The Benefits Of Home Refinancing Online

The Internet has set home refinancing as easy as can possibly be. Discover the various advantages you can enjoy if you refinance online.

The Internet has changed and will continue to change the way everyone does business. The home refinancing industry has taken advantage of this advancement as well, much to the gratitude of many homeowners. What advantages can you enjoy when you do home refinancing online? Here are some of them.


One of the benefits of the Internet is that everything seems to be happening at a faster pace. All you need to do is look around for a good home refinancing site (which can be done in a few clicks and types), fill out an application form, and expect replies and pre-approval letters in a matter of minutes through email. You do not have to call them up, or visit their actual location to get the information and the forms that you need.

It is true that the home refinancing market is thriving these days that choosing from between them can prove overwhelming. However, with online resources, you will be able to spot the larger, more reputable companies. It is easy to spot them with their professional website, excellent customer service and comprehensive information. You can also do a quick research on the reputation of a company you are looking into refinancing with through community boards and forums.

Consequently, refinancing online will allow you to make more informed decisions. You have the rest of the home refinancing market knocking its doors through your Internet portal, providing you with all the information you need to get by. After looking through a few websites, you will see what the current rates in the market are, what are usually offered and what options you have available. All these in just a few clicks of your mouse button. You do not only save time, but you save yourself a lot of trouble to find out exactly what you need to know.

One of the best parts about doing it online is that you can save some money. Most online mortgage companies usually cut out some charges such as underwriting and origination fees. Not only that, the competition in the refinance market online is also quite tight. You can actually use this to your advantage by picking out one that offers you the best deal you can qualify for. You can try applying for 3 or 4 different companies, ask about their offers and quotations and choose whichever can give you the best deal.

Lastly, home refinancing online poses lesser risks as less commitment is involved. You can apply online with as many lenders as you wish for without having to be obliged to commit to one immediately. Instead, you can test the waters, check whether they can give you the service and the best offer you need. If you think that you are dealing with a lender which will not be able to keep up with your demands, you can easily move on to the next without having to feel unnecessary guilt. This way, you will be able to choose wisely and set the risks involved to a minimum.

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Don't Wait for Good Credit; 6 Credit Repair Ideas for more Mortgage Refinancing & Mortgage Sales

Even people that know virtually nothing about finance and Wall Street are talking about the serious impact the subprime mortgage catastrophe has had on our economy. While the incredible number of failed subprime mortgages may have started the economic tumble, the continued financial problems and people's inability to obtain a mortgage or mortgage refinancing of their home is exacerbated by poor credit scores.


To make matters worse, with the horrifying increase in foreclosures across the country, the mortgage, and mortgage refinancing problem for mortgage brokers is just going to grow.

When an individual's credit score goes down, so does their choices for mortgages and mortgage refinancing options. Also, tell your clients to beware of untrustworthy credit repair companies and other scams in the marketplace today promising to "repair bad credit”.

Good credit is an absolute must for a loan originator to be able to put through most reasonable mortgage and mortgage refinancing deals, and with the problem not going away anytime soon, it behooves the loan originator the help their clients with ideas for the credit repair process of improving their credit scores.

This type of credit repair advice is the way that a mortgage broker can turn a potential client into the "real deal" and close their mortgage or mortgage refinancing deal. Also, if done properly, more often than not, the process can take place in a relatively short time span.

Step 1

Realize that rebuilding an individual's credit score is an ongoing process and requires thoughtful preparation to successfully rebuild his or her credit to an acceptable level to obtain a well structured mortgage or mortgage refinancing product.

Encourage your client to be conservative on any new monthly credit score building budget that they will be able to make the payments and never be late on anything. Caution your client not to structure a program with monthly payments that they cannot comfortably make, because being late on any payments will further reduce their credit score and may make a new mortgage or mortgage refinancing of their home impossible.

If there are extenuating circumstances such as divorce, insist that they review their credit program with their attorney before agreeing to anything.

Step 2

If your client's credit card companies have not reported or have understated their credit limits on their credit cards, it can hurt their credit score. For this reason, have your client determine if their credit card companies are understating their credit limits on their cards. Often credit limits are reported as lower than they actually are and frequently may not be reported whatsoever.

