Opting to go with a VA loan to refinance your home mortgage can be great for your budget. It is possible to get cash when you need it. If you need to consolidate your high interest debt or pay for a child’s tuition a VA loan can be beneficial.
VA refinancing loans can be great. If you need you can find cash in little to no time at all. It can be a great tool to utilize.
What a VA loan transaction requires is repayment of the estate debt. The loan must be for the same property and also the same borrower. What this is called is “Cash Out Refinance.” This “Cash Out Refinance” is considered the principle residence of the homeowner.
In general the rule for the owner is that their homes can be refinanced for up to 90% of its appraised value. However, this option is not available in every state so check whether you are in a state that offers this option. The closing cost must be at par with the ratio of the homes value.
It does not matter how long the home have been owned, it is not a requirement for this loan. However, the minimum requirement is that the homeowners pay the loan on time on a consistent basis.
Most often people are not aware whether their rates are adjustable. This is a big concern because most people budget their income to accommodate the payment that they currently have. Fixed VA loans are great because it allows the borrower to know exactly how much they need allow for their payments every month.
This however is up to the lender to decide. The other option would be the VA loan that with an adjustable rate. On average the interest on the loan is adjusted by 1% every year. The duration of this is usually around five years and would typically reach 5%.
The only person that knows what is best for you is yourself; never take the first offer that is given to you. It is a common mistake people make, jumping on the very first offer because they are worried or not exactly sure of what to do or what they can do.
Do some research and find a plan that best fits you and your situation. It is recommended to speak with a consultant and look at their calculations. Look at how differently you make have to make the payments, depending on whether you choose to go with an adjustable VA loan or a VA loan that has a fixed rate. Make sure you are absolutely comfortable with the plan that is offered.
Once you have the numbers, think whether you would be able and comfortable with your monthly payments and go from there.
By: Michael Petrone
Posts Tagged ‘Interest Debt’
Home Equity Refinancing – VA Loan Refinancing
January 25th, 2010California Cash Out Refinance Mortgage Loans
January 3rd, 2010
Are you looking to pull some extra cash from your home? If you’ve built up equity in your home then you can most likely refinance and get cash out when you need it.
With a new cash out refinance mortgage loan, you can turn your home equity into cash for just about any purpose.
Here’s how a cash out refinancing loan works. Let’s say your home is worth $300.000 and you still owe $200.000 on the existing mortgage. The difference of $100.000 is the home equity available to you.
It’s up to you to do whatever you want with the money from your home refinance. A good way to use it is to consolidate any high interest debt you might have. The interest rate on a cash out refinance loan can be as low as 6%, and you’ll get tax benefits too because the debt is part of your home mortgage.
In most cases, a California homeowner can refinance up to 100% of their home value. You may be able to keep your monthly payments the same or even lower them. The length of your loan payback period will determine your monthly payment amount.
Even if you have bad credit you can still qualify for a refinance loan, since your home is used as collateral. But don’t forget that you could wind up losing your home if don’t make your payments.
Cash out refinancing can be a smart thing to do. You can pay off debt, improve your home, pay for education, or even start a home business with the money you get from your home.
By: Frank W Ellis
Interest Only Loan Refinance
December 4th, 2009
Refinancing of interest only loans simply means swapping one loan for another. It is an effective way to decrease the debt on existing loans. This is especially beneficial if the current interest rates are lower than the interest rates you are presently paying on the loan. Refinancing would enable you to convert your high interest debt into a low interest debt, as the amount of monthly payment would decrease. The extra money saved can be reinvested in something more lucrative like real estate or shares, or to pay off high-interest debts like credit cards. Refinancing is also done for converting an adjustable rate mortgage into a fixed rate mortgage. Refinancing has become so common in recent years that almost three quarters of new mortgages were refinanced loans in 2003.
Refinancing of interest only loans is very attractive, especially when the time comes for the loan to get amortized. That means the loan will have to be repaid at the current interest rate, along with the principle. Most people seek to refinance their interest only loan in order to buy more time, i.e. to delay the repayment of the principle further. However, this may also increase the risk on the loan, since the interest rates may go up further, the price of the house may come down or the economy may slump in the future.
Refinancing of interest only loans is ideal for people who are expecting huge capital gains in the next few years or are planning to sell their house by the time the interest-only period is over. This is a good alternative as long as the economy is good, the interest rates are steady and the prices of houses are increasing. Interest only refinancing is recommended for people who have irregular incomes like commissions or bonuses or those who are expecting a hike in their income in the coming years. The savings accrued from refinancing can also be used for home improvement, which will increase the value of the home in the future.
A few questions to be considered while refinancing are: how long do you expect to stay in the house? How much equity do you have in the house? Will you have to pay points for getting a low rate from the refinance? What would be the closing costs? Will the lower payments from the refinance enable you to cover the closing costs, points (if any) and the fees reasonably?
There are several lenders who are offering refinance options for interest only loans. The Internet is a good source for getting information about these offers and also to find out more about interest only loan refinance.
By: Eric Morris