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Refinancing A Home Equity Loan Article
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from:How to Avoid Refinancing Loan Mistakes
At one time or another homeowners have to get a refinancing loan; they need to pay off credit cards and other debts, but all too often they choose the wrong refinancing loan. When you take on a refinancing loan, this creates a brand new loan. Often homeowners make the mistake of choosing the wrong kind of loan. They might choose an adjustable rate mortgage (ARM), when a fixed rate mortgage would have been better. Then with a fixed rate mortgage, some people choose the lowest payment schedule, which means the term of the loan is longer than you need it to be. A 30 year mortgage is right for someone if they cannot make higher payments; but the over all interest paid would be much more than if the homeowner had chosen a 15 year refinancing loan.
There are closing costs associated with refinancing loans, because it is a new loan. The costs at closing are usually between 3 and 5 percent of the price of the home. Before refinancing, you should find out how long it will take before you will break even. Your lender can provide you with a break-even analysis. A break-even analysis will determine how many months you must pay before you break even on the closing cost. If it will take more than 2 years to break even then you should reconsider taking out the loan.
Another mistake homeowners make is paying too much for private mortgage insurance (PMI). Homeowners will pay between $50 and $100 a month for PMI and what they might not know is that after the loan-to-value ratio reaches 80 percent or lower, you can ask the lender to drop the PMI. Before taking out a refinancing loan, you should ask the lender at what point can you drop the PMI payment.
Never rush into getting a refinancing loan; there are some predatory lenders out there that will take advantage of you. Always deal with a reputable bank, credit union, or other type of lender. A bad lender will not consider your best interest; a bad lender will encourage you to take out a bad loan so that you will be paying back the highest rate of interest. Shop around for the best loan possible.
People with less than perfect credit get the worst loans; therefore, it will behoove you to get a copy of your credit report from all the major credit bureaus. Check your credit report for errors, and if there are errors present, address them right away. Should there be any negative marks on your credit report address these also, by paying off the debts to get the negative marks removed, so that you won’t get stuck with a sub-prime interest rate. Your objective to refinance is the get the best refinancing loan, by knowing how to avoid mistakes.
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Refinancing A Home Equity Loan News
Obama meets with Reno family, pushes for extension of home refinancing program
President Barack Obama visited a Reno couple Friday and urged Congress to extend a home loan refinancing program. He told a neighborhood crowd of about 100 people that many Republicans in Congress want to rely on old solutions to the housing crisis.
Read more...Freddie Mac: 30-year mortgage rate down a tick at 3.78%
Record low interest rates for 30-year mortgages edged down another tick, Freddie Mac said in its latest survey , which showed lenders across the nation offering the benchmark loan at 3.78% compared to 3.79% last week. The typical rate on a 15-year fixed loan held steady at 3.04%.
Read more...Mortgage Q&A: Borrowers hit by mess others made
The very real credit crunch continues. The political pundits keep preaching the sermon of the common-sense lending that's needed to get credit flowing again in hopes of jump-starting the housing market and spurring refinancing. Programs have been introduced. The Home Affordable Refinance Program (HARP), initiated a couple of years ago, ...
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Read more...Refinancing to pay for my swimming pool?
Dear Dr. Don, I am looking at putting in a swimming pool. I need some extra cash. Two choices I have looked at are: refinancing with a cash-out mortgage; or refinancing with a new first mortgage plus a home equity line of credit. Currently the interest rate on my mortgage is 4.375 percent.
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