Refinancing of interest only loans simply means swapping one loan for another. It is an effective way to decrease the debt on existing loans. This is especially beneficial if the current interest rates are lower than the interest rates you are presently paying on the loan. Refinancing would enable you to convert your high interest debt into a low interest debt, as the amount of monthly payment would decrease. The extra money saved can be reinvested in something more lucrative like real estate or shares, or to pay off high-interest debts like credit cards. Refinancing is also done for converting an adjustable rate mortgage into a fixed rate mortgage. Refinancing has become so common in recent years that almost three quarters of new mortgages were refinanced loans in 2003.
Refinancing of interest only loans is very attractive, especially when the time comes for the loan to get amortized. That means the loan will have to be repaid at the current interest rate, along with the principle. Most people seek to refinance their interest only loan in order to buy more time, i.e. to delay the repayment of the principle further. However, this may also increase the risk on the loan, since the interest rates may go up further, the price of the house may come down or the economy may slump in the future.
Refinancing of interest only loans is ideal for people who are expecting huge capital gains in the next few years or are planning to sell their house by the time the interest-only period is over. This is a good alternative as long as the economy is good, the interest rates are steady and the prices of houses are increasing. Interest only refinancing is recommended for people who have irregular incomes like commissions or bonuses or those who are expecting a hike in their income in the coming years. The savings accrued from refinancing can also be used for home improvement, which will increase the value of the home in the future.
A few questions to be considered while refinancing are: how long do you expect to stay in the house? How much equity do you have in the house? Will you have to pay points for getting a low rate from the refinance? What would be the closing costs? Will the lower payments from the refinance enable you to cover the closing costs, points (if any) and the fees reasonably?
There are several lenders who are offering refinance options for interest only loans. The Internet is a good source for getting information about these offers and also to find out more about interest only loan refinance.
Interest Only Loans provides detailed information about interest only loans, interest only loan rate, interest only loan calculators, pro and cons of interest only loan and more. Interest Only Loans is the sister site of Mortgage Amortization Schedule.
Article Source: http://EzineArticles.com/?expert=Eric_Morris
Monday, October 29, 2007
Saturday, October 27, 2007
On Line Mortgage Quotes
The mortgage industry is a very competitive one, so if you are on the market for a mortgage, or refinancing your existing one, you may want to consider getting a few quotes on line.
By obtaining a few quotes on line, you are in no way committing yourself to anything.
Due to the competitive nature of the mortgage industry, it really wouldn't hurt to post an on line application at a secure sight, and allow for four or five loan officers or brokers to compete for your business.
Obtaining an on line quote is very simple, not to mention, very safe. When going through this simple process, you are asked for very limited information. At least enough for a loan officer to get a general idea of what you are looking for.
One of the many benefits of obtaining on line mortgage quotes is the fact that you barely have to do anything except point and click. Once this is accomplished, you will receive anywhere between three and five phone calls, usually within forty-eight hours from loan officers who are interested in doing business with you.
Another benefit of having four or five loan officers assess your situation is that you will have the option of choosing the best rate and loan program to meet your needs and your budget.
When shopping for on line mortgage quotes, most loan officers understand that you are shopping around and speaking with other mortgage companies.
The last thing a loan officer wants is for you to take your business to their competitor. This puts them in a situation to find you the best rate and program available.
Shopping for an on line mortgage quote is definitely worth a try, and costs absolutely nothing. Remember you are not committed to anything, so why not give it a shot? Good luck.
http://www.articlegeek.com/finance/mortgage_refinancing_articles/online_mortgage_quotes.htm
By obtaining a few quotes on line, you are in no way committing yourself to anything.
Due to the competitive nature of the mortgage industry, it really wouldn't hurt to post an on line application at a secure sight, and allow for four or five loan officers or brokers to compete for your business.
Obtaining an on line quote is very simple, not to mention, very safe. When going through this simple process, you are asked for very limited information. At least enough for a loan officer to get a general idea of what you are looking for.
