declaration of bankruptcy; 2. Your donation or abandonment of your home; 3. Your perpetration of fraud or misrepresentation; 4. If a government agency needs your property for public use (for example, to build a highway); or 5. If a government agency condemns your property (for example, health or safety reasons).
FHA Mortgage
The Federal Housing Administration (FHA) is a special program under the jurisdiction of the Department of Housing and Urban Development (HUD). FHA was established in the 1930's to enhance housing standards and conditions, and give an adequate home financing system through insurance of mortgages. In other words, FHA was the original mortgage insurance for US families! With the mortgage insurance provided through FHA, families that could otherwise be excluded from the housing market were able to purchase homes.