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Need to Refinance 1st and 2nd Mortgages?
Posted by: | CommentsRefinancing both your first and second mortgages will result in one low monthly payment that could save you thousands in interest charges. By combining both mortgages, you qualify for lower rates than if you refinance separately. You can see a significant savings with your second mortgage refinance, which is often several points higher than your first mortgage rates. You will also save on application fees and other closing costs.
Strategies To Lower Your Mortgage Payment
You have a couple of options to lower your mortgage payment when refinancing. The first choice is to find a low rate mortgage. So even if you choose the same length for your loan, you will still see a savings in your monthly mortgage bill. Adjustable rate and interest only loans will give you the lowest payments, at least at the beginning of your home loan. But a fixed rate loan can also give you reasonable rates with security that they wonít rise in the future.
The other option is to extend your loan term, especially in the case of your second mortgage which usually is for five to ten years. By consolidating your loans to a thirty year loan, you lengthen your payment schedule for principal, so you have a smaller payment. However, your interest rate and charges will be higher than with a shorter term.
Getting The Best Loan
Once you determine the type of loan and terms you want, do your shopping for a good lender to save even more money. Lenders will vary in how much they charge for closing costs and interest rates. The APR will tell you how loans compare overall, both in terms of rates and closing costs.
But if you are planning to move or refinance again in the future, then be wary of paying high closing costs. Even if they secure you a lower rate, you will only see a savings if you keep the mortgage for several years.
Donít base your lender decision based on posted loan rates. Ask for a personalized loan quote based on your general information. With more accurate numbers, you can make an informed choice as to who has the best financing for you.
Home Equity Loans, What are they all about?
Posted by: | CommentsA home equity loan or line of credit has become a very popular way to allow home owners to borrow money against the value in their home without refinancing or taking out a second mortgage. While a home equity line of credit is similar to a second mortgage there is a significant difference. When you take out a home equity line of credit you are not receiving a lump sum of cash. Instead you have access to the money as you need it so you only pay interest on what you borrow up to your limit. You are under no obligation to even use it. The benefits of using a home equity line of credit include a lower interest rate and more flexible terms than an unsecured loan. Just remember that you must make your payments on time since your house is collateral and you certainly do not want to lose that!
Similar to a credit card, the bank will be approve you for a specific amount of credit. The lenders will usually set your limit to a percentage of the value of your house, often 85%, minus whatever your current mortgage balance is. This will depend on the lender and your credit history. Often where your house is located will often be a factor as well. More secure real estate markets will allow you to borrow more as the bank won’t have to worry as much about the value of your house falling below what your loan is.
Just as you would for any other type of loan, you must compare interest rates among different lenders, know whether the line of credit has a fixed or adjustable interest rate. Also you will need to know how you can access your money. Often, if you go to your regular bank, you can spend from your home equity line of credit just as you would be able to from your checking account. Some other companies will require you to place a call, or transfer from their bank to your bank which may take several days. A home equity line of credit is a good way to ensure you have the funds you need for emergencies or repairs to your house.