While we are on the subject of credit cards, make sure that your client has a minimum of three credit cards or other sort of revolving credit. Many people mistakenly believe that if they have credit cards it actually hurts their credit score and because of this, they cancel some or all of their cards. Their credit score can be more harmed and the possibilities of not obtaining new mortgage refinancing on their home or a new mortgage is greater by simply canceling existing credit cards.

Furthermore, if they do not have any credit cards, have them obtain at least three. If they have trouble with getting typical cards like Visa, Master Card, Amex etc, tell them to try a local department store, or a Home Depot or Lowes. Quite often these types of stores are more lenient in granting revolving charge accounts.

Step 3

Make sure that your client reduces any outstanding credit card balances to under 30% of their credit limit on each of the individual cards. Some people mistakenly think that the 30% figure is based on their overall revolving credit card balance, but this is false. A single card over the 30% balance can nullify the benefit of the effort of having the revolving credit cards in the first place.

If your client has one card over the limit and several others under the limit, if they are limited on cash and cannot pay down the high card, have them see it they can transfer some of the higher card's balance to the lower cards. Have them check first before doing this to see if this type of transfer creates a higher interest rate or any other adverse effects on their credit.

Thus, if an individual has 3 credit cards with a total of $12,000 credit, but two of them have a $2,000 limit and the other has an $8,000 limit, make sure that they keep the $2,000 limit cards under $600 each and the $8,000 card to under $2,400.

Implementing this simple process will cause credit scores to rise, along with the possibility of obtaining that desired mortgage or mortgage refinancing program.

Step 4

When helping your client to raise their credit scores, make it a point to frequently pull their credit reports for them to determine their status as well as any errors on their reports.

Errors are so common on credit reports that over 75% of all credit reports have a minimum of one or more mistakes on them. Just by their being diligent and carefully insuring that any incorrect reporting information is removed, their credit score will quite often go up incredibly. This is certainly one of the easiest and most effective things that your client can do immediately to improve their score dramatically along with the possibility of them obtaining a new mortgage or mortgage refinancing of their existing mortgage.

Step 5

If your client's credit has been damaged to the point of having been sent to a collection agency, they probably will not want to immediately pay off the credit card debt. As incredible as it may seem, this situation can actually be more harmful than having credit card debt sent to a collection agency on their credit record.

When one of your clients have been sent to a credit collection agency, the effect on their credit is low after about two years and is virtually wiped out after four years.

Insure that your client receives a written promise from the collection agency for a "letter of deletion" before they do anything toward satisfying the old credit card debt, because without a letter of deletion, they may hurt their credit problem more than help it. Stress to your client that they should not pay anything on the bill until they receive in writing the agreement for the letter of deletion from the collection agency.

Most people trying to improve their credit to obtain a mortgage or mortgage refinancing on their home think that they need to pay off everything as quickly as possible, but this is one case that paying before you obtain the proper documents protecting your situation can actually seriously hurt your credit. People have in reality completely paid off a debt or negotiated a settlement to learn to their dismay that they now have no leverage to get the collection agency to send the letter of deletion.

Step 6

Finally, if your client does not make paid installments on a car or a boat, have them take out some sort of installment loan with someone like Best Buy or Sears on some needed appliance or with Staples or Office Depot for some business equipment. Credit bureaus look carefully not only at the fact that you have credit, but also the blend of the types of credit that you have. Having just credit cards only is not as advantageous as having credit cards and some sort of installment payment loan.

Be sure that your client watches out for the rates on their new installment loan. Some of these rates can be "out of the roof" and create undo stress on the monthly budget.

Also, unlike the credit cards which you should keep in perpetuity, obviously, revolving credit comes to some point at which the loan is satisfied and the monthly payment ceases. Tell your client that this is not a "license to spend", but if they are wanting to increase their credit score, they should not pay cash for larger ticket items, but instead, put a large cash down payment on the item and obtain an installment loan to finance the remaining balance. Financing a smaller amount can actually lower loan interest payments thus lowering the monthly payment; all of which makes your client more likely to improve their credit score and get a new mortgage or mortgage refinancing of their home.

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What is the Difference Between Loan Modification and Refinancing?

Instead of proceeding with the foreclosure action, most banks and lending institutions prefer to arrange a loan modification plan with the borrower. Thus, the terms of the loan will be changed and the borrower will be given a new chance to pay off the existing debt. When it comes to refinancing, there will be better loan terms as well but a number of fees and penalties to pay, which depend of course on the actual mortgage. This is one significant difference between loan modification and refinancing, but obviously not the only one.


