There are certainly many advantages to a home loan refinance. If you have been in your home for awhile, there is a good chance that you have built up quite a bit of equity in your home. Even if it has not been that long since you purchased your home, if you live in an area where prices have appreciated considerably, you could still have a significant amount of equity in your home to tap into for a home improvement, purchase or to use for debt consolidation.
If you are considering a home loan refinance, it is important to know what you should expect. In some ways, getting a home loan refinance is not much different from getting your first mortgage with the exception that you already have the house! You will want to make sure that you look for the best terms and interest rates. In a similar fashion, the lender will want to make sure you are credit worthy before they approve you for the loan.
One of the first questions the lender may ask is why you are interested in refinancing. Be honest with the lender, because this may help him or her to design a home refinance package that perfectly suits your needs. Even if you are planning to consolidate your debts with your home refinance, be sure to mention this when you apply.
Be prepared for the fact that the lender will run a credit check on both you and any co-borrower in order to determine the level of credit risk you present. This is part of the process of becoming pre-approved in the home buying process. The lender will check your credit score and also check your credit report to determine the number of delinquencies you may have, the number of open accounts you have and the balances on those accounts.
The lender will also be interested in your income and various expenses. This is to ensure that you will be able to actually afford the proposed home loan payment. The underwriting guidelines for every lender are different; however, the general rule of thumb is that a prospective buyer should not have a debt to income ratio that is higher than 36%. Additionally, lenders usually prefer for your total housing expenses not to exceed 28% of your income. Of course, there are some exceptions to this rule. In certain circumstances, lenders will approve loans for buyers who have a debt to income ratio up to 40%. You can usually qualify with a higher debt to income ratio if you are able to make a larger down payment and/or if your credit rating is good enough.
To ensure there are no surprises when you sit down with the lender to discuss your home loan refinance, it is a good idea to check your own credit score in advance and be certain there are no mistakes or discrepancies before you submit your home loan application. If you do find any discrepancies, take the time to have them fixed before you apply for a home loan refinance.
By: Alan Lim
Posts Tagged ‘Refinancing’
Refinance Student Loans and Save Money
April 23rd, 2010
The elation of graduating from college quickly fades when the reality of finding a job and starting a career set in. In addition you must also begin planning how you are going to pay off any student loans you accrued during the past few years. Repaying these loans may be made a little easier if you refinance student loans.
Many student loans have a grace or deferment period to allow the graduate to begin work prior to making the first loan payment. This is a good time to do the research necessary to refinance student loans.
There are two options that you should consider when seeking to refinance your loan. Each of which will help you in managing your monthly loan payments. A good refinancing package may provide the opportunity to lock in a lower interest rate. In addition you may be able to extend the life of the loan by as much as 15 years. Both have the advantage of immediately reducing your monthly payments and allowing you to have a better standard of living. In terms of real savings reducing the interest rate is a better option in that it will reduce the total amount you will have to pay over the life of the loan.
In order to make a good decision on which refinance package you are going to apply for you should find out if you can combine all the different loans into one package. In many cases you may not be able to refinance student loans that are from different sources. Co- mingling private and federal loans is frequently not a possibility. Even it is possible to combine both federal and private loans you most likely will end up with a higher interest rate.
It is very important that you do a good job of comparing loans features and requirements before you sign the application. Seeking good student loan consolidation advice from your former university is an option that you may want to consider. You also may want to check out the blogs that are related to student loans to find out what is working and what is not. The more information you gather the more likely you will have the ability to make a good decision as what loan refinance package you need. Remember doing a good job now will mostly likely save you significant money over the life of your loan.
By: Jim Kesel
Tennessee Refinance Loans – Refinance Mistakes That Will Cost You Money
March 8th, 2010
Getting a Tennessee refinance loan can save you thousands of dollars over the life of your loan. There’s only one catch—you need to get a good deal on your refinance. It is the only way to make sure you get the absolute most out of your savings. Below is a list of three common refinance mistakes that will be sure to cost you money. With just a little bit of time and effort, you will easily be able to avoid these refinancing pitfalls.
Not Researching Rates
It is imperative that you get a good interest rate on your Tennessee refinance loan. To do this, you will need to research average rates and get rate quotes from several different lenders. This will allow you to make comparisons and be confident in the rate you finally choose to accept. Currently, fixed rates on 30 year Tennessee refinance loans average 5.45 percent.
Choosing the Wrong Lender
There are many reputable lenders who deal in Tennessee refinance loans. Unfortunately, there are also a lot of scammers. Tennessee has a serious problem with predatory lending. As of January 2007, a new law will be in effect to help protect borrowers. The law applies to high cost refinance loans and prohibits fraudulent practices. Even with this law in place, you are the only one who can protect your finances. Be sure to take time to find a lender who has your best interests at heart.
Not Paying Points
If you plan on living in your house for a few years and you have the money to do it, it only makes sense to pay points on your Tennessee refinance loan. Paying points upfront can significantly lower your interest rate and make the refinance more worthwhile.
By: Jane Hale