Mortgage Refinancing 101
If you are looking to refinance your mortgage, now is an opportune time to do so. Rates are lower than they have been in the past and lenders are competing for business. Mortgage refinancing is offered by most lenders and can have a positive impact on your financial situation. When you refinance your mortgage you can possibly lower your rate, change your adjustable rate to a fixed rate, and you might even be able to pull extra cash to pay off credit card debt, helping you become free of non-mortgage debt.
You need to know the difference between a broker and a lender when looking into mortgage refinancing. A broker works on your behalf to find a loan program for you that is provide from a lender and they usually work off a commission base. A lender is the one who is actually financing the money and determines whether or not you qualify for one of their programs. Some brokers charge what are known as ?junk fees?, such as a broker fee, on top of the fees that the lender charges to do the loan. Obviously you can avoid some of these ?junk fees? by dealing directly with a lender. Using a broker can have benefits too, as some lenders offer brokers special programs or deals to bring them consumers.
When looking to mortgage refinance, your best deal is to do the research and get quotes from more than one broker or lender. Make sure you ask questions and understand any programs that are being offered to you and that you understand all of the fees being charged.
Tips on Finding the Right Mortgage Lender
Many consumers find it difficult to know what to look for when choosing a mortgage lender. There are many lenders to choose from and when you use a lender it?s because you are making an important decision to either buy or refinance a home. You want to make a decision to use the right lender for you.
The first thing you should look for in a mortgage lender is their stability and reputation. Some lenders have been around for many years and have been reliable for their customers throughout the years. It is important that you choose a lender that has customers that are happy with the products and service that they receive from the company. You can research a lender?s complaint history and look for testimonials on their websites to get you started.
You are also going to want to look into the programs and products that are being offered. By reviewing the services they provide, you will get a better picture of whether they are the right lender for you or not. A lender that offers a variety of products will assure you that you will have options to choose from.
Take a look at whether the lender offers more prime or sub-prime loans. Prime loans are offered to customers with higher credit scores, more assets and are an over-all lower risk to the lender. Sub-prime loans are offered to customers with lower credit scores and in more difficult financial situations which represents a higher risk to the lender.
Whichever category that you fall into, you want to be sure that you use a mortgage lender that specializes in these types of loans so you get the best product suited for your financial situation. If a prime customer goes to a sub-prime lender, they are likely to get a rate that is slightly higher due to the programs offered are more suited for sub-prime borrowers. On the other hand if a sub-prime customer goes to a prime lender, they may not qualify due to the programs having strictly guidelines because they are more suited for prime customers.
When looking for a mortgage lender, make sure that you do some research on the company and get all of your questions answered so that you can make a well informed decision.
Home Mortgages in 2011
In these challenging economic times, everyone is starting to wonder if lenders are going to make it harder to get a home mortgage in 2011. There are two different ways you can approach this relevant topic.
For some consumers it will become harder to get a mortgage depending on their type of employment. If you are self-employed it will likely be more difficult for you because the requirements to prove your income have increased significantly since the foreclosure crisis started. In the past, lenders would allow you to state your income if your credit score was high enough; in other words you did not have to prove the amount you made, you simply told them how much you earned.
Many loans that were stated income have contributed to the foreclosure rates due to the consumer not actually having the income that was stated (whether it was the lender, broker, or consumer who came up with the amount).
Another contributing factor to increase the difficulty in obtaining a home mortgage would be lenders lowering acceptable LTV ratios. LTV stands for loan-to-value and is calculated by taking the amount the lender is willing to finance divided by the current value of the property. Before the foreclosure crisis, many lenders offered combination loans that went as high as 125% LTV (which means they lent more than the home was worth at that time).
Don?t give up yet; there are some advantages consumers will benefit from when looking for a home mortgage in the near future.
Everyone hears about the foreclosure crisis, bankruptcy filings increasing significantly, and progressively more people defaulting on debts; all of which affect your credit score. It is predicted that lenders will start to lower their guidelines in terms of credit scores and start looking at applicants on more of an individual basis on their current situation for approval, rather than their credit score being a top qualifying factor.
Home values are low and foreclosures are still at a record high. This means you can get more for your money.
Banks are constantly buying homes at foreclosure sales then turning around and selling them for their current market value, not what the previous consumer owed on the mortgage from when home values were significantly higher. To top it all off, rates are low and loan programs are limited. Before the foreclosure crisis lenders were offering all types of loan programs that the average consumer couldn?t understand; such as negative amortization loans, interest only loans, and balloon payment loans.
With foreclosures hitting an all time high, lenders are doing away with some of these deceptive loans leaving you with the most common of them: fixed rate loans and adjustable rate loans. In these trying economic times, in all probability lenders will have no choice but to adjust their guidelines to make it more feasible for the consumer to obtain a mortgage. No doubt they will be cautious in their lending criteria as to avoid another foreclosure crisis like we face today.