Even though loan modification results in a lower interest rate, lenders have become interested in such programs given the worrying numbers of homeowners in default. They prefer to avoid default mortgages and to offer the borrower the opportunity to escape financial difficulties. Refinancing resembles loan modification in that it can guarantee a lower interest rate, but there are many differences one should be aware of. Homeowners are considered suitable candidates for refinancing the moment they have a high credit score, equity accumulated on the property and most importantly, a job that is 100% secure.

The recent economic recession has had a negative impact where home equity and loan balances are concerned, making it almost impossible for people to consider refinancing. People are losing their jobs and they have a hard time meeting monthly payments. For them, loan modification is a better option, not requiring the perfect credit score nor any of the things mentioned above. The terms of the loan will be changed by the lender, the monthly payments will become affordable and the interest rate will be reduced.

Is refinancing more advantageous than loan modification or vice-versa? The truth is that these two options are aimed at people in different situations, each presenting a set of advantages and disadvantages. Refinancing can be a better option for people who have equity accumulated on their property and who have no stains on their credit report. If you choose to refinance and you meet all the criteria, you should not necessarily expect to get a fixed interest rate or a reduction on your payments. As for loan modification, there are no fees to pay, your credit report is not taken into account and you can benefit from a lower, and fixed, interest rate. If you wanted to know the difference between loan modification and refinancing, I believe you have found the answer to that question!

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Get Extra Cash By Refinancing

There are many ways of consolidating debt. One of the smartest, though, is to refinance your home mortgage and use the extra money you can get out of your home equity to cancel other debts.

Benefits Of Refinancing

When you refinance your home mortgage you obtain a loan in order to pay off the existing one. This is beneficial especially if the new loan presents either a lower interest rate or a longer repayments schedule. In any case, the applicant will be able to reduce his monthly payments considerably.

By refinancing you will also be able to request a higher amount than the remaining of the outstanding loan and thus obtain extra cash from the equity you have built on your home. These refinance loans are known as Cash Out Refinance Loans and the surplus can be used for many purposes. However, you can raise your credit score and improve your credit history by using it for eliminating debt by paying off a certain amount of the remaining debt, especially high interest debt.

When To Refinance

If you think that refinance might be a good option for you to consolidate debt, you should pay special attention to the interest rate and the loan amount since these two issues will determine whether refinancing your home loan is convenient or not. A lower interest rate with a similar repayment program would lower your installments and thus you would have extra money for repaying your debt sooner. The same thing can be achieved if you can get a higher loan amount.

If you can obtain a lower interest rate by refinancing your mortgage, if you can get a longer repayment schedule and thus lower monthly payments or if you can get all the extra money you need by refinancing for a higher amount, then refinance is the right option for you.

If none of these benefits can be obtained by refinancing your home loan, then you should reconsider refinancing. There are other options like unsecured or secured personal loans and home equity loans and lines of credit that can help you consolidate your debt. You should also check when considering refinancing that the previous home loan does not have a prepayment penalty. Otherwise you might loose all the money you were going to save by refinancing your mortgage.

How To Find The Right Lender

Finding the right lender that will offer you the best deal on your refinance home loan is the key issue when it comes to refinance. The smartest way to go is to search online; there are some online companies that offer access to many lenders dealing with mortgages and refinance mortgage loans where you will be able to obtain free quotes and compare them in order to make a conscious decision. Refrain from contacting realtors to get advice on refinance home loan lenders. The truth is that it is not their area of expertise and they usually have agreements with lenders that will turn your refinance loan more onerous. If you want to get the best deal available you should shop around and compare rates.

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Home Mortgage Refinancing Rates What You Need to Know

Are you thinking about refinancing your mortgage loan this year? A home mortgage refinance can save you a lot of cash if you it the right way. Did you know the mortgage rate you have on your home now was marked up by the broker arranging your mortgage for a fee? You've been overpaying ever since purchasing your home just to give that person a fee from the lender. Never fear; you're not alone in fact, according to the HUD Secretary this hidden mortgage commission will cost homeowners in the United States sixteen billion dollars this year alone. Want to save a few thousand bucks on your next home loan? Read on I've got the skinnyon refinancing your mortgage loan for you without paying too much for your next home loan.

