Christian Home Refinancing Tips
Christian home refinancing tips can be very helpful to homeowners considering whether or not to refinance their mortgage, but the decision to refinance is heavily based on person's situation and future goals. If timed just right, refinancing can save thousands of dollars, but it isn't for everyone and doesn't work for every situation. Choosing to refinance can cost a lot of money in and of itself. Closing fees, appraisals, title insurance can add up quickly and surmount any savings a homeowner might make in signing a new mortgage. Individuals should weight their personal situation carefully before following the latest advice or hottest tip. Home refinancing tips can help bring the situation into focus, but at the bottom line, if it doesn't save money or deepens debt, refinancing is not worth the effort.
Many people decide to refinance when interest rates are lower. Homeowners who chose an adjustable rate mortgage (ARM) on their first loan, may want to lock in at a fixed rate. Although ARMs are generally lower, they fluctuate over time with the changing index. By locking into a low fixed rate, when interest rates are low, borrowers never have to worry about it rising too high. Plus, a fixed mortgage stabilizes monthly payments, so individuals can better manage personal finances in their budgets. However, many home refinancing tips also state that the benefit depends on how long a homeowner plans to stay in the current house. Borrowers planning to move within three to five years will usually not benefit since ARMs are usually fixed for the first three-year period. Those who plan to stay in homes for longer periods of time do benefit from locking in at a low fixed rate. Another alternative would be to refinance every three to five years, keeping the lower rates with fixed periods. Individuals who originally financed under poor credit situations often choose to refinance when credit scores are have improved enough to qualify for lower rates. Home refinancing tips also suggest applying for approval for a government subsidized loan, even with lower credit scores or no credit history at all. However, approval is handled on a case-by-case basis. Increasing credit scores greatly reduce rates, payments and terms of the mortgage, enabling more money to be spent on debt reduction and other necessities.
Homeowners may also want to change the terms on their mortgages. Increasing monthly installments, shorten the term of the loan, saving hundreds on interest and building equity up much faster. Others prefer to stretch out the term of the loan to decrease monthly payments and free up extra money needed for other expenses. Doing this will usually increase the total payout of the loan, not saving any money at all in the long run. However, according to home refinancing tips, if a borrower is able to lock in at a lower interest rate, he or she can lower monthly payments without increasing the term of the contract. This option both combines the best of both worlds.
Home refinancing tips also include using equity to consolidate outstanding debt. Once a homeowner has built up some equity in the house, that equity can be borrowed against to pay back loans with higher interest rates. "Moreover he provided him cities, and possessions of flocks and herds in abundance: for God had given him substance very much." (2 Chronicles 32:29) Since home equity loans are secured against the property, interest rates are generally lower than most other loans. This can save the individual a lot of money in interest. Often referred to as second mortgages, these loans can replace several outstanding loans into one easy payment. However, people who take out home equity loans do so at great risk. Defaulting will cost them more than the loan. They will lose their home. Homeowners must carefully weigh the risk and make sure it is manageable before deciding.
Individuals who refinance can also get cash in the process to pay for a new car, college or other debt. This cash-out refinancing is not a second mortgage and usually carries a lower interest rate than a home equity loan. The amount is simply rolled over into the new mortgage with any fees and closing costs involved. There are many ways to cash-out during refinancing. Interest only loans allows the borrower to pay only the interest on the loan for a specified amount of time and is usually only available within the first few years of a mortgage. Many home refinancing tips advise using this time of financing for items that would increase in value at a higher rate than the equity in the house, such as high-end investments or home improvements that would drastically increase the market value. Individuals can borrow up to 95% of the property value in both ARM and fixed mortgage loans. If the housing market is increasing, although no payment is being made on the principal, equity is still being built up in the house. No document or low document loans often come with higher interest rates and are only extended to homeowners with good credit scores. They require minimal paperwork and usually attract borrowers whose salaries aren't consistent. On the other hand, no ratio loans are available to individuals who don't want to provide income for privacy reasons. These borrowers much have good income and a large amount of assets to cover extra costs.
Home refinancing tips can also aid homeowners in finding lenders. Financial advisors suggest shopping around for the best rates and securing a reputable lender who will disclose all fees in writing upfront. Make sure the lender is a member of the Better Business Bureau or a similar organization that calls for accountability. Before restructuring, make sure that the original loan does not carry any early payment or pre-payment fees. These can be very costly, adding up to six months worth of payments. Taking in financial tips and advice from professionals will help the process, but borrowers must take care to assess their individual situation before proceeding.
