Refinancing Your Home Mortgage Loan - Refinancing Your Home Mortgage Loan

You’re considering refinancing your home mortgage loan to save money. Interest rates are the lowest they have been in decades. But, you’re asking yourself, “Is refinancing worth my time and effort. Can I really save thousands of dollars on my home mortgage loan?” The answer is yes. There has never been a better time to refinance your home mortgage.

Refinancing your home is a great way to save thousands of dollars over the length of your mortgage loan. You could lower your monthly payments considerably. This will depend upon your current interest rate.

With today’s online mortgage companies, it’s easy for them to give you all the information you need. This can help you to get a lower interest rate, because these mortgage companies are very competitive to earn your business. You don’t have to run all over the place pulling credit reports and talking to multiple lenders. Online mortgage companies can give you quotes from many different lenders.

Before you find a lender to refinance your current mortgage, there are a few key factors to know. It’s a good idea to decide how long you’re going to stay in your home, your current interest rate, credit rating and the value of your home. These are all very important things to consider before you refinance your home.

With interest rates so low, it is a great time to refinance your home. Online mortgage lenders are now more competitive than ever for your business. Even if your credit is not perfect, you can still refinance your home mortgage. Now is the time to take advantage of the lowest interest rates in decades and save yourself thousands of dollars on your home mortgage loan.

Refinancing your home with a lower interest rate can help reduce the term of your current mortgage. Your payments may stay the same, but the length of the loan and interest you save, can make it worth your time. You would have to lower your rate considerably for this to make sense. Good mortgage brokers can give you different ideas on what is best for your situation.

Taking the time to look into refinancing your home can pay off. If your current mortgage payment is $1,890 and refinancing reduces it to $1,790, the difference of $100 can add up. It’s a good idea to plan on staying in your home for at least 2 years for refinancing to make sense. This is because of the fees.

Everyone has a different reason for refinancing their home. One thing that refinancing does is allows you to leverage your home to accomplish your goals right now! It used to be you had to sell your home before you could take advantage of appreciation. However with a refinance you can use that appreciation to accomplish your immediate goals without selling the house.

In days past the main reason anyone would refinance their mortgage loan was to lower the interest rate. More recently, homeowners refinance for a wide variety of financial reasons as the mortgage becomes an intregal part of the homeowners overall financial plan.

Combo Mortgage Loan - Have you been thinking about buying a home buy have no money to put down? Have you been thinking about refincing your home to consolidate some credit card debt or to get a little extra cash out of the equity in your home to do some home improvements? If you answered yes to either of these questions then a combo loan may be right for you. Ask your mortgage professional how a combo loan can benefit you.

A combo loan is any combination of a first mortgage and a second mortgage or home equity loan. Combo loans are an easy way to maximize the use of the equity in your home. These loans can often allow you to borrow up to the full value of your home.

Benefit of One Stop Mortgage Loan - Affiliated Business disclosures inform the borrower if the Mortgage Broker/Lender or Correspondent Lender are partners or own an interest in another Company servicing the borrower. Title Companies, R.E. firms, and R.E. Attorneys many times are interconnected. The benefit of in-house services is a faster turn-around and better service to the borrower.

The costs can sometimes be discounted if all affiliates are under one roof.

Clients can feel comfortable knowing that their loan stays in one location and if any issues arise, it can be addressed and handled more efficiently.

Mortgage Loan Process - After The Mortgage Application

Your mortgage company will begin the work of verifying all the information youve provided. This process can take anywhere from one day to one week, depending on the type of mortgage you choose, whether youre buying a home outside your local community, or a host of other factors.

Within three business days after your application, the mortgage company must give you a good faith estimate of your closing costs. Youll also get a statement that shows your estimated monthly payment, the cost of your finance charges, and other facts about your mortgage. Stay in touch with your mortgage company to speed up the application process. Some home buyers find the closing process to be one of the most intimidating aspects of buying a home because its so unfamiliar. If so, ask your mortgage company what to expect at your closing.

Once complete, your application will be given to a processor in the mortgage company who will organize your paperwork and may verify your employment, bank balances, and other information.

Be sure to respond promptly to requests for information while processing is taking place.

Commonly requested items during processing that may not have been collected during the application include:

The final purchase contract for the house (if applicable).

If youre self-employed, the mortgage company may require your personal and business tax returns for the previous two years and your companys year-to-date Profit and Loss statement.

Divorce settlement papers, if applicable

Updated account statements for listed assets in the application that may have changed in value.

Information about debts or credit report items that may have been delinquent or not accurate.

Evidence of your mortgage or rental payments, such as canceled checks.

An irrevocable gift letter if you are receiving a monetary gift from a relative.

The processor is collecting this information before presenting it to an underwriter. An underwriter reviews all the information in your loan file to determine if the application meets the lender guidelines. With approval, a lender should give you a letter of commitment, which is a promise from the lender to make a loan based on specific terms and conditions.

Once you receive your approval, and youre waiting to close on the sale of the home, dont go on a shopping spree. The mortgage lender may do a final check of your credit report or bank accounts to make sure youre not assuming more debt or spending your cash reserves.

Key Factors in Qualifying for a Loan

When a lender makes a decision about a mortgage application, they consider two basic factors: your ability and willingness to repay the loan.

