Home Mortgage Refinancing Guide

What documents are required to qualify for a mortgage loan?

Depending on the type of program you are qualifying for your lender may require detailed documentation of your income and assets, or even no documentation at all. There are programs that allow you to verify only your assets but not your income. These programs serve a purpose; however you will typically pay a premium interest rate if you accept a loan under these terms.

Generally speaking, the more documentation you can provide of your assets, pay stubs, bank statements, and tax returns the easier it will be for you to qualify for a mortgage with a low interest rate.

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Required Document Mortgage Loan - What You Need to know

Will refinancing be worth your while?

Refinancing can be worthwhile, but it does not make sense for every mortgage holder. A general rule is that refinancing becomes worth it to you if the current interest rate on your loan is at least 2 percentage points higher than the current mortgage interest rate. This rule is broadly accepted as the safe rule of thumb when juggling the costs of refinancing a mortgage against your potential savings. There are other considerations, too, such as how long you plan to stay in your house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the mortgage refinancing. Depending on your loan amount and the particular circumstances you might choose to refinance a loan that is only 1.5 percentage points higher than the current rate. You may discover that you are able to recoup the costs in a shorter time. If you want to shorten the term of your home loan it may not be necessary to refinance the mortgage. If you financed on a 30 year note when you purchased your home and have the cash on hand to pay an additional amount each month, you can pay down the principal on the loan faster by making additional payments.

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Bad Credit Mortgage Memphis - What You Need to Know

If you are a homeowner looking for Mortgage Companies Memphis sign up for a free guide, Five Things You Need to Know Before Refinancing a Mortgage. This guide will save you thousands of dollars when refinancing your home through Memphis mortgage companies.

Five Things You Need to Know Before Refinancing a Mortgage is a free e-book designed to guide you through the process of refinancing your home. The guide is divided into five sections delivered by email:

I. Should You Refinance?
II. Your Credit
III. Refinancing Costs
IV. How To Shop Around
V. Common Pitfalls To Avoid

This information is provided free, with no obligation and nothing to buy. Before refinancing with Memphis mortgage companies read this free guide.

Mortgage Companies Memphis - What You Need to Know

Over-inflated home prices are not stopping cash poor consumers from getting the house of their dreams as many mortgage lenders are letting homeowners drag out their mortgages for up to 40 years. By switching from a fixed 30 year to a 40 year mortgage, homeowners can stretch out mortgage payments and qualify for larger homes with lower payments. Home prices in today?s market are ready to decline as demand decreases. The average price of a starter home in the US has climbed up 14% since last summer, while the average income for the has only gone up 4%.

Although 40 year mortgages may seem like good news for homeowners, many experts say the benefits are far outweighed by high interest rates, 10 years of extra mortgage payments, and a reduction in home equity. This (40-year) mortgage screams of a budget constrained people desperate to get into a home. Inflated home value appreciation over the last several years has left some consumers with little choice but to seek riskier loans, like the 40 year mortgage and other interest only loans.

A 40 year mortgage is more attractive than interest only loans because borrowers build equity, even though it is at a sluggish rate. The 40 year mortgage was created in the late 1980s by several S&L associations. Since home prices skyrocketed, there has been an increase in demand for this type of mortgage.

Refinance a Mortgage - What You Need to Know

There are a number of factors that determine the mortgage interest rates for any given borrower. These factors include: the type of loan you are applying for, (fixed vs. adjustable) your credit score, the Loan to Value ratio of your home, your documentation, the type of property, and the points you pay. If you opt for a fixed rate mortgage your interest rate will be higher than an adjustable rate mortgage. Fifteen-year mortgage interest rates are also typically lower than 30 year interest rates. Generally speaking, the higher your Loan to Value ratio, the higher your interest rate will be. Your documentation can also affect the interest rate of your mortgage. Some programs require very little documentation of your assets or income; these programs serve a purpose, but typically charge much higher interest rates. The more documentation of your pay stubs, tax returns, and bank statements you can provide, the easier it will be for you to quality for a low interest rate mortgage. The type of property you are refinancing can also affect your mortgage interest rate. Interest rates are typically lower for your primary residence vs. second homes or investment properties.

Points act to lower the interest rate you qualify for by pre-paying a portion of the interest before the loan. A “point” or “discount point” is equivalent to 1% of the loan amount and usually reduces or “discounts” the loan rate by an eighth of a percentage point. For example: You want to get a loan for $100,000 to buy a home. Each “point” would cost you 1% of $100,000 or $1,000 but would reduce your loan’s interest rate by .125%. The lender might offer you an 8.0% loan with zero points, a 7.875% loan with one point, or a 7.75% loan with 2 points.

Points, like the down payment, are paid at closing. In some cases, lenders will allow borrowers to finance the points over the term of the loan. Lenders sometimes use points to make their interest rates appear lower. Be aware that lower interest rate offered by a lender may translate into higher points requirements.

Refinance a Mortgage