Home Loan Refinance Tips

You don t have to be a personal finance guru to gain a good deal on your next mortgage. Mortgage loans are retail things like anything else you purchase today; you just need to understand how to distinguish and stave off the crap people are shoveling to make a buck at your expense. Mortgage brokers have garnered themselves a repute for being shady used car salesman in past years and correctly so. This doesn t mean you should stave off employing a mortgage broker when refinancing your home. Mortgage brokers have access to par interest rates which is something you'll ne'er get from your bank or credit union.

Wholesale Mortgage Rates

You're educated with wholesale monetary values when it comes to retail products but what about mortgage loans? Mortgage interest rates are no different; in fact, mortgage loans are retail products being resold by mortgage companies and brokers for a fee. How do mortgage companies and agents make their cash? They make money from two places: you and your lender. Your mortgage company or agent can charge you an origination fee, often called origination points for their part in setting up your home loan. This fee is often fleeced. A reasonable fee for loan origination is one percent of your loan amount however, it s not uncommon to see this fee as high as . Ne'er give this much for a mortgage broker origination fee.

The next source of compensation for your Mortgage Company or broker is a little noted kickback known as Yield Spread Premium. Simply put this is a kick-back given by the lender when your mortgage broker locks and closes your home loan with a higher than market place mortgage rate. You ll see market or the so called wholesale interest rates referred to as Par Mortgage Rates.

Par Mortgage

A par interest rate is plainly one that does not cost you anything to catch or produce any money for the Mortgage Company or agent arranging your home loan. Interest rates that cost you cash require discount points be given at closing. Keep in mind that one point is one percent of your home loan sum of money and a discount point is a fee paid to lower your mortgage rate. If you have to commit a fee at closing to get certain mortgage interest rate this is not a par rate; likewise if your interest rate produces a commission for the agent it is not a wholesale rate either. If you desire the greatest possible deal when re-mortgaging your home loan you need to get as near to a par mortgage rate as attainable.

Fending Off the uncalled-for markup of your mortgage rate to generate a fee for the mortgage agent is simpler than you think. You just need to seek out the appropriate broker for the task and forget about refinancing with a bank or credit union. Banks fund their mortgages with the bank's funds and are not commanded under the present-day disclosure laws to state you how they've marked up your interest rate. Equate a wholesale rate to your bank's great deal and you'll see how much they overcharge their clients.

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How Time Influences Mortgage Refinancing

According to the Mortgage Bankers Association, mortgage refinances are expected to reach $1.93 trillion in 2009, while new mortgage originations will reach about $825 billion. The prime factors behind the drive to refinance are the rising rates of unemployment, new programs by Freddie and Fannie Mae, and actions made by the Federal Reserve.

With the Federal Reserve constantly working to keep interest rates low, and programs available that encourage homeowners to refinance their mortgages, this may be the best time to refinance a high-priced mortgage. This may also be the best time to refinance a mortgage for a longer term. While refinancing your mortgage for a longer term may substantially increase the total amount of a mortgage, it will greatly lower monthly payments. It is important to sit down and reassess you financial situation to decide if you refinancing your home mortgage is an option for you.

Time-in On Your Mortgage before Refinancing

While there is no definite rule about how long you have to hold a mortgage before attempting to refinance, time may play a significant role. If you had to accept a higher-than-optimal interest rate because of past bad credit, for instance, and are counting on your improved credit rating to get you lower interest rates on a refinance, you should wait at least six months before refinancing. Six months is about how long it takes most lenders to start reporting your payment history to the credit bureaus.

The timing of a mortgage refinance is a delicate balancing act. The longer you continue paying the higher interest rate, the more it will cost you, but the longer you make regular payments on your mortgage, the better your credit score will look when you do apply to refinance your mortgage.

Another effect that time has on your ability to refinance is that the longer you pay on your mortgage, the higher equity you will have in your home. This is important because it will determine whether or not a lender will consider refinancing your mortgage. First, you will need to calculate how much equity you have in your home. It is actually not difficult to figure out your equity on your own. You first need to find out how much your home is currently worth, and then subtract the amount you still owe on your mortgage. For example, if your home is worth $100,000 and you still owe $60,000 on your mortgage, then your home equity is $40,000 or 40%.

Once you have that figure, you can research the type of mortgage refinance that a lender will be willing to grant you. Most lenders require at least 5% to 10% equity to agree to refinance your mortgage from an adjustable rate to a fixed rate, or to change the length of your mortgage term. Thus, if you want to go from a 30 year to a 40 year mortgage, you should have at least 5% equity in your home.

