Christian Equity Home Loan Refinancing
Seeking out Christian equity home loan refinancing can be a good idea for families in need of a little extra cash. This cash might be used for such purposes as home improvement projects or to pay off unsecured debts. As homes increase in value, the equity that is earned can be great. Drawing on these equities can provide a type of secured debt that is relatively easy to attain. Some borrowers have a desire to consolidate debts through this type of financing. The savings in interest that can be achieved by rolling a lot of little debts into one can be significant. With the price of real estate, families in need of larger living quarters might choose to remodel or enlarge their current house rather than buy a new one. Using equity home loan refinancing for this purpose can be a wise move and will almost certainly be less expensive than an entirely new real estate purchase. Keeping an eye on interest rates is always a good idea when considering this type of borrowing. Often these loans will have an interest rate that fluctuates with the market rather than a fixed rate. As rates rise, the borrower's payments will rise as well. For this reason, a borrower should be prepared for all eventualities, including meeting higher payments should the rates climb too quickly.
In the area of equity home loan refinancing, a borrower may have a choice between basic loans or lines of credit. Straight loans will simply make a certain amount of cash available to the borrower up front. The borrower will then pay back the debt through monthly payments that are spread out over a specified period of time. A line of credit is a more flexible approach. The borrower can simply draw on this line of credit over time. There will, of course, be limits on the amount of money that can be borrowed and a deadline for when the debt must be paid off. The advantage of this approach is that the borrower can choose to simply borrow money as needed. For example, if a debtor in the middle of a remodeling or expansion project on their property, they may find that the project is costing more than was originally anticipated. By drawing on a line of credit, a borrower can meet the needs of the project without negotiating additional loans. By the same token, if less money is needed than was originally thought, home equity has not been touched and extra funds have not been borrowed. This flexibility is a popular feature with many homeowners. Whatever type of equity home loan refinancing a family might choose, tapping into these funds can help meet pressing financial needs.
Before choosing this financing option, there are a few things that a potential borrower should take into consideration. The kind of borrower who could make an ideal candidate for equity home loan refinancing will have certain things in common. The ability to pay the debt off in a reasonable amount of time can be important, especially for lines of credit. When a borrower comes to the end of the time allotted on a home equity line of credit, there should not be a large amount of debt left. When a good deal of money is still owed and time is up, a borrower may have to seek out new financing, or run the risk of loosing the property. Also, interest rates on short term loans tend to be lower. In most cases, standard equity home loan refinancing will amortize over ten to fifteen years. Lines of credit may have a shorter life span. All debt in this category will generally have much shorter terms than traditional mortgages. Some borrowers feel that refinancing the original mortgage on a property is wiser than taking out an additional loan that taps into equities. There are also cash out refinancing options that allow the borrower to walk away with a certain amount of cash in addition to renegotiating terms for a new mortgage.
When determining the total amount of equity in a property, a homeowner will simply subtract the amount of money that is still owed on the property from the property's current appraised value. In addition to this total, a potential borrower's credit history will also be taken into consideration. A low credit rating will usually mean higher interest rates and harsher terms. It may be possible to attain financing within this category that offers a fixed rate of interest. Of course, terms on equity home loan refinancing will vary with each lending institution. Honesty is always an important priority in any kind of financial dealing. The Bible has many apt descriptions regarding the harm that is done by deceitful practices. "Bread of deceit is sweet to a man; but afterwards his mouth shall be filled with gravel." (Proverbs 20:17)
There are benefits that may come with choosing equity home loan refinancing. Lines of credit give the borrower the option of getting money as it is needed rather than guessing how much to borrow up front. This also means that a debtor will only have to pay interest on the money that was borrowed. Interest rates on these loans are generally tax deductible. Lower closing costs will usually accompany lines of credit as well as standard loans. However, there may be certain fees attached to this funding. As with any legal document, the wise borrower will make sure to carefully read all of the fine print in the loan agreement before moving forward.
