Refinancing [guide2mortgage.blogspot.com]
Are you considering refinancing your home mortgate to lower your interest rates and monthly payments? This could be a great financial decision and TransUnion wants to help guide you toward a successful refinance. Follow these refinancing tips for the best experience. For more information on your credit score, visit www.transunion.com
guide2mortgage.blogspot.com Refinancing your home mortgage? Learn how to refinance your home with these credit tips
Borrowers stand to save $ 2.5 billion to $ 5 billion from the revamped federal home loan refinance program. That's great news for troubled homeowners. Home loan aid program enriches banks
With mortgage rates falling to record lows this summer and the housing market showing signs of a pulse, refinancing activity is perking up.
Its too bad that so many people are relying on oversimplified advice and bad numbers to decide when to pull the trigger.
The refinancing equation has never been more complicated. While some borrowers are desperate to reduce their monthly payments, others are looking to build equity. Some are even treating their mortgage as an investment vehicle, sinking excess cash into their homes in order to secure a lower rate and cut future payments.
Yet most personal-finance resources these days dont account for situations like these. Even essential factors like tax rates and inflation expectations are often ignored in favor of simplistic calculations.
Many popular Web resources, in fact, are financed by lenders, mortgage brokers or lead generators that connect borrowers with banks. At times, their advice can be downright harmful.
Thats because of the risk involved. Refinancing generally costs 3% to as much as 6% of the outstanding principal of the loan, with banks levying fees on everything from application fees and title searches to appraisal costs and legal expenses. (Mortgage points can add to the total, though they typically help reduce the interest rate and lower overall costs.)
Fees are often murky, too, making comparison shopping difficult. The best way to compare deals is to consult with a housing-counseling agency approved by the U.S. Department of Housing and Urban Development.
Given such costs, you dont want to refinance often. Yet the advice coming from the mortgage world suggests you should be doing it regularly.
One particularly dubious idea gaining prominence is the 1% rule, which used to be the 2% rule when rates were higher. The gist: Refinance when you can knock a full percentage point off your rate.
A lead-generation site called Supermortgages.com says the following in a piece called When to Refinance a Mortgage: Are the current mortgage interest rates at least 1 point less than your existing mortgage interest? If so, refinancing your home mortgage might make sense.
Wells Fargo & Co.s website goes further. In an advice article titled Deciding to Refinance, it writes: If interest rates are 1/2% to 5/8% lower than your current interest rate, it may be a good time to consider a refinance.
Yet people who followed the one-point rule could have refinanced five or six times in the last 15 years, paying so much in fees that the savings would likely be wiped out.
Supermortgage content largely comes from mortgage brokers, lenders and other industry sources, says Andy Shane, a spokesman for parent company SuperMedia Inc.
In this case, he says, the author is a freelance writer with a law degree and a background in real estate who used a mortgage calculator and determined that a one- to two-point cut in rates made a pretty significant difference in monthly payments compared with closing costs.
Wells Fargo spokesman Jason Menke says the banks website has a wide range of information available to help borrowers. The rate difference cited is just a point where a borrower may want to consider looking into a refinance, he says.
The 1% rule could translate into big business if it catches on. About 71% of outstanding fixed-rate mortgages guaranteed by Fannie Mae or other government-sponsored entities are at least a point above current rates, according to Walter Schmidt, senior vice president at FTN Financial Capital Markets in Chicago. Related Refinancing Issues
Question by John P: Is the zero refinancing home loan real ? I am planning to buy my first home and applying for a home loan and one of the lender said this to me " If you take your mortgage with us and after 4 payments are made, if the rate goes down by a .25% we will refinance you at no cost" 1) Do they really refinance at NO(zero) cost of the rates go down .25% ? 2) Are there any other charges which are hidden which lenders charge if we refinance at a later stage when rates drop ? Best answer for Is the zero refinancing home loan real ?:
Answer by daeve930
Ask them if they'll provide that guarantee in writing. Since it would be the same lender, it would really be a loan modification. In only 4 months time, the only expense to them would be to pull a new credit report (we pay $ 12 - $ 18 for them), and whatever it costs to draw up the papers. They could use the same appraisal, title policy with maybe a small addendum, and flood cert. The escrow wouldn't have to change because your taxes and insurance would be affected. It would be very possible, if you're dealing with a reputable lender. When the market was so slow last fall, my company offered no closing cost purchase money loans. The rates were comparable to other lenders, and we just absorbed the closing costs. We're over run with refinances right now (mine is taking at least 3 months, which is a little longer than for people who don't work here). We've always paid the closing costs on home equity loans and lines of credit in TX, and lines of credit everywhere else, if you took at least a minimum initial draw, and you could just put it back tomorrow if you didn't really want it. It's not unheard of, but you want to be sure of what you're getting. If you're dealing with Joe's the broker, or Joe's Mortgage Company, or the First National Bank of Joe, I'd be leary. If it's somebody you've heard of like Wells Fargo or Bank of America, I'd say it's probably true, but get it in writing.
Answer by Judy
All they're saying is that if rates go down .25% or more after you've made at least four payments, they'll drop your rates. It won't cost them anything but a little paperwork - won't need a new appraisal or title search, for example. They are NOT saying your rate would go to zero, just that they'll drop it and not charge you a fee for the change. And by the way, if you go with them, I'd get that in writing, including how they will assign the new rate.
Answer by jlf
Some lenders have such offers. It refers to the administrative costs of the refi - NOT the new interest rate you'll pay. Just remember that they can change or rescind that offer at any time.
Answer by Landlord
Get it in writing and read every single word of that, especially the fine print. It is very unlikely that they do not have a million clauses, including the right to rescind at any time.