One of the many benefits of obtaining on line mortgage quotes is the fact that you barely have to do anything except point and click. Once this is accomplished, you will receive anywhere between three and five phone calls, usually within forty-eight hours from loan officers who are interested in doing business with you.
Another benefit of having four or five loan officers assess your situation is that you will have the option of choosing the best rate and loan program to meet your needs and your budget.
When shopping for on line mortgage quotes, most loan officers understand that you are shopping around and speaking with other mortgage companies.
The last thing a loan officer wants is for you to take your business to their competitor. This puts them in a situation to find you the best rate and program available.
Shopping for an on line mortgage quote is definitely worth a try, and costs absolutely nothing. Remember you are not committed to anything, so why not give it a shot? Good luck.
http://www.articlegeek.com/finance/mortgage_refinancing_articles/online_mortgage_quotes.htm
Friday, October 26, 2007
Should You Re-Finance
One of the ways you can determine if mortgage refinancing is a sound idea for you is to use one of the many mortgage refinancing calculators available at finance sites on the Web. Mortgage refinancing advisability depends on several things. You have to look at your current rate of interest, the rate you might secure with refinancing, how long you plan to live in your current home, and the closing costs on the mortgage refinance.
To fully understand the results of the mortgage refinancing calculators and the use they make of your information it is important to understand mortgage refinancing jargon. We've included some here.
The first term is probably self explanatory. You'll hear mortgage refinance professionals refer to your original mortgage amount. This simply means the amount of the loan that you originally signed for when you first took out your mortgage. Appraised value is a term you'll hear frequently as well. Lenders are referring here to the value the professional appraiser put on your home when it was first purchased. The phrase current term in years means the number of years you were given to pay off your original loan. If you took out a 30 year mortgage your current term in years is thirty. Years remaining will come up in any mortgage refinancing discussion or calculation. It means the number of years you have left to pay on your mortgage.
If someone asks for your income tax rate when they calculate your mortgage refinancing costs and options they want to know what rate of interest you paid to Uncle Sam last year when you did your taxes.
The term calculate balance means to let the mortgage refinancing calculator determine what balance you have left based on the information you have given about the original loan and the years that remain on it.
To let the calculator determine if mortgage refinancing is advisable for you you'll need to know what your home is currently appraised at or guesstimate this if you don't know and the balance of the mortgage. The calculator will assume you want to refinance the balance. If that is not the case - if you have funds from elsewhere that you are going to apply to the balance prior to refinancing then you'll want to subtract that total from the balance and indicate to the calculator that that new figure is your balance. You'll also have to have some idea of what new interest rate you are likely to get and then decide on the number of years you want to take to pay off the new loan.
What is important to gather as well, is the loan origination rate. This is the percentage of this mortgage refinance balance that you pay the lender as his or her loan origination fee. In most cases, this is going to be one percent of the loan balance. The term other closing refers to any closing costs for the new loan. This will include appraiser and filing fees.
Points Paid is an important term to know for mortgage refinancing calculations. It means the number of points you'll have to pay to your lending institution to reduce the mortgage interest rate. Each point represents one percent of the amount of the new loan.
PMI is an important term as well. It means principle mortgage insurance.
James Copper is a writer for http://www.any-loans.co.uk/mortgage-refinance.shtml where you get advice on mortgage refinance
Article Source: http://EzineArticles.com/?expert=James_Copper
To fully understand the results of the mortgage refinancing calculators and the use they make of your information it is important to understand mortgage refinancing jargon. We've included some here.
The first term is probably self explanatory. You'll hear mortgage refinance professionals refer to your original mortgage amount. This simply means the amount of the loan that you originally signed for when you first took out your mortgage. Appraised value is a term you'll hear frequently as well. Lenders are referring here to the value the professional appraiser put on your home when it was first purchased. The phrase current term in years means the number of years you were given to pay off your original loan. If you took out a 30 year mortgage your current term in years is thirty. Years remaining will come up in any mortgage refinancing discussion or calculation. It means the number of years you have left to pay on your mortgage.
