Five Reasons to Refinance Your Home

Lowering the rate 

The mortgage interest rate that you’ve been paying may be higher than what’s available on the current market, so it may make sense to refinance to a new low rate. If you’ve recently improved your credit score and financial situation, a refinance may be the right move because you’ll be able to snare a better rate. It will reduce your monthly payment, and could lower your total interest costs.

Building equity more quickly

In certain scenarios, a higher monthly mortgage payment can have financial benefits. The higher payment allows you to build equity and reduce debt faster. The combination of higher equity and lower debt adds stability to your overall financial picture. You can achieve this goal by restructuring your home loan into a shorter maturity. The traditional choice is a 15-year mortgage, because they have slightly lower interest rates than 30-year loans. Your monthly payment would still be higher because you’d be paying the debt off over a shorter period of time, but your total interest costs would be substantially lower. 

Raising cash

A cash-out refinance is a viable option when you need money to purchase a long-term asset. Examples are home renovations, a college degree, and real estate property. Cash-out refinances don’t make sense for vacations, clothes, and cars.

Lowering your risk

Refinancing to a fixed-rate mortgage can reduce risk if you currently have a balloon payment loan or adjustable-rate mortgage (ARM). Today’s low inflation level may make your ARM seem pretty attractive, but there’s no telling what could happen in a few years. Balloon payments are scary because you can’t predict what the lending environment will be like when your big payment comes due.

Consolidating debt

If you have two mortgages, consider consolidating them into one with a mortgage refinance. Your goal is to have an overall lower interest rate and payment, assuming that you have at least 20 percent equity in your home.

Refinancing is a good way to build equity faster, finance a long-term asset, and to lower your rate, your overall interest costs, or your risk. These could all be considered “right” reasons. However, which one is the right reason for you and what is the best way to do it? Call one of our refinance specialists in order to pinpoint where you should be heading next!

The Cash-In Refinance

You've heard of the cash-out refinance. That's when the new mortgage is for a bigger amount than the old loan. The homeowner receives a check for the difference at closing. In a cash-in refinance, the refinanced mortgage is for a smaller amount than the old loan. The homeowner takes a check to the closing.

Why would you do this you ask? There are four major reasons why this is a logical choice for borrowers:

1. Getting the best mortgage rate – Also if you are underwater on your mortgage, you may not qualify for the refinance. Bringing money to the table can change that.
2. Eliminating PMI (Private Mortgage Insurance)
3. Avoiding a jumbo loan (loans generally between $417,000 and $729,750)
4. Shortening your loan term with reasonable monthly payments

These reasons and several more are making the cash-in refinance much more attractive to borrowers who are attempting to soften the blow to their monthly cash flow.

Would you like to find out if this is your best option? Want to know how much you need to bring and what fantastic changes that means for you? Give one of our refinance specialists a call to find out today!

USDA Interest Rates

This is arguably the hottest topic in the entire mortgage universe, “What is the lowest interest rate I can possibly get?” That, ladies and gentlemen, is the $64,000 question and yet the answer changes every day; even multiple times a day! However, the never ending quest for this answer leads most people to question the validity of FHA vs. Conventional vs. USDA vs. VA in terms of finding the lowest rate.

The truth of the matter is that yes, you can shave fractions of a point by bouncing between these loans and seeing which one posts the lowest rate at the time you look at it. What determines your interest rate more is the type of mortgage and length of time your mortgage runs for. I speak specifically about a fixed vs. an ARM vs. an Interest Only loan, or one of the several other possible programs available. These individual programs affect rate more than the people sponsoring it.

The biggest question is which program is best for you based on your own individual situation. Are you a member of our military? Do you live in a rural community? How much of a down payment can you afford if any? Based upon these and several other factors, you may qualify for a loan program you never even knew existed getting you not only a low rate but also a low monthly payment with a larger budget for a house!

Want to know more? Call one of our mortgage professionals today to find out what loan program suits you best and how you can lock the lowest rates of the day, or possibly even the hour! Hurry!

Finding the Right Terms for Your Needs

When comparing fixed versus variable interest rates, an important question to ask yourself when selecting repayment terms is, "How long do you plan to live in your house?"

Are you planning to stay?

If you plan to live in your house for the full term of your mortgage, you'll probably want to look for ways to reduce your interest rate and reduce the total amount of interest that you'll pay over time. Choosing a repayment schedule with a shorter term (and higher payment) can be a smart way to accomplish this.

Are you planning to sell in 5 years?

If you plan to sell a house within five to seven years, reducing your interest rate may be less important than finding a monthly payment that suits your budget. Because of the many different variables involved, it is best to contact a licensed mortgage professional to help you through some options that will help you achieve what you’re looking for.

Plan launched to help 'underwater' borrowers

By Alan Zibal

WASHINGTON — The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth.

Starting Tuesday, the Federal Housing Administration will permit lenders to give these borrowers refinanced loans backed by the government. The lenders will be required to forgive at least 10 percent of the original mortgage amount. Investors who have control over the mortgages as part of their large portfolios will select which borrowers are invited to participate.