Christian Home Refinancing InformationHomeowners can find home refinancing information online or through a local mortgage lender or banker. Actually, shopping online for information before discussing refinancing options with a banker equips homeowners with an arsenal of data which can help them make wise choices when applying for a home equity loan. Anyone who has owned property for a substantial amount of time has a built-in source of ready cash. As a rule, real estate increases in value; and a house purchased twenty to thirty years ago can double in price, especially if improvements have been made. Smart homeowners can tap into the equity in an existing residence by obtaining a second mortgage, hopefully at a lower interest rate.
Equity is computed as the difference between the appraised market value of a house and the amount of money remaining on the mortgage. Homeowners who have paid on a first mortgage for at least ten to fifteen years may have enough equity built in the residence to secure a substantial loan. A second mortgage is taken out which pays off the first loan; and the remaining balance used for whatever purpose homeowners choose: applied to college tuition, deposited into a tax-deferred Individual Retirement Account, or used for renovations and repairs. The original or new mortgage lender will be able to furnish home refinancing information, such as the amount of principal and interest on the second loan; the term, usually fifteen to twenty years; and the amount of payments due if the new loan is an adjustable or fixed rate mortgage.
The best advice for homeowners who are considering a second mortgage is to collect as much home refinancing information as possible before signing a long term agreement. Knowing what options exist and what lenders require before making a commitment protects borrowers from getting locked into contracts that prove to be more of a headache and a hassle in the long run. Borrowers should resist the temptation to quickly agree to a contract to alleviate the burden of debt without taking the time to consider the consequences of acquiring a second mortgage. Finding the right refinancing requires wisdom: "If any of you lack wisdom, let him ask of God, that giveth to all men liberally, and upbraideth not; and it shall be given him. But let him ask in faith, nothing wavering. For he that wavereth is like a wave of the sea driven with the wind and tossed" (James 1:5-6).
Lenders may offer refinancing home equity in the form of a lump sum loan with a fixed interest rate or as a line of credit from which borrowers can access funds as they are needed. Also called a "closed end home equity loan," a lump sum payout provides homeowners with a one-time cash windfall which can go a long way in paying off excess debt and thereby freeing up some money for other expenses. Parents can realize the dream of sending their children to college, or stashing away money towards a tax-deferred retirement fund. Mortgage banks, credit unions, and other lending institutions may provide home refinancing information which helps borrowers make the best use of lump sum amounts, based on specific financial needs. Borrowers who are seasoned investors may consult financial planners to assess whether cash from home equity loans can be re-invested in portfolio holdings, such as certificates of deposit, stocks, and bonds; or used to purchase safe liquid assets, such as gold or other precious metals, which hold their value in spite of stock market fluctuations.
Borrowers who opt for loans which provide a revolving line of credit may be able to gradually reduce debt or making much needed property improvements or renovations. An open-ended line of credit is subject to fluctuating interest rates based on the current prime rate, plus margin. Borrowers commit to a minimum monthly repayment with interest-only options in order to keep credit lines open. The lower interest-only payments and ready access to cash make an open ended home equity loan attractive to borrowers who prefer to withdraw money as needs arise. Lenders will be able to provide home refinancing information on open or closed end home equity loans so that borrowers can make an informed decision which best suits their individual needs.
Whether homeowners decide to apply for a second mortgage to reduce existing loans and/or interest rates, pay off debts, save for retirement, or plan a dream vacation, borrowers can surf the Internet and compare rates and options for the best deal. Most home refinancing information can be found on real estate or mortgage lender websites. Some sites gather principal and interest rates from around the nation and post a comparison of lenders. Web-based home refinancing information usually includes an automatic calculator to determine the new monthly principal and interest payments. Homeowners shopping for loans simply plug data into an online form, such as current income and the total amount of the second mortgage. Quotes are also available on some lending institution web sites, along with electronic applications which can be approved usually within a 24- to 48-hour period.
Web-based "money stores" also provide home refinancing information and help Christian borrowers locate lenders who specialize in creative financing. In today's housing market, conventional lenders may be reluctant to offer loans to borrowers with less than perfect credit scores. Online money stores actually shop national databases to match borrowers with lenders who may be more lenient when it comes to extending a second mortgage. Some lenders may be willing to deal with poor credit borrowers for home refinancing, especially since the house is used as collateral; and repossession is always a guarantee that loans are not at risk. Homeowners seeking refinancing through an online agent are subject to screening to assess an ability to repay second mortgages. Income earnings statements, banking information, credit scores and histories, and evidence of steady employment are required before financing can be approved.