How Long You Intend to Stay in Your Home

The other time factor that affects your decision to refinance your home mortgage is how long you intend to remain in your current home. Since you will incur closing costs and penalties for early loan repayment when you refinance your loan, it will take time for you to actually realize any savings on your refinanced mortgage. For example, if you currently are paying $660 a month on a 30 year $100,000 mortgage, you can lower your monthly payment to $590 a month by refinancing to a 30 year $100,000 mortgage, a savings of over $70 a month. If the loan closing costs and penalties for early repayment total $2,500, it will take at least thirty six months for you to recover the costs of your loan. Therefore, unless you are planning to stay in your home for at least three more years, refinancing your mortgage loan will actually cost you money rather than save you money. The longer you remain in your home at the lower interest rate, the more savings you will realize. If you remain in your home for another ten years, you will realize $5,900 in savings. If you stay in your home for another twenty years, you will pay $14,300 less in mortgage payments at 6% than you would at 5%.

Paying Off Your Mortgage Faster

Another reason to refinance your mortgage is to pay it off faster. If your financial circumstances change, and you have more money to put toward your mortgage, you may consider refinancing your mortgage to a shorter term. You will not only pay off the loan faster and get out of debt sooner, but you will also be paying considerably less for your home. For example, if you refinance a $100,000, 30 year fixed term mortgage to a 15 year fixed term mortgage, you will increase your monthly payment from $599.95 to $849 monthly, but you will save $63,000 over the life of the loan.

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Mortgage Refinancing – Reasons To Avail Refinancing Facilities

A mortgage is a type of loan, primarily used to purchase property, in which a lender or mortgagee provides credit facilities or finance to a borrower or the mortgagor, after obtaining a legal protection in the form of an official commitment, according to which the lender holds a legal right to sell or carry out transactions or activities to recover the loan amount,
in the event the borrower becomes delinquent and is not able to repay or redeem the borrowed capital. In simple language, a mortgage is a loan undertaken to buy property in which the borrower gives official powers to the lender to sell his or her property if it is not possible to repay the borrowed amount. Majority of the banks and building societies offer mortgages and mortgage facilities, as well as mortgage companies.

Refinance

Refinancing means the process or activity in which the existing debts or financial obligations incurred due to a loan or financial borrowing is replaced with a new loan or credit facility having different terms and conditions, lowered interest rates, and a restructured loan or debt repayment plan that is based upon the borrower’s monthly income and cash inflow. Refinancing of existing loans is carried out to reduce the interest rate or interest costs by rearranging the loan terms to repay the entire outstanding loan amount at a reduced interest rate, and extending the debt repayment time. The basic objective is to reduce one's periodic payment obligations by increasing the loan term or tenure, and re-avail the credit facilities at affordable rates. People undertake refinancing activities to raise cash for investment purposes, consumption, or the payment of a dividend or a preexisting loan.

Mortgage refinancing

Mortgage refinancing means paying off your existing real estate mortgage loan with finance availed from another mortgage loan, which is specially structured to help you save money by reducing the net payable mortgage interest rates as well as extending the tenure with lowered monthly repayment schedule. There are many reasons why individuals opt for refinancing options and avail mortgage refinance facilities. The interest rate imposed upon a mortgage is directly tied to its associated monthly mortgage repayments. Lower interest rates usually mean lower monthly payments. It is recommended you avail refinancing facilities when your credit score has improved, or when the market offers an attractive repayment rate. A lowered down interest rate also helps in rebuilding the equity for your home.

Reasons for refinancing

Individuals prefer mortgage refinancing programs because of following reasons:

1. Reduced monthly payments

One of the major reasons to go in for mortgage refinance is to avail reduced or lowered monthly dues. When you pay less it becomes possible to save some money. It is difficult to save money when you have fixed overheads, and you are paying high monthly installments. By decreasing the overall payment and interest rate, it is possible to avail a difference in your net payable monthly amount. This amount can be saved by depositing your money in a savings account, where you get a dual benefit of maintaining your savings as well as availing interest on it.

2. Avoid Balloon Payments

A balloon payment is the final payment, which results into the termination of the debt, and the amount paid is substantially more as compared to previous installments. Balloon payments are a good way to lower your initial monthly payments and rates. At the end of the fixed rate term, which is usually around 5 or 7 years, if borrowers still possess their property in their individual names, the entire mortgage balance would mature out for a final payment. Balloon program provide a facility through which the borrowers can easily switch over into a new fixed rate or adjustable rate mortgage.