If someone asks for your income tax rate when they calculate your mortgage refinancing costs and options they want to know what rate of interest you paid to Uncle Sam last year when you did your taxes.
The term calculate balance means to let the mortgage refinancing calculator determine what balance you have left based on the information you have given about the original loan and the years that remain on it.
To let the calculator determine if mortgage refinancing is advisable for you you'll need to know what your home is currently appraised at or guesstimate this if you don't know and the balance of the mortgage. The calculator will assume you want to refinance the balance. If that is not the case - if you have funds from elsewhere that you are going to apply to the balance prior to refinancing then you'll want to subtract that total from the balance and indicate to the calculator that that new figure is your balance. You'll also have to have some idea of what new interest rate you are likely to get and then decide on the number of years you want to take to pay off the new loan.
What is important to gather as well, is the loan origination rate. This is the percentage of this mortgage refinance balance that you pay the lender as his or her loan origination fee. In most cases, this is going to be one percent of the loan balance. The term other closing refers to any closing costs for the new loan. This will include appraiser and filing fees.
Points Paid is an important term to know for mortgage refinancing calculations. It means the number of points you'll have to pay to your lending institution to reduce the mortgage interest rate. Each point represents one percent of the amount of the new loan.
PMI is an important term as well. It means principle mortgage insurance.
James Copper is a writer for http://www.any-loans.co.uk/mortgage-refinance.shtml where you get advice on mortgage refinance
Article Source: http://EzineArticles.com/?expert=James_Copper
Thursday, October 25, 2007
Deciding To Refinance
Traditionally, the decision on whether or not to refinance has meant balancing the savings of a lower monthly payment against the costs of refinancing. But in recent years, companies have introduced "no cost" and lowcost refinancing packages that minimize or completely eliminate the out-of-pocket expenses of refinancing. (These refinancing packages compensate with a higher interest rate, or by including some of the costs in the amount that is financed.)
With traditional refinancing, the most often cited rule of thumb is that the interest rate for your new mortgage must be about 2 percentage points below the rate of your current mortgage for refinancing to make sense. However, with the newer low and no cost refinancing programs, it can be worth your while to refinance to obtain a smaller reduction in interest rates.
How long you expect to stay in your home is also a factor to consider. If you'll be moving in a few years, the month to month savings may never add up to the costs that are involved in a refinancing.
http://www.amo-mortgage.com/Articles/Refinance.asp?ArticleID=1044&p=amo
With traditional refinancing, the most often cited rule of thumb is that the interest rate for your new mortgage must be about 2 percentage points below the rate of your current mortgage for refinancing to make sense. However, with the newer low and no cost refinancing programs, it can be worth your while to refinance to obtain a smaller reduction in interest rates.
How long you expect to stay in your home is also a factor to consider. If you'll be moving in a few years, the month to month savings may never add up to the costs that are involved in a refinancing.
http://www.amo-mortgage.com/Articles/Refinance.asp?ArticleID=1044&p=amo
Wednesday, October 24, 2007
Facts About Mortgage Loan Offers And Pre-Approval
If you receive pre-approval letters from the lenders on your mortgage loan, then it becomes much simpler to get the property or house and quickly as well.
Many people want to look at homes before applying for mortgage loan, but these days it become reverse, first apply for mortgage loan than see the plot. This can give you assurance and idea how much you are capable to spend on a house, and thereafter you can find property much more easily and quickly.
Even though you have good credit certificate and good salaried job and you also know that you will be accepted for the loan, it is good to apply for pre-approval than to be pre-qualified. Pre-qualified person is that who is eligible to apply for mortgage loan, this does not figure out the amount you going to receive. So after receiving pre-approval letter only you can classify how much amount is approved. If your circumstances do not change you will surely receive the same.
