12
May
By support
Home Mortgage Tips

Mortgage 101: the Basics of How Mortgage Refinancing Works

Mortgage 101: the Basics of How Mortgage Refinancing WorksRefinancing your home mortgage can be beneficial for you for a number of reasons. As a homeowner, you may have spoken with some of your friends and neighbors who have already refinanced, and you may have heard about some of the different benefits associated with refinancing your mortgage. For example, refinancing can result in a lower mortgage payment, the ability to pay your mortgage off more quickly, reduced interest charges and other benefits. If you have never gone through this process yourself, however, you may not know what to expect with the refinancing process.

Determining if Refinancing Will Benefit You

The actual benefits that you would receive by refinancing will be unique to your situation. Refinancing is a process that results in replacing your existing mortgage with a new mortgage. This will establish your home financing with a new interest rate, a new term and a different mortgage payment. In some cases, the new loan amount that you qualify for will be higher than the amount that you owe, and you may be able to obtain cash out of the refinancing process because of this. One of the best ways to determine what the specific benefits are for refinancing your mortgage is to speak with a mortgage professional directly.

How to Get Started

Refinancing a home mortgage is very similar to applying for the original home mortgage when you purchased the home. However, additional information will be requested regarding your current mortgage, and some information may also be requested about the original purchase. You generally will need to provide tax returns, bank statements and other related financial information to complete the process.

However, initially, you may only be required to fill out a loan application and to agree to have your credit report pulled. This initial step will help a mortgage professional to determine if you may qualify for a refinance mortgage and what the estimated loan terms may be. Generally, this process can be completed quickly.

When you close on your refinance mortgage, the closing will typically take place in a title agency or another similar venue. The title or escrow agent will facilitate the process of using the funds from the new mortgage to pay off the balance on the existing mortgage and to complete any other required steps on your behalf. While there are some steps that need to be taken for you to refinance your mortgage, the process is typically rather easy when you work with the right mortgage professional. You can request more information about refinancing your mortgage when you speak with a loan specialist.

07
May
By support
Home Mortgage Tips

Understanding Lower FHA Mortgage Insurance Premiums and How They May Help You Save Money

Understanding Lower FHA Mortgage Insurance Premiums and How They May Help You Save Money FHA loans are designed to help individuals take advantage of the benefits of home ownership, and these loans have low down payment requirements. However, for borrowers who choose to make a down payment that is less than 20 percent of the sales price, the borrower will be required to pay a mortgage insurance premium with the monthly mortgage payment.

This premium is in place to minimize the risk that the lender takes when making a low down payment loan, but it does result in a higher monthly mortgage payment for the homeowner. Recently, the FHA has announced a lower rate for FHA mortgage insurance premiums, and this can help home buyers save money.

A Closer Look At The Reduced Premium

In January 2015, the FHA announced that the FHA premium rate would decline from a current level of 1.35 percent of the loan value to 0.85 percent. This has the potential to save home buyers hundreds of dollars per year in reduced mortgage payments, making home ownership more affordable. In fact, the FHA stated that it believes this reduction will help as many as 250,000 home buyers who currently do not qualify for a mortgage to purchase a home.

Calculating the Savings For You

The mortgage insurance premium is in place on low down payment loans until the home equity has accrued to at least 20 percent of the home’s value. This equity is essentially built up between principal reduction with regular monthly payments and increasing property values, but homeowners typically will need to prove that the equity is present before the mortgage insurance premium can be removed from the monthly payment.

As a home buyer, it is important to know that you may be responsible for the mortgage insurance premium for several years or longer. Therefore, this reduced premium can result in considerable savings for you over time. You can use an online calculator to determine your actual savings and to calculate your monthly payment based on the new rate.

If you have not qualified for a mortgage in the past due to the addition of a mortgage insurance premium, you may consider contacting a mortgage representative about your current options. The reduction in the premium rate will help many to qualify for the loan amount that they need, and you can speak with a representative about your financing needs and to request an estimate for your mortgage payment.

05
May
By support
Home Mortgage Tips

Save Some Additional Cash with Our Guide to Lowering Your Monthly Mortgage Payment

Save Some Additional Cash with Our Guide to Lowering Your Monthly Mortgage Payment If you are like many other homeowners, your home mortgage payment is the single largest expense in your monthly budget. This is a fixed expense that you will typically be responsible for until your loan is paid in full or until you sell your home, and you may have a 15, 20 or even 30 year term on your mortgage.

If your home mortgage payment has become unaffordable or burdensome for you to manage with your current financial situation, rest assured that you may be able to save some additional cash each month without selling your home. Refinancing your existing mortgage can provide you with important financial benefits to help you better manage your budget.

How Refinancing Lowers Your Mortgage Payment

Refinancing your existing mortgage essentially will replace your existing loan with a new loan, but you may not understand how this will result in a lower mortgage payment. When you initially applied for your current mortgage, your payment was fixed based on the interest rates at the time as well as the original loan balance. Since that time, you likely have reduced your loan balance considerably, and interest rates may be improved as well. In fact, some homeowners are able to refinance to a lower rate as well as pull equity out of their home in the process.

How Home Equity Could Further Reduce Monthly Expenses

While your main goal for refinancing a home mortgage may be to reduce the large monthly mortgage payment that you are responsible for, the fact is that you may be able to use your home equity to further reduce your monthly expenses. For example, you can use extra funds provided to you through a refinance to pay off an outstanding student loan, a car payment or a credit card balance. Some homeowners may even be able to pay off most or all of their debts by tapping into their home equity.

It is common for homeowners who have a high and unmanageable mortgage payment to feel overwhelmed and even trapped by their financial situation. However, as you can see, lowering your mortgage payment and even reducing some of your other expenses may be easier to do than you might think. If you are interested in learning more about how refinancing your mortgage may help you to improve your financial situation, you can speak with an experienced mortgage professional today.