Interest only loans can be very tempting to borrowers who are unable to afford a home with traditional means. They are also popular among those who intend to invest their savings or those who plan to make more money in the future. Unfortunately, interest only loans aren’t right for everyone. If you, like many other people in Indiana, took out one of these loans and find that they aren’t all that they are said to be, you may want to consider refinancing.
Who Should Refinance Their Interest Only Loan
Many people who take out an interest only mortgage loan expect to be making more money within a few years time. Unfortunately, expectations don’t always match up with reality. If your earnings aren’t increasing, refinancing now may be a good idea. If the interest only period of your loan will be ending soon or if you plan on staying in your house for awhile longer, refinancing will also be of benefit.
Why Refinancing Will Help You Save
Currently, interest rates on interest only loans in Indiana average 5.72 percent. While this is a fair rate, it’s not much lower than the rate you would pay on a regular adjustable rate mortgage. In fact, it may even be higher depending on the type of ARM you get. Current rates on a 5/1 ARM in Illinois average 5.56 percent, while a 3/1 ARM averages a rate of 5.42 percent. By refinancing to a regular ARM, your monthly payments will still be comparable to what you pay now. The bonus is that you will be paying on the principal and building equity at the same time. This will allow you to save money over the long haul.
By: Jane A. Hale
Posts Tagged ‘Adjustable Rate Mortgage’
Indiana Refinance Loans – Refinancing an Interest Only Loan
January 17th, 2010Refi Home Mortgage Loans – Different Types of Mortgage Refinance Loans
January 13th, 2010
With today’s lenders, you have more refinancing options than ever before. So whether you are looking to reduce your rates or lower your monthly payments, you can find financing that is right for you.
Lenders also let you compare loan quotes online without hurting your credit score. So with real numbers, you can determine which is the best lender and loan for you. You take the guesswork out of the refinancing process, knowing how much you can save.
Stability Of A Fixed Rate Mortgage
Refinancing for a fixed rate mortgage can lower your rates and give you peace of mind. By setting your mortgage rate today, you know exactly how much your interest will cost and how long your loan will last.
Fixed rate mortgages also allow you to buy down the rate, saving you thousands if you keep the mortgage for several years. You can also extend the loan period to reduce monthly payment amounts.
Betting On Lower Rates With An Adjustable Rate Mortgage
Refinancing with an adjustable rate mortgage will qualify you for some especially low rates a year or more. With these introductory offers, you can save hundreds a month.
There is the chance that rates will increase, along with your monthly payments. Depending on your caps, you may also see your mortgage lengthen due to high rates. But if you aren’t planning to keep your loan or house for too long, you may find the savings worth the risk.
Cashing Out Your Equity With A Refi
Cashing out part of your equity during a refi saves you money on application fees and higher rates with a separate home equity loan. When you pull out your equity, you can still select fixed or adjustable rates. You also have the options of extending or shortening your loan terms.
Creative Terms For Unique Situations
Interest only loans and similar creative loan terms work for those in unique situations. For instance, if you are planning to move in a year, refinancing with an interest only loan can cut your mortgage payments by hundreds of dollars. And by selling before the loan payments jump, you don’t have to worry about high payments.
By: L. Sampson
Refinance or Loan Modification?
January 9th, 2010
A downturn in the United States economy has increased the demand for mortgage loan modification assistance. With a large amount of homeowners being upside down, the opportunity to refinance into a better mortgage term has become impossible.
For those who are stuck with the adjustable rate mortgage, a high interest rate, etc. the chances of qualifying for a new loan are very slim. First, if you qualified for a stated income lenders no longer allows such type of loan. Therefore, borrowers in this situation will have to stay in their current position no matter how high the interest may become. Second, the lenders requirement for debt to income ratio’s have changed. Some lenders use to let you go up to 65% dti and now good luck with getting 55%(only if you have 80% or below loan to value). Third, lenders now requires borrowers to have reserves. In this economy how many people really have reserves? The likelihood of these people having reserves when the economy was at it’s best is probably slim. Finally, let’s not forget about the distressed area’s which is nationwide. To this day maybe 99.9% lender will not do a 100 percent financing (who can blame them?). Now, with all this in mind, what options are these homeowners left with?
The answer?
Loan modification can be beneficial for homeowners when refinancing is no longer an option. With foreclosure filings increasing up over 80 percent higher than 2007, it has forced lenders to cooperate with assisting homeowners by modifying non performing mortgage loans. Lender are willing to work with homeowners a long as they feel that the loan can perform. Though, in some cases homeowner are denied for the simple reason that no matter what modification the lender has to offer; the borrower just cannot afford the home.
Can a homeowner do their own loan modification?
Yes, homeowners can choose modify their current mortgage terms with their current lender. Though, keep in mind that the lender at times may give you what is more beneficial for them and not the homeowner. Hiring professionals can be very costly but, it has its benefits. Keep in mind that their are many loan modification companies out there and choosing the right one can be difficult. When choosing a company make sure to research who they are and what their reputation is. Loan modification prices vary depending on how much work needs to be done. When working with a company, make sure that you are aware that there is no guarantee that the loan modification can be done. There are loan modification software’s available for these companies such as Casi Mod to determine if there is a possibility that a loan modification can be made. By inputting the current financial situation, it will give them a general idea on the possibilities of attaining a loan modification. Be aware of organizations that collect money before taking all financial (income, expenses, assets, etc.) information and consulting you with a plan that they will try to conquer. Make sure that they take a really good look at the file, consult you and give that you a proposal before paying for their services. Again, this can be costly but highly suggested as long as you are dealing with a superior company.
In conclusion, owning a home is an American dream. Homeowners do not want to lose their homes because no matter what they will have to live elsewhere. Though, with the decrease in home values and income, deterioration of credit, and strict lender guidelines it is almost impossible to refinance and put themselves in a better position. Therefore, doing a loan modification could be the best option for most people.
By: Miko Del Rosario