Mortgage applications rose across the U.S. for the third straight week, driven by both home purchase loan and refinancing activity.
It may be a slow housing market, but approximately 82 percent of Freddie Mac-owned loans refinanced during the quarter resulted in new loans that were at least five percent larger than the original amount of the previous mortgage.
This is the same percentage of cash-out refinances as was reported in the fourth quarter of 2006.
Here’s a question for Bankrate’s financl advisor, Don Taylor. It centers on mortgage refinancing …
Applications for new mortgages and refinancing increased 0.6 percent last week, pushed upward largely by higher demand for home loans to buy real estate, an industry trade group reported yesterday.
Home mortgage applications rose last week after five consecutive weekly declines, as lower home loan rates spurred both home purchase loan and home mortgage loan refinancing activity in the U.S.
Washington Mutual Inc., the largest U.S. savings and loan organization, has offered to refinance home loans - $2 billion worth of mortgages - at lower interest rates to help subprime borrowers meet rising payments.
A second mortgage may have allowed you to acquire the residence you wanted or to have extra cash for some project - but that was a few years ago.
Now, you’ve built up decent home equity and are wondering if it would be a good time to refinance your second mortgage. Here are some things you need to know in order to help you make that decision intelligently …
Especially in the current housing market - as initially low home mortgage rates are spiraling upwards - individuals are hoping to refinance home loans.
Before you decide, however, it should be clear what your purpose for refinancing is so that you can be sure your mortgage is still meeting your financial needs. Let’s review a few basic reasons why you’d go through with this process:
1. Lowering Your Rate and Payment
Many people refinance their adjustable-rate mortgage to lower their interest rate. It may be that you got your ARM at a higher rate than what is currently available. If you refinanced to a lower interest rate, you would subsequently be lowering your monthly mortgage payment and possibly saving yourself some money.
2. Consolidating Debt
Consolidating high-interest credit card debt is another good reason to refinance your ARM. If you have a lot of credit card debt that you want to get rid of, it’s a smart idea to use your mortgage loan to do it; the interest on your credit cards is most likely higher than the interest rate you could get on a mortgage.
Moreover, mortgage interest is tax-deductible whereas credit card interest is not. That can be a great advantage and could save you more money.
3. Getting a Fixed Rate Mortgage
When you consider mortgage refinancing your ARM, you have to consider the current mortgage environment. Are rates going up or down? Right now, short-term rates have remained at a constant level. But that could change at any time.
You also have to know whether the rate on your ARM is about to adjust. If it is, it could go up. Or you may have been in a situation where you needed a short-term mortgage, but now are ready to move to a long-term, fixed-rate mortgage.
If you’re averse to your rate (and payment) changing, you may want to move from an ARM to a fixed-rate mortgage. A fixed-rate mortgage will guarantee that your rate and payment won’t fluctuate for up to 30 years.
4. Getting Cash Out
But refinancing can be more than just getting a fixed rate or lowering your payment. Getting cash from your home equity is another big reason to refinance. You may need to make some improvements on your home like adding a bathroom or updating your kitchen. Or you may need money to start the business of your dreams.
There are many reasons to refinance out of your adjustable rate mortgage. The best thing to do is to speak to an experienced home purchase loan expert. Ask a lot of questions so that they can find the right mortgage that fits your needs- the FREE form above will get you started.
SOURCE: Quicken Loans
When interest rates spike, many owners turn to a mortgage refinance. As they should.
The process can be overwhelming, however. Therefore, it’s important to take the proper steps in order to make it as simple as possible …
Know the ‘why’ of your refi
The first step, figuring out exactly why you want to refinance, is key. “‘Because rates are low’ isn’t the sole reason to refinance,” experts say.
Remember, different mortgages meet a variety of needs. Consider:
It helps if you can guess how long you’ll live in the house.
“The more prepared the consumer is, the more that we can give them a tremendous amount of advice and counsel,” says Doug Perry of Countrywide Mortgage. “Lenders are very eager to provide a great deal of advice to narrow down the mortgage products as a means of accomplishing financial goals.”
Perry, who is first vice president of consumer markets, says Countrywide has more than 80 mortgage products, consisting of various fixed- and adjustable-rate loans for an assortment of periods. Most home mortgage brokers and lenders can offer dozens of mortgage products, just as an auto dealer offers dozens of models and trim levels and colors.
Many homeowners want to refinance to get the lowest possible monthly payment, but that goal is not as straightforward as it seems. The lowest possible payment would come from an interest-only loan, but that type of mortgage is a good fit for only a few.
A mortgage that adjusts monthly or annually will sport a rock-bottom rate - that is, until short-term adjustable rates rise above today’s long-term rates. There are “hybrid ARMs” - adjustable-rate mortgages that have a low introductory rate that lasts three, five, seven or 10 years, then adjusts annually thereafter. Those mortgages work for people who are pretty sure they will move in about three, five, seven or 10 years.
Perhaps you want to lower your monthly payment, but don’t want to start anew.
Just ask the lender to amortize the new loan for the remaining length of the current loan. For example, if you are three years into a 30-year mortgage, you can ask the lender to set up the refinanced loan so that you’re scheduled to pay it off in 27 years. Or you can refinance home loans to pay them off in 15 or even 10 years.
Bring your papers, please
When you apply, ask your lender for a list of exactly what documentation and information you must provide. This step separates the fast customers from the laggards.
We’ve said it before (more than once) but we’ll say it again:
Rising mortgage payments are putting many homeowners in the United States at risk of losing their home or falling badly behind on payments.
But even if things have already gotten bad, careful mortgage refinancing may be able to pare down or altogether eliminate that risk, and keep you fiscally afloat.
Three years after the real estate market turned hot and prompted so many people to buy, thousands are now in grave danger of losing their homes because they can’t make their monthly payments.
The number of foreclosures is soaring this year.
The rates of foreclosures had been increasing for months during the past year, but in January, mortgage lenders filed a record number of foreclosure suits in the U.S., more than twice the number compared with a year earlier.
Why are so many mortgage payments rising to heights beyond the reach of the borrowers? Because there are so many adjustable-rate mortgages on the verge of pushing up monthly bills. Many homeowners simply took on more debt than they could manage.
Some, to get the house of their dreams, agreed to risky mortgages with low, but adjustable interest rates that are just now moving upward.
Worse yet, they may have taken on balloon mortgage payments they could not make. Many high-risk borrowers had no other choice but to accept higher home loan rates.
Rising insurance and property tax bills have only compounded the problem.
The long and short of it is that many homeowners can no longer afford the houses they live in. They have missed a few months, and now the mortgage lender is suing, asking the courts to intervene and auction it off.
Homeowners who can still afford to pay their newer, higher home loan payments are suffering too. Attractive adjustable rate loan payments from a few years ago, are now about to jump up as much as $500 a month.
What is a borrower with an imminent payment increase to do? Prepare before your payment goes up.
The time is now. If you know your rate is going to adjust any time soon, apply above and request a free, no obligation mortgage refinance quote.
You can lower your bills beginning this week, before your rates go up, and you fall behind on your home payment or any of your other payments. There’s really no need to wait until the situation gets completely out of control.
These are tough times, but by exploring options for conventional mortgage and home equity loan refinancing, you will probably be able to navigate through these stormy waters unharmed.