Ability to repay the mortgage is determined by verifying your current employment and analyzing your total income. Lenders prefer for you to have been employed at the same place for at least two years, or at least be in the same line of work for a few years. Your proposed monthly payment will be compared to your monthly

Willingness to repay is influenced by how you have paid previous loans and by examining how the property will be used. Willingness can be gauged by your credit report. There is also a greater tendency to stick with your payments if you live in a house as opposed to a rental property or vacation home.

It is important to remember that there are no set rules and each applicant is handled on a case-by-case basis. Many applicants come up a little short in one area, but make up for it with other strong points. These compensating factors may include a large down payment, solid employment, extensive educational background or overall financial health.

For applicants who need to make a lower down payment, mortgage insurance is protection for the lender in case you stop making payments. This allows low and moderate income families become homeowners with low down payment programs.

Your Total Mortgage Payment

Your monthly mortgage payment typically is made up of four components: principal, interest, taxes and insurance, together known as PITI. The principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. The interest is the fee charged for borrowing money. You can determine the amount of principal and interest by using our Mortgage Payment Calculator.

The taxes are property taxes your community levies which are generally based on a percentage of the value of your home. The lender usually collects 1/12th of the yearly property tax bill each month. The lender collects taxes in advance and places the money in an escrow fund.

Lenders wont let you close on your home loan if you dont have home insurance to cover your home and your personal property against losses from fire, theft, bad weather and other causes. The insurance amount is collected and paid much like the taxes. Each month 1/12th of the insurance bill is collected and stored in an escrow account until the bill is due. Even if you pay cash for your home, it is a good idea to buy home insurance in the event your home is damaged or destroyed.

Principal and interest comprise the bulk of your monthly payments in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your initial monthly payments are largely interest, and as the loan matures, a greater portion of your payment is allocated toward the principal.

Due to the recent trend of lenders cutting appraised values, this is something that should addressed and included in the process...You will think it's worth one thing, the appraiser will come up with another value, which we will use to structure our loan, then the lender may come up with their own value...If it's a tight loan and you need 100% financing, or are very close to the cutoff line for program you desire thru desired lender, be prepared for a 2nd option if this happens during a review...Many loans have been lost due to this happening, many of those I believe could have been better managed by discussing the possibility and discussing some options in case...It would be better to hear, "well, what we discussed possibly happening, happened, we'll move on to our 1st option and I will keep you abreast, sorry for any inconvenience this has caused" than "houston, we have a problem" and no options previously discussed...I can beleive any borrower would rather hear the first than deal with the 2nd at a time when they thought nothing else could go wrong...

The Mortgage Loan Process - The first step in the mortgage process is usually to apply for a loan. You may also have preliminary discussions with the mortgage professional to determine whether or not they can help you with your loan. At any rate, the process can not begin until you have filled out and signed a mortgage application and the appropriate disclosures.

The basic process of trying to obtain a mortgage is application and disclosure of all applicable information, processing your loan application, an underwriter underwriting your loan, loan approval, and then the closing of your loan. Each step mentioned here has certain criteria and procedures that are done and completed to finish each step.

One thing that will help in the process, is to quickly supply your mortgage professional with whatever documentation he or she asks you for at each stage of the loan process. This helps the loan finish faster, and with less frustration, as well as it will often times save the borrower money.

From that point you will be asked to provide a lot of personal documentation, such as paystubs, w2's, bank statements etc. Make sure you provide all pages of the requested items to expedite your loan.

If asked for paystubs or bank statements, make sure you provide the most recent ones available.

If you find that documenting your income will be a problem you should ask your preferred mortgage professional about a Stated Income, Reduced Documentation, or No Ratio mortgage.
These loans generally require high FICO credit scores and a good employment history.

Reducing Your Monthly Mortgage Loan Payment - One of the most common ways to lower your monthly mortgage payments is by refinancing at a lower interest rate. If interest rates have dropped since your mortgage was last issued, then consider refinancing to reduce your monthly payment. You can also buy down the interest rate to the lowest possible payment and receive some payment relief. Also look at other alternative loan programs that may give you a lower monthly mortgage payment.

Reducing your monthly mortgage payment will save you money but consolidating high interest rate debt into your mortgage may save you
two to three times more each month in total debts. It will save you money each month and reduce your tax obligation because mortgage interest is tax deductible.

One way to lower your monthly mortgage payment is to extend the term of your mortgage. If you have a 15 year mortgage and refinance into a 30 year or 40 year mortgage you can potentially save hundreds of dollars per month. Your mortgage broker can show you step by step how to determine if extend your term can help you reach your goals of a lower payment.

Does your loan payment include Private Mortgage Insurance? PMI can be cancelled when you have proven a successful payment history and your loan balance is 80% or less of your home's current value. If your home has appreciated in the last few years you may be bale to cancel your PMI and save money every month.

You may also consider a mortgage loan where you only pay the interest each month. This type of loan is known as an interest only loan. It is important to remember that since you will only be paying the interest each month your principal won't be reducing. Meaning if you took out a $250,000 loan to purchase a home and have an interest only loan after 5 years, for example, you will still owe $250,000.

These loans work well in areas of rapid or moderate property value appreciation. While these loans aren't for everyone, they are an attractive alternative to a regular 30 year fixed rate mortgage.

If you consolidate your debt and significantly lower your monthly payments, it is important to exercise some control and resist the temptation to go buy a lot more stuff on credit. Many people will still end up in bankruptcy after they consolidate debt because they feel that they can now afford to go buy more, and they dig themselves into a hole that is very difficult to get out of.