For getting pre-approval, you need to come across the right lender, who can show you clear picture for what you need. They will go through with certain formalities by checking you and give you pre-approval letter, after that you can start searching for your dream home.
Now you are having pre-approval, this gives you idea how much you are capable and can afford to spend on a property. This will also narrow your search as you are having the limit to spend. And you can quickly come across in finding the right kind of property, and make buying easier.
You will be seen as potential cash buyer with the pre-approval mortgage loan. Seller can take you granted as a cash buyer only and accept the offer with pre-approval letter. Now if you have agreed to buy the property but the mortgage is not in place, then it may take some time arrange the funds, and you might not get funds you need. However if you are having pre-approval letter then it suggests that the fund is already guaranteed, and you can come across quickly enough. This will make buying stressful and you can get the house you want.
http://www.fastmortgagesonline.com/articles/2007/03/
Many people want to look at homes before applying for mortgage loan, but these days it become reverse, first apply for mortgage loan than see the plot. This can give you assurance and idea how much you are capable to spend on a house, and thereafter you can find property much more easily and quickly.
Even though you have good credit certificate and good salaried job and you also know that you will be accepted for the loan, it is good to apply for pre-approval than to be pre-qualified. Pre-qualified person is that who is eligible to apply for mortgage loan, this does not figure out the amount you going to receive. So after receiving pre-approval letter only you can classify how much amount is approved. If your circumstances do not change you will surely receive the same.
For getting pre-approval, you need to come across the right lender, who can show you clear picture for what you need. They will go through with certain formalities by checking you and give you pre-approval letter, after that you can start searching for your dream home.
Now you are having pre-approval, this gives you idea how much you are capable and can afford to spend on a property. This will also narrow your search as you are having the limit to spend. And you can quickly come across in finding the right kind of property, and make buying easier.
You will be seen as potential cash buyer with the pre-approval mortgage loan. Seller can take you granted as a cash buyer only and accept the offer with pre-approval letter. Now if you have agreed to buy the property but the mortgage is not in place, then it may take some time arrange the funds, and you might not get funds you need. However if you are having pre-approval letter then it suggests that the fund is already guaranteed, and you can come across quickly enough. This will make buying stressful and you can get the house you want.
http://www.fastmortgagesonline.com/articles/2007/03/
Refinance Your Home Loan and Lower Your Monthly Payments
The most popular reason to refinance a loan is to reduce your monthly payments, this is known as “rate and term” refinance. By refinancing your loan you reduce the applicable rate, bring down the per-month payment and cut short the interest payable over the life of your loan.
There can be several ways in which you can refinance to lower your monthly payments. The first method is reducing the term of the mortgage. The shorter the time of pay back, the lesser will be the interest charged on the loan, the less you’ll have to pay your lender. So instead of going for a thirty years pay back plan, ten of fifteen of twenty years plan will save you a handsome amount in shape of saved interest. But keep in mind that the monthly payment is likely to increase in this case.
The second way of refinancing to lower your monthly payments would be to switch from an Adjustable Rate Mortgage (ARM) to a Fixed Rate Mortgage (FRM). You may have chosen ARM in the start because of smaller monthly payments to start with, or because you were planning to live in this home for a smaller period of time, but now you realize that your ARM monthly payments have risen quite considerably, causing you problems in coping with your finances, or you might have given up the idea of shifting, so now you need to refinance your loan and switch to the security of FRM.
The third way is to add to your mortgage balance and get a check back from your lender at the closing. The interest costs on home mortgage loans are deductible for tax purposes. If you are stuck in high interest loans like credit card, personal or education loans, the best way is to take your cash out of your home and pay these loans. But this is only possible when you have a home equity available. Some refinance companies offer up to 80% of the market value of your home.
