Homeowners across the nation continue to turn to cash out refinance and home equity loans for paying off high rate credit cards that are escalating out of control. The Federal Reserve lowered key rates again yesterday, but many homeowners just can’t take the combination of rising adjustable mortgage rates at the same as the increasing interest rates from their credit card companies. Unfortunately, recent changes to the bankruptcy laws have led to minimum credit card payments being doubled by the bank lenders who issued the credit. As consumer debt grows so to do the worries of homeowners across the nation who may be facing a foreclosure on their home. It makes sense to utilize the equity you have left to help refinance an eliminate the debts that are causing you the most pain.
Bankruptcy used to be the way people got out from under burdensome credit card debt. But, under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 filing for bankruptcy is prohibitively expensive, complicated and time consuming. This may be why fixed rate home equity loans have become popular methods for refinancing high-interest credit card debt, particularly for those with low credit scores.
Critics suggest that credit card accounts are not secured by your home. But then, the interest is not tax deductible. Most first or second mortgage loans carry mortgage interest that is tax deductible. Home equity loans are calculated with simple interest terms and revolving credit cards are calculated with compounding interest.
While credit card advocates point out that the loan terms for refinance and home equity loans are typically longer than credit cards, they are not forthcoming with the penalty rates and additional costs added to the compounding interest. Many consumers are beginning to realize that fixed interest terms are more realistic for actually paying off your debts.
Borrower like the home refinance loans, because they can get a reduced interest rate that offers an affordable payment. The adjustable rate mortgages have caused a real stir in 2008 as foreclosure and payment default rates have reached record highs in states like California, Florida, Indiana, Michigan, Virginia and Massachusetts. With new FHA initiatives, homeowners can refinance their ARM with a FHA home mortgage that now allows cash back and debt consolidation. FHA used to limit home refinancing to rate and term guidelines that prohibited any cash back or bill consolidation. FhA also allows bad credit, limited credit and loans for first time home buyers.
By: Maria Ny
Posts Tagged ‘Home Refinance Loans’
FHA Home Mortgage Loans – Refinance Adjustable Rates and Debt
April 26th, 2010Ohio Refinance Loans – Should You Pay Points on Your Refinance?
March 26th, 2010
Points can be confusing for anyone who isn’t a mortgage or lending expert. This is why most people overlook the option of paying points on their Ohio refinance loan. The problem is, they also miss out on the opportunity to save money over the life of their loan. The information below can help you determine whether or not you should pay points on your refinance.
What are Points?
There are two different types of points that can be paid with an Ohio refinance loan: origination points and discount points. Origination points are required to pay for part of the closing costs and are paid to the originating lender. Discount points are optional points that can be paid to lower your interest rate. One point is equal to one percent of the loan. Paying these points does not change the amount you borrow, but it does buy down the rate used to calculate your monthly mortgage payments.
Reasons to Pay Points
If you have the money to pay discount points, there is no good reason not to do it. Interest rates on 30-year Ohio home refinance loans currently average 5.77 percent. For each point you pay, you lower your interest rate by approximately a quarter of an interest point. If you would be paying 5.77 percent, paying 2 discount points can lower your interest rate to 5.27 percent. This will in turn lower your monthly payments, as well as the total cost of the loan.
Reasons Not to Pay Points
If you don’t plan on keeping your home for much longer, paying points on your Ohio refinance loan can be a serious waste of money. Points come with an initial upfront cost. You will need to stay in the home for a certain amount of time for the interest savings to be worthwhile.
By: Jane A. Hale
Mobile Home Refinance Loans With Any Credit
December 24th, 2009
What would be your reason for refinancing your mobile home? Would you want to payoff debt, buy a bit more land, use the money to add one, or do you have another reason? Most reasons are going to be valid and are going to be what you need to refinance. There are some things you need to know about refinancing a mobile home that are going to be different than a typical loan. Here are some mobile home refinance loans tips to help you.
First, if you do not already own your own land, then you need to consider making a plan to purchase some land for your mobile home. This makes getting finances much easier and you will no longer have to pay rent for a spot in a park. Plus if you decide you want pets or children you will have a lot more room for them with your new land. If you want to add on later this is easier to do with the land as well.
Second, make sure your home is fixed to the ground and is not on wheels. Also, get rid of the trailer hitch because it makes your home look like it is easily moved and that is not very secure for a bank. This will help you when appraisal time comes because there will be no pictures with wheels or a hitch to help underwriting tell you no. This is a must and most lenders will not even touch you if you do not get rid of the wheels and hitch.
Last, make sure you do everything you can to help your credit score. Get a free credit report and pay off any small debts you can to help your credit score. This will greatly improve your chances of being approved when it comes time to to get one of many mobile home refinance loans. Plus paying off some debts will help your debt to income ratio which also helps your chances of qualifying.
By: Gressly Stevens