Homeowners usually have a choice of a variety of different loans when they refinance. The different mortgage refinancing loan options allow a homeowner to choose the best loan for them based on their needs. Many homeowners refinance to get cash back, lower interest rates, or change the terms of their home loan. Whatever your reasons is, here are the most popular loan options for a homeowner who is refinancing a mortgage.
The most popular loan types are fixed rate mortgages, adjusted rate mortgages (ARM), and cash back refinancing options, or home equity loans.
Fixed rate mortgages are a great, stable, loan choice. They offer interest rates which never change throughout the length of the loan. This is the loan type that is generally suggested for most homeowners. Many people choose to opt out of an ARM and into a fixed rate home loan.
Adjusted rate mortgage (ARM) loans mean the interest rates can change throughout the length of the home loan. While this loan type may not be the most stable, or cheapest in the long term, there are some reasons why a homeowner would choose this loan. These loans are usually cheaper and easier to get into, and sometimes offer a low interest fixed rate period. After the introductory fixed rate period is over, the loan is eligible to have its interest rate changed at any time.
Cash back refinancing is a great way for a homeowner to utilize the equity in their home, and get a large amount of cash back. This is typically cheaper than a personal loan, and the money can be used for anything a homeowner wishes. When a homeowner does this they are just refinancing for more than they currently owe on their mortgage, and pocketing the difference. Although the money all needs to be paid back, it is at a much lower interest rate, and spread over a much longer period of time.
While there may be a few other options, these are by far the most popular ones. Many homeowners will refinance their home in the next few months, and knowing which loan types are available will make the decision easier. Understand the different options available to you when you refinance your mortgage, and make the decision the is best.
By: Michael Petrone
Posts Tagged ‘Refinancing Mortgage’
Bad Credit Mortgage Refinance Loans
April 2nd, 2010
It’s still not to late to refinance your home mortgage loan. The fact is, interest rates are still significantly lower than they were 5, 10 years ago.
If you are one of the 33 million Americans struggling with bad credit, don’t let “less-than-perfect” credit, discourage you from refinancing your current mortgage.
Refinancing your mortgage may allow you to lower your monthly mortgage payments. A cash-out refinance method may be used to liquidate some of the equity
that your home has gained in the past several years. In states such as California, it’s almost a shame not to cash in on the incredible home value appreciations.
Some neighborhoods have seen appreciations of up to 300%!
If you decide to refinance, keep these three tips in mind.
1. Shop, shop, around. You wouldn’t buy the first “open home” that that you visit on a sunday afternoon so why would you go with the first and only mortgage refinance option that you are given?
2. Find a mortgage refinancing process that can gives you up to 4 mortgage refinance quotes. Look for lenders, who specialize in consumers with bad credit. These lenders tend to make the loan process easy, since they have
specialists, who are used to dealing with consumers with poor credit.
3. Save as much as you can. Once you get your mortgage refinance quotes. Make the obvious choices and go for the lowest interest rates. You may have to pay points to get a
lower interest rate. Weigh the cost of the points against how much you would save in the long run, if you select a lower interest rate.
4. Start to rebuild your credit. Use some of the extra cash that you are enjoying, to pay off debt and start rebuilding your credit. Pay your bills on time – always!. This will prove to your creditors that you can handle debt.
Follow these simple steps and will be able to get a mortgage refinance loan in no time – even with bad credit.
Find the list of lenders, who specialize in bad credit refinance mortgage loans and reviews on each lender.
By: Delia Galley
Mortgage Refinancing: Loan-to-Value Ratio Basics
March 27th, 2010
If you are in the process of refinancing your mortgage it is important to understand how loan-to-value affects your mortgage application. Here is what you need to know about your loan-to-value ratio.
The value of your home is an important aspect of your mortgage application. The loan-to-value ratio lenders use is based on the appraised value of your home and the amount you are requesting to borrow. To determine your loan-to-value ratio, divide the total amount of your loan by the value of your home from a recent appraisal.
For example, if your home is worth $150,000 and you are asking for $120,000 from your new mortgage lender, your loan-to-value ratio is .80 or 80%. Mortgage lenders have guidelines for approving mortgage loans and traditional lenders typically do not approve mortgage applications with loan-to-value ratios greater than 80 percent; if the lender is willing to approve a mortgage above 80% loan-to-value, that lender may require Private Mortgage Insurance in order to qualify.
Mortgage lenders consider homeowners with high loan-to-value ratios to be more of a risk for lending. Homeowners that own more equity in their homes are less likely to default on their mortgages than those that have little or no equity. In addition to requiring borrowers with high loan-to-value ratios to take out Private Mortgage Insurance, mortgage lenders charge these borrowers higher interest rates because of this increased risk. If you are a homeowner with a high loan-to-value ratio the lender may require you to pay for a new appraisal before approving your mortgage. To learn more about refinancing your mortgage and avoiding common mortgage mistakes, register for a free mortgage guidebook using the links below.
By: Louie Latour