If you bought your home with less than 20% down, then your finance company would have insured your loan from a Mortgage Insurance (MI). As your house appreciates, so will your equity. If your home value is appreciating and your balance is decreasing, it will also increase your equity. If one of these or both occur and your equity increases from 20%, the savings of getting rid of MI will allow refinance. In some cases may also be cancelled automatically under the 1988 act of homeowners’ protection.
http://www.fastmortgagesonline.com/articles/
Thursday, October 18, 2007
Reverse Mortgages - Use Your Home Equity To Finance Your Retirement
Reverse mortgages offer seniors a way to use the equity in their homes to help finance their retirement. With people living longer, reverse mortgages can provide income when retirement savings aren't enough to cover living expenses.
Also known as Home Equity Conversion Mortgages, or HECM's, reverse mortgages allow seniors to sell part of the equity in the home in order to get cash, without having to sell the home or take out a home equity loan.
With a reverse mortgage, instead of making mortgage payments to a lender every month, the mortgage lender sends you money every month. You don't have to pay the money back for as long as you live in your home.
Naturally, you must repay the reverse mortgage at some point: when you die, when you sell the house, or when you no longer live in the house as your principal residence.
Most reverse mortgages require that you be at least 62 years of age, and live in the home.
Types of reverse mortgages:
There are three types of reverse mortgages: single purpose reverse mortgages; federally-insured reverse mortgages; and private reverse mortgages.
A single-purpose reverse mortgage can only be used for one purpose specified by the government or a non profit lender. Some of the allowable purposes include home repairs, home improvements, or property taxes. Single-purpose reverse mortgages have very low costs associated with them, and are usually available only to those with low or moderate incomes.
Federally-insured reverse mortgages are called Home Equity Conversion Mortgages (HECM's), and are backed by the U.S. Department of Housing and Urban Development (HUD). Because of the relatively high costs associated with HECM's, they are best suited for those who intend to stay in their homes as long as possible.
To qualify for an HECM, you must first consult with a federally-approved housing counselling agency. The counselor will explain the costs, the financial implications, and the alternatives to reverse mortgages.
The amount of money that you can receive from an HECM depends upon your age, the type of reverse mortgage you choose, the value of your home, current interest rates, and other factors. Generally speaking, the amount you can receive will be higher if you have a lot of equity in your home. Also, your age will impact the amount you can receive; the older you are, the more you will likely receive.
If you qualify for an HECM, you have several options as to how you will receive your payments. You can choose a fixed monthly payment over a specific period of time, or for as long as you live in your home. You can also set up a line of credit, from which you can draw funds from the loan proceeds at any time, and in whatever amounts you choose.
Private reverse mortgages are very similar to government-run HECM's. The difference is that the money is being borrowed from a private lender, and the costs may be higher than government HECM's. However, those who own higher-valued homes may find that they will qualify more easily for a reverse mortgage going through a private lender, and may also get more money from the reverse mortgage than if they went with a government HECM.
Features of Reverse Mortgages:
You paid for your home with the the money you had left in your paycheck after taxes. Therefore, the loan payments you receive from a reverse mortgage are not treated as taxable income. This means that the payments will not affect your Social Security or Medicare benefits.
While a reverse mortgage means that you are borrowing against your home, you still retain the title to the home. However, because you retain the title to your home, you're still responsible for repairs, property taxes, utilities, and other expenses, just as you would be with a conventional mortgage.
Reverse mortgages involve closing costs, so be sure to interview several lenders to make sure that you're getting the best deal.
A reverse mortgage means just what the term suggests: instead of the amount of money you owe on your home declining over time, the amount of money you owe on your home increases over time.
How much can the amount you owe increase to? A "nonrecourse" clause is contained in nearly every reverse mortgage. The clause prevents you or your estate from owing more than what your home is worth when the loan is repaid.
One obvious disadvantage of a reverse mortgage is that, in the end, you are left with little or no equity in your home. You won't have anything from your home to pass on to your heirs, or to use if you should go into a retirement home or assisted living.
