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Compare Lenders for the Best Mortgage Refinance Rates Online
Posted by: | CommentsHome mortgage refinancing can be an excellent opportunity to get a lower interest rate and more financial security for your home during these turbulent times. Getting the best mortgage refinance rates is imperative to maximize monthly savings. That is why homeowners should shop for a refinance loan and negotiate the closing costs. Market insiders have been reporting higher loan fees from mortgage lenders today. Since the housing crisis we have seen fewer mortgage lenders and brokers. Loan companies may be in a better position to offer you a no cost refinance option, but your credit must be stellar.
According to Steve Brown, CEO of Pacific Coast Bankers’ Bank, in San Francisco, mortgage lenders are trying to make up for loan default losses by raising revenues in closing costs on new refinances transactions. The era of no income verification loans is long gone amid tightened regulations.
According to Yahoo Finance, the top 5 mortgage lenders today are Bank of America, Wells Fargo, JPMorgan Chase, U.S. Bancorp and Citigroup, “These banks represent the vast majority of all loans in the U.S.,” Brown said. But these banks sell home loans with largely the same set of borrowing requirements, as nearly all mortgage today are backed by the Federal Housing Administration, Fannie Mae and Freddie Mac. But borrowers should still shop for the best mortgage refinance rates and look for the lending deals. Most mortgage bankers say a borrower should plan for a 30 to 60 day process when home refinancing. With dropping property values and stricter appraisal guidelines, getting an appraisal can be an obstacle for mortgage refinancing. “They might have to have the home appraised a couple of times to get a solid valuation.”
A spokesman for the Mortgage Lead Vault, a mortgage lead company recommended “making sure that you are comparing apples to apples. Verify the interest rate, term and of course the closing costs when comparing lender quotes.” According to Zillow the survey indicated that borrowers spend about 5 hours shopping for a home loan online, yet they spend 10 hours shopping for a car. 31% of borrowers spent less than 2 hours researching their refinance loan. About 50% of all borrowers “only got one or two mortgage quotes.” Many loan professionals suggest getting four refinance quotes.
Credit Problems Hindering Mortgage Refinancing
Posted by: | CommentsThe mortgage refinance application volume dropped significantly last week. It appears the pool of eligible borrowers for home refinancing has been shrinking significantly as mortgage lenders continue to tighten their loan guidelines leaving no solutions for borrowers with bad credit . According to a report from CNBC, many insiders were surprised by MBA’s report this morning on weekly home refinancing applications report from the Mortgage Bankers Association.
Even as the 30-year fixed mortgage rates are available at 4.75%, refinancing fell dramatically last week for the first time in a month, down 14.25%. Michael Fratantoni writes, “Despite the historically low mortgage rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance.” Fratantoni underscores the problem most borrowers have with the lack of home equity being the driving force for not qualifying to refinance. For homeowners who have good credit but owe more on their mortgage than their home is worth, they may be eligible to refinance under the government’s Home Affordable Refinance Program. This refinance loan allows conforming mortgages to be refinanced up to 125% loan to value.
The issue of bad credit refinancing is a biggest reason most borrowers can’t approved for a home refinance loan. If you were late on a mortgage payment, you won’t qualify for the FHA refinance program. That is why so many homeowners are seeking loan modification plans. Many homeowners also suffer from credit card debt that usually brings down the credit scores. The lack of refinancing while interest rates are at record lows underlines the major problems in mortgage lending in 2010. It also suggests that the government involvement in the housing crisis may have its repercussions.
Rates Drop and Mortgage Refinancing Applications Soar Again
Posted by: | CommentsIt seems that Europe’s financial crisis is converting to low mortgage rates for US borrowers looking to refinance their first or second mortgage. Homeowners seeking a low rate mortgage refinancing are in the right place at the right time if they have the credit, income and equity in their home to qualify: Mortgage rates are inching closer to a record low. The window of opportunity may close soon. Refinance rates could jump if investors grow more confident and shift money out of the safety of government bonds, which influence mortgage interest rates. For now, though, mortgage refinance rates are ridiculously low. The average thirty-year fixed-rate loan sank to 4.78% last week, the lowest this year and barely above the record of 4.71% set in December. And fifteen-year loans are at their lowest rates in twenty years.
According to the Mortgage Bankers Association, mortgage refinance applications soared last week to the highest level in seven months. Anxiety over the European crisis has caused global investors to snap up Treasury bonds, which they view as much safer than other investments. Treasury yields have fallen as a result, taking mortgage refinance rates down, too. When the crisis eases, and especially if the American economy recovery stays on track, expect investors to move out of bonds and back into stocks. That would make refinance mortgages more expensive. “If the economy finally really shows sustained improvement, rates are definitely going to go up,” said Fred Chamberlin, a consultant with Alpine Mortgage Planning in Eugene, Ore. He suggests that homeowners looking to refinance move fast and not hold out for even lower rates. “If you want the bottom, the only way you’re going to know it is when you’ve missed it,” Chamberlin said.