The plan was first announced in March. Its rollout represents the latest of numerous efforts by the administration to address the housing bust. So far, the government has only nibbled around the edges of the crisis, as its programs have run into numerous problems.

The lending industry was ill-prepared for a crush of distressed homeowners, the economy worsened and millions of homeowners had taken on so much debt that their financial woes have been nearly impossible to resolve.

Nearly half of the 1.3 million homeowners who have enrolled in the Obama administration's main mortgage-relief program — overseen by the Treasury Department — have already fallen out over the past year.

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Many borrowers say the government program is a bureaucratic nightmare, with banks often losing their documents and then claiming borrowers did not send back the necessary paperwork. Banks say borrowers often didn't return the required documents.

The new refinancing program takes a different approach. It allows investors in mortgage-backed securities to evaluate their holdings and select borrowers that will be offered refinanced mortgages guaranteed by the FHA.

The theory is that there are some loans that investors simply want to unload because they have a high risk of default.

However, when faced with the choice between slashing the amount borrowers owe on their home loans and foreclosing, lenders have generally chosen to foreclose on borrowers. Many experts doubt the new program will persuade investors to change their minds.

Government officials acknowledge that getting the plan going will be complicated. FHA Commissioner David Stevens said in a statement that it "requires significant coordination and operational execution by several parties to be successful."

The government estimates that between 500,000 and 1.5 million homeowners could be helped. But Stevens said the number of borrowers who actually benefit will likely be toward the low end of that range.

Even so, Keefe, Bruyette & Woods Inc. analyst Bose George called the government's estimates "extremely optimistic." George said investors are likely to only offer refinances to borrowers who have seen their home values plunge to the point where they owe 40 percent more than their home's current value. Those homeowners, he said, are in danger of walking away from their mortgages.

"We're assuming that the impact is minimal," he said.

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The program is funded with $14 billion from the Obama administration's existing $75 billion mortgage assistance program. That money will be used to cover incentive payments to lenders and losses from borrowers who fall back into foreclosure.

To qualify, borrowers must be up-to-date on their mortgages, though many people who have already received loan modifications through other programs are still eligible. The plan is limited to loans in which homeowners owe at least 15 percent more than their home's current value.

Analysts at Barclays Capital estimated last month that the refinancing program would only aid between 200,000 and 300,000 homeowners. If it reaches that many, it would be a small share of the number of Americans with so-called underwater mortgages.

As of the end of June, about 11 million U.S. homes, or 23 percent of those with a mortgage, were in this position, according to real estate data provider CoreLogic.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

What You Need To Know About Shopping For Mortgage Rates

Shopping for mortgage rates can seem complicated at the best of times. There is much more to getting the best mortgage rates than just calling around and deciding to go with the mortgage company that instantly offers you the lowest mortgage rates for your property. Every mortgage broker and mortgage lender actually has a range of mortgage rates and what you actually qualify for depends on your personal circumstances and the property that you are purchasing or refinancing. In order to qualify for the best mortgage rates it is wise to get all of your paperwork together first and obtain a copy of your credit report for yourself as this will also enable us to accurately quote you mortgage rates.

Now is certainly an ideal time to buy or refinance a home, not only because of the incredibly low home prices but because mortgage rates across the US are at historical lows. At the time of writing this article according to a public mortgage rate website current average mortgage rates in Atlanta, Georgia are 4.93% for 30 year fixed rate loans, 4.33% for 15 year fixed rate mortgages and just 3.8% for 5/1 ARM loans (rates vary by the minute).

Before making a decision on a mortgage loan it is wise to use a mortgage calculator to analyse the benefits of different mortgage rates and the different loan programs and terms available. Obviously the shorter the term (of fixed portion) of the loan generally the lower the interest rate and often resulting monthly mortgage payments. It is wise not to over extend yourself in the desire to obtain the lowest rate and you must consider your long term goals and how long you plan to stay in the home.

Shopping for the best mortgage rates is about more than just the interest rate. The true cost of the loan is disclosed in the effective APR. This is the effective Annual Percentage Rate when the fees associated with taking out the loan are taken in to consideration. When you are shopping for the best mortgage rates you must look at both the interest rate and the APR.

The biggest cost that affects the true APR of your loan is whether you are being charged points in order to receive that rate. Each point is equal to 1% of the mortgage loan amount. Points are paid in exchange for lower rates and are normally negotiable. Whether it makes sense to pay extra points for lower mortgage interest rates depends on how long you plan to keep the home. The longer you keep the property the more sense it makes to pay points as you will realise the interest rate savings over a longer period of time.

When shopping for the best deals and mortgage interest rates you also need to pay attention to the other fees being charged. Make sure you are comparing apples to apples. The third party fees such as title insurance, inspections and appraisals really should not vary between mortgage companies and will not affect mortgage rates offered.  However, the individual mortgage lenders you approach will often charge different fees for credit reports, processing, underwriting and broker fees. Obviously you want to try and negotiate the best deal possible but at the same time be willing to pay a reasonable rate for great service.