Richard A. Baker is the publisher of http://www.buyyourhomeguide.com More mortgage-related articles written by Richard A. Baker can be found at http://www.buyyourhomeguide.com/mortgage_information.html
Article Source: http://EzineArticles.com/?expert=Richard_A_Baker
Also known as Home Equity Conversion Mortgages, or HECM's, reverse mortgages allow seniors to sell part of the equity in the home in order to get cash, without having to sell the home or take out a home equity loan.
With a reverse mortgage, instead of making mortgage payments to a lender every month, the mortgage lender sends you money every month. You don't have to pay the money back for as long as you live in your home.
Naturally, you must repay the reverse mortgage at some point: when you die, when you sell the house, or when you no longer live in the house as your principal residence.
Most reverse mortgages require that you be at least 62 years of age, and live in the home.
Types of reverse mortgages:
There are three types of reverse mortgages: single purpose reverse mortgages; federally-insured reverse mortgages; and private reverse mortgages.
A single-purpose reverse mortgage can only be used for one purpose specified by the government or a non profit lender. Some of the allowable purposes include home repairs, home improvements, or property taxes. Single-purpose reverse mortgages have very low costs associated with them, and are usually available only to those with low or moderate incomes.
Federally-insured reverse mortgages are called Home Equity Conversion Mortgages (HECM's), and are backed by the U.S. Department of Housing and Urban Development (HUD). Because of the relatively high costs associated with HECM's, they are best suited for those who intend to stay in their homes as long as possible.
To qualify for an HECM, you must first consult with a federally-approved housing counselling agency. The counselor will explain the costs, the financial implications, and the alternatives to reverse mortgages.
The amount of money that you can receive from an HECM depends upon your age, the type of reverse mortgage you choose, the value of your home, current interest rates, and other factors. Generally speaking, the amount you can receive will be higher if you have a lot of equity in your home. Also, your age will impact the amount you can receive; the older you are, the more you will likely receive.
If you qualify for an HECM, you have several options as to how you will receive your payments. You can choose a fixed monthly payment over a specific period of time, or for as long as you live in your home. You can also set up a line of credit, from which you can draw funds from the loan proceeds at any time, and in whatever amounts you choose.
Private reverse mortgages are very similar to government-run HECM's. The difference is that the money is being borrowed from a private lender, and the costs may be higher than government HECM's. However, those who own higher-valued homes may find that they will qualify more easily for a reverse mortgage going through a private lender, and may also get more money from the reverse mortgage than if they went with a government HECM.
Features of Reverse Mortgages:
You paid for your home with the the money you had left in your paycheck after taxes. Therefore, the loan payments you receive from a reverse mortgage are not treated as taxable income. This means that the payments will not affect your Social Security or Medicare benefits.
While a reverse mortgage means that you are borrowing against your home, you still retain the title to the home. However, because you retain the title to your home, you're still responsible for repairs, property taxes, utilities, and other expenses, just as you would be with a conventional mortgage.
Reverse mortgages involve closing costs, so be sure to interview several lenders to make sure that you're getting the best deal.
A reverse mortgage means just what the term suggests: instead of the amount of money you owe on your home declining over time, the amount of money you owe on your home increases over time.
How much can the amount you owe increase to? A "nonrecourse" clause is contained in nearly every reverse mortgage. The clause prevents you or your estate from owing more than what your home is worth when the loan is repaid.
One obvious disadvantage of a reverse mortgage is that, in the end, you are left with little or no equity in your home. You won't have anything from your home to pass on to your heirs, or to use if you should go into a retirement home or assisted living.
Richard A. Baker is the publisher of http://www.buyyourhomeguide.com More mortgage-related articles written by Richard A. Baker can be found at http://www.buyyourhomeguide.com/mortgage_information.html
Article Source: http://EzineArticles.com/?expert=Richard_A_Baker
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