Home refinancing isn’t right for everyone who qualifies. In most cases, mortgage refinance loans cost several thousand dollars in fees. No cost mortgage refinancing may be available but usually the interest rates are higher, so in the end you may not save as much money as you would have you paid the lending closing costs. Experienced mortgage lenders recommend calculating how long it will take to recover those fees with the lower loan rate. As cheap as mortgages are these days, the number of loans being taken out to buy homes remains at its lowest point in more than 13 years. One reason is that a special tax credit for homebuyers expired last month. Many people had rushed to sign contracts by then. Another problem millions of homeowners are having is qualifying for a refinance mortgage. Borrowers need solid credit and a down payment of at least 3.5%.
Banks tightened mortgage refinance guidelines after millions of borrowers fell into default and foreclosure during the housing bust. A loan officer with Icon Mortgage in Las Vegas said, “They’re really looking with a magnifying glass,” said Steve Mevorah,. “They’re trying to make sure that they are flawless loans.” Analysts had expected mortgage rates to rise when the government ended a program designed to bolster the housing market. Instead, they fell because of fears that Greece would default on its debt.
Cash Refinance Versus Second Mortgage
Posted by: | CommentsMany borrowers need helping chossing which refinance loan is best for their situation. Comparing benefits of cash out refinancing and second mortgage loans is always a good idea. There are a few differences between a 1st mortgage refinance and a home equity loan, so let us examine the pros and cons of each type of loans.
Dear Mortgage Lender: My wife and I presently have a thirty-year mortgage at 5% that has a fixed rate. The first mortgage loan balance is around $400,000. We paid $500,000 for the house with a $100,000 down payment. Our realtor friend said our home should be worth $650,000, based on similar homes that recently sold in the neighborhood.
We have owned our home for a little less than 2 years and thought that now might be a good time to get some money out of our home with a second mortgage or cash out refinance loan. With the money our goals are to consolidate credit card debt and finance a home remodeling project that we have been considering for the last few months. We have accumulated nearly $20,000 in credit card debt and a friend suggested refinancing the debt into a credit card debt consolidation loan. If we eliminated our credit card bills, we would wave good-bye to almost $1,000 a month in credit card payments. With interest rates so low for mortgages, we figured that this would be a wise move, but some of our neighbors suggested that second mortgages were risky and that using our home to refinance bills may not be a good move in case we needed the money for an emergency down the line. What do you think?
Which type of loan would make sense for us financially? 2nd mortgage or mortgage refinance? Also what is the difference between a second mortgage and a home equity loan? – J. Stevens, Virginia Beach, VA
Dear Stevens Family: Paying out money each month for minimum payments on high interest credit cards can eat your savings and strangle your cash flow. While using your home equity has some risks, millions of homeowners have been able to consolidate their debt, reduce monthly payments and save money when refinancing debt into a mortgage. Second mortgages or home equity loans are not easy to qualify for in 2010, so you may need to request a refinance loan that also extends you cash back for debt consolidation and the home remodeling. You are under 90% loan to value so if your credit is good, you shouldn’t have a hard time qualifying for a home refinance loan with a low competitive interest rate. From what we are hearing, most home equity lenders are only extending home equity loans to 80% for cash out and bill consolidation. Just a few years ago borrowers were able to qualify for 100% mortgage refinancing with fixed equity loans, but the default rates soared and lenders have tightened their guidelines significantly when it comes to second mortgage loans. It is also hard to advise you to get an equity loan at 6% when you may qualify for cash-out refinancing below 5% that is fixed on a thirty year term.
We also recommend comparing 1 point closing cost scenarios on refinance loans with no cost mortgage refinancing. Compare the rates to make sure the no cost option is worth the incentives.
FHA Mortgage Loan Defaults Rise
Posted by: | CommentsFHA refinance loans remain more flexible than conforming loans, but if the borrower defaults, the FHA insurance held by our government picks up the tab. In a recent CBS article they profiled a New York City bus driver Steven Mitchell is two months behind on mortgage payments for a home loan guaranteed by Uncle Sam and part of a growing first-time home owner population at risk of foreclosure. His home in the Far Rockaway section of Queens, New York, has a mortgage insured by the Federal Housing Administration, known as the FHA, which does not grant home mortgages, but insures them.
FHA mortgage volume has soared – quadrupling in the past three years. In 2006, 425,000 borrowers acquired FHA home loans. This year, nearly half of all first-time home buyers in the U.S., a total of 1.8 million, used FHA-insured financing to refinance or make a new purchase.
Part of the appeal is the FHA allows a down payment as low as 3.5 percent of the purchase price. “The current degree of FHA predominance in the market is unparalleled,” Department of Housing and Urban Development Inspector General Kenneth Donahue told Congress earlier this year. FHA is part of HUD.
Mitchell has a monthly payment of $3,200, hefty for a bus driver earning $47,000 a year, but his brother and a friend who live with them were helping with the payments until they lost their jobs, leaving Mitchell juggling the household bills by himself. “As long as everything was still being paid, everybody was doing a part, it could have been done,” Mitchell said. Mitchell’s home is one of 5.5 million purchases or mortgage refinance loans worth a total of $696 billion currently insured by the FHA.
FHA forecasts it may pay out $27 billion over the next 30 years to cover expected defaults, leaving it with only $4 billion of its $31 billion cash on hand. That would sink the FHA’s capital reserves below the congressionally-mandated two-percent of its loan portfolio, but the agency says no bailout is in the offing. Read the complete > FHA article.
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