3. Avoid private mortgage insurance (PMI)

The PMI is undertaken primarily to protect the lenders when debtors have unacceptable credit ratings or who are likely to become delinquent while repaying their debts. When the outstanding loan amount decreases over a period as the debtor pays off the monthly dues, the degree of encumbrances reduces on the home offered as a security, and it becomes possible for the debtors to avail certain benefits. However, to avail the benefits right from the start at the inception of the loan, mortgage refinancing turns out to be a good option since you do not have to pay the PMI. The inherent risk is covered by the credit facility itself, and the lender does not need to ask for special protection. It is possible to avoid PMI through mortgage refinance programs.

4. Generate home equity

Generally, as time passes, most homes will increase in value, and are therefore excellent choices for investments. Increase in the net resale value also increases the potential to avail loans of greater amounts. However, when a mortgage is carried out, the lien sets in and prevents the potential from being used by the debtor. Mortgage refinance makes it possible to avail the advantage of an increase in the home resale value. Through refinancing, it becomes possible to generate some liquidity or hard cash, which can be utilized for some fruitful purpose such as renovating your home or paying off a credit card debt.

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Details about Refinancing a Second Mortgage

According to the Mortgage Bankers Association, mortgage refinances are expected to reach $1.93 trillion in 2009, while new mortgage originations will reach about $825 billion. The prime factors behind the drive to refinance are the rising rates of unemployment, new programs by Freddie and Fannie Mae, and actions made by the Federal Reserve.

With the Federal Reserve constantly working to keep interest rates low, and programs available that encourage homeowners to refinance their mortgages, this may be the best time to refinance a high-priced mortgage. This may also be the best time to refinance a mortgage for a longer term. While refinancing your mortgage for a longer term may substantially increase the total amount of a mortgage, it will greatly lower monthly payments. It is important to sit down and reassess you financial situation to decide if you refinancing your home mortgage is an option for you.

Time-in On Your Mortgage before Refinancing

While there is no definite rule about how long you have to hold a mortgage before attempting to refinance, time may play a significant role. If you had to accept a higher-than-optimal interest rate because of past bad credit, for instance, and are counting on your improved credit rating to get you lower interest rates on a refinance, you should wait at least six months before refinancing. Six months is about how long it takes most lenders to start reporting your payment history to the credit bureaus.

The timing of a mortgage refinance is a delicate balancing act. The longer you continue paying the higher interest rate, the more it will cost you, but the longer you make regular payments on your mortgage, the better your credit score will look when you do apply to refinance your mortgage.

Another effect that time has on your ability to refinance is that the longer you pay on your mortgage, the higher equity you will have in your home. This is important because it will determine whether or not a lender will consider refinancing your mortgage. First, you will need to calculate how much equity you have in your home. It is actually not difficult to figure out your equity on your own. You first need to find out how much your home is currently worth, and then subtract the amount you still owe on your mortgage. For example, if your home is worth $100,000 and you still owe $60,000 on your mortgage, then your home equity is $40,000 or 40%.

Once you have that figure, you can research the type of mortgage refinance that a lender will be willing to grant you. Most lenders require at least 5% to 10% equity to agree to refinance your mortgage from an adjustable rate to a fixed rate, or to change the length of your mortgage term. Thus, if you want to go from a 30 year to a 40 year mortgage, you should have at least 5% equity in your home.

How Long You Intend to Stay in Your Home

The other time factor that affects your decision to refinance your home mortgage is how long you intend to remain in your current home. Since you will incur closing costs and penalties for early loan repayment when you refinance your loan, it will take time for you to actually realize any savings on your refinanced mortgage. For example, if you currently are paying $660 a month on a 30 year $100,000 mortgage, you can lower your monthly payment to $590 a month by refinancing to a 30 year $100,000 mortgage, a savings of over $70 a month. If the loan closing costs and penalties for early repayment total $2,500, it will take at least thirty six months for you to recover the costs of your loan. Therefore, unless you are planning to stay in your home for at least three more years, refinancing your mortgage loan will actually cost you money rather than save you money. The longer you remain in your home at the lower interest rate, the more savings you will realize. If you remain in your home for another ten years, you will realize $5,900 in savings. If you stay in your home for another twenty years, you will pay $14,300 less in mortgage payments at 6% than you would at 5%.