Christian Refinancing Home EquityRefinancing home equity isn't necessarily a cut and dry issue because many factors come into play before making a go or no go decision. Surprisingly, a lot hinges on what kind of personality a person has; brooder, melancholic, a natural worrier or upbeat, optimistic and positive. As a result of those natural personality indicators, the nature of economic times, good or bad come strongly into play. Since refinancing may involve lending agreements that are variable rate interest lending transactions, the market ups and downs can send a more brooding personality into a tailspin. So first take a real inventory of what kind of risks and fluctuations a person can tolerate, and if married, make sure this character inventory evaluation includes a person's spouse. The spouse will always give the right and honest appraisal!
So how long will the person or family be living in the house? Unless a person is living in an area of the country where house values are continuing to climb, an anticipated short stay in a house (less than two years) may not bode well for one's bottom line. For example, since closing costs are always a part of the refinance deal, it may take several years to recoup those costs through a lower interest rate loan. Moving from that house in two years or less will put a person in the hole financially despite a lower rate. And even if a person gets a no point loan, the costs are always included in the loan itself. Many online calculators are available for a person to use that will clear up any short stay refinancing home equity questions.
Another factor that is also important in considering whether refinancing home equity is right for the consumer would be the issue of personal finance changes. Has employment status changed? Have new debts been added to my credit report and have there been on time payments or are there late payments recorded? The cold hard truth is that each time a refinanced mortgage request is put forward, the borrower goes back under the microscope for inspection. This is true even if the request is for a cash out mortgage where earned equity is being covered with the new loan. Someone has wisely said that it is in the good times, the times of plenty and no want that the interest and true trust in God is put to the test. The Psalmist said it beautifully when he penned, "But let all those who trust in thee rejoice; let them ever shout for joy, because thou defendest them: let them also that love thy name be joyful in thee." (Psalm 5:11)
When economic times get hard, credit gets much harder to obtain. In frisky economic periods, banks which traditionally offer the lowest interest rates have typically made the 650 credit score a benchmark threshold for lending. Mortgage investment companies are more lenient in these upbeat times, allowing perhaps even a 600 score to be considered. When the pendulum swings the other way, banks may call for 725 to be their FICO threshold for lending and investment companies may make a 675 FICO their low ceiling number. And because so many factors actually go into crafting a credit score, such as payment integrity, unsecured loan balances, length of credit history, types of loans and frequency of loan applications, it can be possible for a homeowner seeking the refinancing home equity opportunity through a new cash out mortgage could be denied the loan.
But let's say that a person does have great credit and has owned a home for ten years and now has thirty thousand dollars equity in the one hundred thousand dollar house. The owner needs money to pay for an expensive medical procedure not covered by health insurance. He could seek a home equity loan based on the equity in the home which will be a variable rate loan as all HELOCs are. Refinancing home equity with a HELOC is usually offered on about seventy percent of the accrued equity in a residence or other property. That would mean the owner could expect to receive about twenty one thousand dollars on that second mortgage loan. However, the owner needs twenty six thousand dollars and the owner is concerned that interest rates may spike in the next year and so concerns about the rate climbing and the low cash received actually scare him away from the refinancing home equity lending agreement.
But the Christian homeowner had actually hit upon a very good opportunity for seeking refinancing home equity because his actual choice would be a cash out fixed rate remortgage of his house at the original one hundred thousand dollar level. In this homeowner's case, his original fixed rate mortgage was set at seven point two percent and will refinance his house again at one hundred thousand dollars, but this time at five and a half percent. This cuts his house payment by almost one hundred and fifty dollars a month and gives him the needed cash to fund the operation his wife needs so desperately. Not all refinancing home equity tales turn out so wonderfully with the dragon slain and the washer girl marrying the prince but it can happen with a good credit score and a dogged determination to wait on the best deal to finally emerge. The best advice is to find a good loan officer and talk about all the options.