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Home Refinancing - Choosing the Best Deal
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Mortgage Broker Refinancing Service
If you are considering using a mortgage broker for mortgage refinancing, you need to read this discussion to avoid overpaying. Mortgage brokers can be an excellent resource for comparing mortgage offers if you watch the broker like a hawk. Here are three questions you need potential mortgage brokers to answer before choosing a mortgage broker to refinance your home.
1. Do You Close on t... Read mortgage refinance article
Debt Consolidation Mortgage
What exactly is a debt consolidation mortgage?
If you are having difficulties in meeting your monthly obligations, then consider getting a debt consolidation mortgage. Simply put, a debt consolidation mortgage is a loan which puts up your house as collateral. It is a type of residential mortgage that combines all your existing loans into a single one.
A debt consolidation mor... Read mortgage refinance article
Home Refinancing - Choosing the Best Deal
Owning a home is one of the most important decisions in anyone's life. Owning a house is also a big financial commitment on your part, so any financial decision involving your home should not be taken lightly. When the right moment presents itself, refinancing the home may be a good financial move. However, choosing the best home refinancing deal can be very confusing.
When choosing your home refinance package, you have to consider a number of points. You need to consider whether the time is right to apply for a home refinance loan. In most of the cases homeowners make the decision to refinance their homes just to lock in low interest rates. Even if the present interest rate is low, it may not be prudent to refinance the home in particular situations. Let us discuss about some of the factors that will help you to make the right decision regarding home refinancing.
Why And When To Consider Home Refinance
The main reason behind home refinancing is the monetary gain. Refinancing means locking in a lower interest rate, and lower interest rate loan in turn means your required monthly payments are lower. Thus you get extra cash in your pocket. There are some typical situations where homeowners may consider a home refinancing loan:
* When a homeowner finds that his current mortgage rate is more than 2 percentage points higher than the current interest rate for a similar loan amount and the person in question has no intention of leaving the house in the near future.
* The homeowner had enough foresight to go for an Adjustable Rate Mortgage (ARM) and now wants to switch to a fixed rate loan to lock in lower rates for the long term. With refinancing, he is expected to get a better ARM with a lower interest rate and naturally more favorable repayment terms.
* When the homeowner wants a shorter loan period so that he can become the complete owner of the home more quickly.
* When the homeowner wants to utilize the equity value accumulated on his property.
If you are considering a home refinance because of any of the above-mentioned reasons, you should take the following points into consideration before selecting a lending company:
* Try to remember whether your current mortgage loan is going through a prepayment penalty. If yes, the new loan will not offer any extraordinary financial gain.
* Never trust those lenders who refuse to provide you with the detailed information on application and closing costs. They tend to impose hidden fees that can rip you off of the savings gained from refinancing in the long run.
* When you decide on a certain loan product, try to lock in the rate for at least 60 days. But if you sense that the loan is going to turn out to be bad at closing you have the right to reject it within three business days.
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Credit Inquiries And Your Credit Score
"Don't let anyone run your credit each inquiry hurts your credit score!!" You hear it all the time. Well if you're looking for a mortgage how can you possibly shop for a loan if you can't run your credit again???
Credit inquiries are 10% of overall credit score, and it's the least understood of all credit scoring factors. There are actually 5 different categories that affect your credit score and they are as follows:
Credit History- Do you pay on time- 35%
Credit Balances vs available credit- 30%
Length/Depth of credit history- 15%
Type of credit- Revolving, Installment,
Mortgage, etc. 10%
Credit Inquiries 10%
Many loan officers, lenders, brokers use credit inquiries to scare borrowers from shopping for their mortgage. It's a scare tactic, and what they'll say is "don't let anybody else run your credit, it'll hurt your score", and that's partially true but there are a few details that they leave out.
For starters inquiries could affect your score from 2 points per inquiry to 25 points per inquiry. The maximum number of inquiries you can have that will affect your credit score in any six month period is ten. So if you have ten inquiries in a ten month period, go to town, at that point you can have eleven, twelve or even one hundred inquiries it doesn't matter it won't effect your score at all after ten.
Now, here's the big one, mortgage and auto loan inquiries are completely different than credit card inquiries. When you want to shop for a mortgage or a car loan, you want to make sure you get the best loan for your personal needs. The problem is, any reputable mortgage professional needs to run your credit to present a loan offer in writing. If you can't get a loan offer in writing then it's not worth paper it's not written on.
So, to actually get an offer in writing to you a loan officer needs to have your credit run. The credit score is only part of the picture, a whole credit history and picture is needed. So how can you look around for a mortgage if every inquiry affects your score? You probably can't. Well, here's the part that probably 99% of the loan officers out there don't know. There's what I like to call a 14-day rule. The 14-day rule says you can have an unlimited number of mortgage inquiries in 14 days and it counts as one inquiry. That's right, unlimited. So for example, you're looking around for a mortgage, you decide go to fifty different mortgage companies. I'm not saying you should do that but, if you decided "I want to shop fifty mortgage companies" and you had fifty different mortgage companies run your credit. If they ran your credit in 14 days, that's one inquiry and that affects your score as one inquiry. If it happens to take you 28 days to shop 50 mortgage companies, which I would think it might take longer than that, but assuming that you can go out and get 50 lenders to run your credit and do whatever it is that needs to be done in 28 days, that will count as two inquiries. Again, this is really the most absolute misunderstood of all the factors in overall credit scoring.
Banks, brokers and loan officers all use inquiries to scare you from shopping for a loan, but they themselves don't even know the rules of how inquiries work. I'm not saying that shopping around is the smartest thing to do, you really need to work with a professional mortgage planner. Certainly, if you're going to shop around know the rules and make sure that whatever you do you get it in writing, you need to get a Good Faith Estimate. You can't get that without a loan officer running your credit. So when a loan officer, a bank, or broker says don't let anybody run your credit it's going to hurt your score, you could answer, you know what, that's true but I know the 14-day rule. I guarantee you whoever you're speaking to says, "What 14-day rule?" Again, remember, you can have an unlimited number of inquiries for a mortgage loan in 14 days and it counts as one starting from the first inquiry.
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Home Refinancing - Choosing the Best Deal
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