Paying Off Your Mortgage Faster

Another reason to refinance your mortgage is to pay it off faster. If your financial circumstances change, and you have more money to put toward your mortgage, you may consider refinancing your mortgage to a shorter term. You will not only pay off the loan faster and get out of debt sooner, but you will also be paying considerably less for your home. For example, if you refinance a $100,000, 30 year fixed term mortgage to a 15 year fixed term mortgage, you will increase your monthly payment from $599.95 to $849 monthly, but you will save $63,000 over the life of the loan.

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Steps Involved in Refinancing a Home Mortgage

Over the past several years, many people have become involved with home mortgages that carry high rates and difficult terms. Now that interest rates and home prices have fallen, it makes sense to explore the option of refinancing a home mortgage. If you are considering refinancing your mortgage, the steps discussed below are crucial to take when refinancing your home mortgage.

Decide if refinancing your mortgage is right for you.

While there are many perks that make refinancing your home mortgage attractive, there are also costs associated with refinancing. Before you decide whether or not to refinance, it is very important to understand what it will cost you in fees, evaluations, and penalties, for early mortgage repayment. There is a standard rule of thumb for deciding whether a refinance is worth considering: if you can refinance into a new mortgage that is at least one full percentage point lower than your current mortgage rate, and are planning to remain in your house for at least two years, it is most likely worth it to refinance your home mortgage. Also, most banks will require that you have at least ten percent equity in your house before they will even consider refinancing your mortgage.

Calculate how much you will save by refinancing your mortgage.

The main reasons for refinancing a mortgage are to lower your monthly mortgage payment, or to reduce the overall amount you will end up paying for your house and loan. Before you can decide if a refinance makes sense for you, you will need to figure out how much you will actually save by refinancing to a lower rate, or a longer term. Depending on your ultimate goal, it may make sense for you to pay more in the long run by refinancing to a longer term in order to get lower monthly payments. It might also be beneficial to pay higher monthly payments in order to pay off your mortgage sooner, and pay less over the full term of your loan.

Shop around for the best mortgage rates on a refinance.

As with any other loan, not all refinance mortgages are equal. Check with your current mortgage holder and shop around online before settling. There are websites where you can compare mortgages and loans side by side, or request mortgage refinance quotes from multiple lenders. Once you have several quotes, you can sit down to compare the costs and figure out if refinancing your mortgage makes sense and if so, which loan makes the most sense for you.

Figure out how much it will cost to refinance your mortgage.

Refinancing your mortgage will involve many of the same costs as getting a mortgage in the first place. You will probably need to pay for an appraisal, as well as typical closing fees. In addition, there may be a pre-payment penalty on your current mortgage that will add to the cost of refinancing.

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Choosing Between Loan Modification Vs. Refinancing

Struggling homeowners in American are now able to receive help with keeping their homes by choosing between refinancing or lowering their monthly mortgage payments through a loan modification. Known as the Home Affordable Plan, it is available to qualified applicants. Here are the facts on the plan: 

* Under the Home Affordable Modification Plan, homeowners facing financial hardship are able to obtain a lower interest rate despite plummeted property values or bad credit. In turn, lenders receive incentive payments for the modified loans. You can be looking at a 2% reduction to your existing rate, a loan term extension to 40 years, and principal deferral. This is especially important to those homeowners whose property values have suffered and who cannot otherwise sell or refinance. 

* Have you been unable to refinance? The new plan offers qualified homeowners with a new loan at the current market rates. With Fannie Mae or Freddy Mac, they require your mortgage be at least 105% of the current value, and that you have not been more than 60 days late in your payments the past 12 months. 

* Did you know the Hope for Homeowners refinance plan can now help more homeowners? So far, this FHA insured plan has completed only 70 loans, so there are now new guidelines to allow more homeowners to qualify. Your lender will be provided an incentive payment by the government by creating a refinanced loan at the existing market rates. 

You can find more information about the various plans by visiting the site http://www.makinghomeaffordable.gov. To apply for any of the modification programs, you must first complete an application and submit a financial statement. The best thing you can do to improve your chances of being approved for any of the plans is to be prepared and have all your documents ready for review. You only have one opportunity to apply, so use this chance wisely! 

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