Archive for Refinancing Articles


Mortgage Refinancing with the HARP 2.0

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By now you have likely heard commercials on the radio, or read a news article that discussed the revolutionary mortgage refinancing plans, called HARP 2.0 that have been endorsed by the U.S. Congress, Fannie Mae, Freddie Mac, and President Obama himself. Nationwide lenders posted some breaking news on their website about the latest changes of the Home Affordable Refinance Program that will be opening the door for millions of underwater borrowers to finally qualify for home refinancing. With fixed refinance rates coming available in the 3% range, the timing could not be any better. Clearly this could be a step in the right direction to help the housing sector finally rebound. It probably won’t hurt Obama’s reelection campaign either.

Nationwide recommends reading up on the Home Affordable Refinance Program 2.0 to determine if you are eligible and if refinancing with this program is the best option for your personal situation. Here are some articles that Nations Lending and MRBuzz recommends reading first:

At MR Buzz, we believe it is important to shop HARP lenders and compare interest rates, terms and costs before committing to a refinance for thirty years.  Also don’t forget that the HARP Refinance Program ends December 31, 2013. There has been chatter about a HARP 3.0, and if that chatter turns into buzz, you can bet that the blog at Mortgage Refinancing Buzz will be the first to report on the facts. If you have additional questions about getting government mortgage relief, we suggest calling the housing helpers at 888-995-HOPE (4673).

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BD Nationwide recently published an article highlighting the opportunity to save money by refinancing with lower interest rate.  There is a sense of urgency for homeowners to get approved for a lower fixed rate because the Federal Reserve has made it clear that they can’t keep key rates this low for much longer. The mortgage company stressed to their audience that if they to get cash out of their house that now was the best time. Consumers in the U.S. have grown accustomed to low home loan rates, but it’s unrealistic to think that affordable house financing will last forever. According to BD Nationwide you should seize the opportunity for low mortgage refinance rates to meet your needs if you are eligible with today’s refinance guidelines.

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Mortgage Refinancing with a 5 or 7 Year ARM

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Most American homeowners have turned a deaf ear to discussions regarding mortgage refinancing with an adjustable rate.  Clearly fixed rate mortgages have surged in popularity in recent years, but they are time when an ARM makes sense. Adjustable rate mortgages (ARM) are a very attractive option for homeowners looking to invest in a home. The interest rate offered on these types of loans are generally significantly less than what you would get on a 30 year fixed rate mortgage. However, the tradeoff is that the interest rate usually changes every year on the anniversary of your loan. This can be quite risky as you won’t know for certain if the interest rate will be higher or lower than your current rate. Even a change of as little as 1% can add hundreds of dollars to your monthly mortgage. Is the monthly savings worth the risk?

Is a 5/1 or 7/1 ARM Too Risky?

It depends on what your long term goals are. Although there are a number of ARMs available, many people consider 5/1 or 7/1 type of ARMs. A 5/1 ARM is fixed for five years and then the rate adjusts every year afterwards until the loan is paid off. The 7/1 ARM is fixed for seven years and then an adjustable rate for the other 23 years. For those that are considering refinancing a home loan, these may be viable options if you are anticipating interest rates will drop by the time the five or seven years have passed. The reality is that there are multiple choices for a fixed rate mortgage refinance with hybrid loans that blend fixed and adjustable rates over the term.

ARM Refinancing May Save You Thousands of Dollars a Year

They are also a good option if you plan on moving or selling your home prior to the mortgage rate becoming adjustable. For example, if you are planning on retiring in a few years and moving to another state, then refinancing at a fixed rate for 5 or 7 years can save you a significant amount of money in interest. As long as you sell your home before the fixed rate term is up, then refinancing your home loan may be worth the time and effort.

How much lower is the 5/1 rate than a 30-year fixed rate? It can be 2% or more less than a fixed rate mortgage which would result in several hundred dollars in savings every month. That is money you can use to pay off more expensive debt, such as credit card, or to put towards your retirement savings. Be aware, though, that refinancing to a 5/1 or a 7/1 does carry some risk. Namely, if you do not sell your home in time, you could get stuck paying a higher interest rate when your fixed rate term ends. Evaluate all of the elements involved in the refinance – interest rate, fees, terms – to ensure you are getting the best deal available.  There are more choices today for the fixed 5 and 7 year loans with conventional, jumbo and a FHA mortgage refinance program. This makes selecting a hybrid refinance that much easier.

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Most Common Reasons for Mortgage Refinancing

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In a recent article, Freddie Mac addressed the most popular reasons that homeowners refinanced their first or second mortgage.

  • 95% of mortgage refinance loans carried a fixed interest rate.
  • 32% of people who refinanced their 30-year fixed-rate mortgage opted for a 15- or 20-year term.
  • 46% of homeowners who refinanced their first-home loan reduced their principal balance by bringing money to the closing table.
  • 16% of homeowners grew their mortgage balance by at least 5% with a cash refinance.
  • The average mortgage rate reduction savings was 22% in interest costs
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When to Refinance

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Knowing when to refinance your home is difficult if you are trying to time the market.  Most homeowners try and play the interest rate game like the stock market when it comes to refinancing. They usually think that if they wait a little longer that the mortgage refinance rates will fall.

Unfortunately like the stock market, predicting the trend for interest rates is difficult and if you wait too long it can come back to haunt you. Millions of homeowners waited a day, week or month too long and never saw mortgage refinancing rate decline to the level they had hoped for.

If you are wondering when to refinance a mortgage, take a picture of your financial situation and compare your interest rate with the current refinance rates.

  • Will refinancing save you money without adding years to your mortgage?
  • What will mortgage refinancing cost you?
  • Do you qualify?
  • Can you document your income with W2’s and paystubs?
  • What is your credit score?
  • Do you have enough equity to meet the loan to value requirements for home refinancing?

Many people choose to refinance when they can lower their interest rate by a percentage point.  If you have a jumbo mortgage, lowering your rate a quarter of a percentage point could save you thousands of dollars. So use a mortgage calculator online and do the math so you can make a sound decision on a mortgage refinance loan. You need to have a good idea about how much money you would save by refinancing. We also recommend looking at the big picture when shopping for the best loan.  Remember that a FHA refinance will have a monthly insurance payment in addition to the mortgage payment, so make sure that you are looking at the big picture. Consider the costs and benefits of mortgage refinancing, before paying for a new appraisal and committing yourself to one lender.

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