Refinancing Is Still A Viable Option: Use Untap Resources To HelpBy Mary Phillips on February 9, 2011, 8:19 am
There are many good reasons to refinance. With today’s low interest rates, you may be able to save on your monthly payments. Mortgage refinancing can also give you cash back to use for home improvement or other purposes, or to consolidate debt or eliminate credit card debt. If you already have two loans or a second mortgage, refinancing both loans can simply your finances and save you money at the same time. You can also choose to change your payment terms, such as converting to a fixed rate loan to lock in low interest rates, or change to a shorter mortgage term to pay off your home more quickly.
Based On All The Factors
There may be several loans available to you or you may find you are quite restricted in your choices. It will often depend on an appraisal, your current finances, and your credit score. A lender will examine all of these areas and meet back with you to advise you on exactly what you are eligible for. Usually the higher an appraisal, the better your credit score, and a stable flow of income will allow you to get the best rate possible and the type of loan you want.
The goal of the stimulus plan is to decrease the high amounts of mortgage defaults and foreclosures. In the past couple of years along with the failure of the U.S. economy, foreclosure and mortgage default rates have soared. Loss of jobs, or pay cuts have been leaving many homeowners with large amounts of debt and low income. Through the plan qualified borrowers will be able to refinance at interest rates around 2-3 percent.
Stay Out Of Foreclosure
The program requires mortgage owners to forgive at least 10 percent of a borrower’s unpaid principal so that the loan can be refinanced into an FHA loan at a lower interest rate. The goal: keep homeowners out of foreclosure even if they owe more on their homes than they are worth.
Cash Out Refinance
There was only 16 percent of refinance loans that were used to cash out the home equity by 5 percent for the fourth quarter of 2010. Freddie Mac said that this is the lowest percentage of cash out equity mortgage refinancing since they began reporting the data in 1985. In the third quarter of 2010, there was only 18 percent that were cashing out their home equity with a refinance mortgage loan. This is historical low numbers when comparing the average over the last 25 years for cash out refinancing is 62 percent.