Refinance Home Mortgage Guide

Are you thinking about mortgage refinancing with an FHA loan? You’ve probably heard that mortgage rates are at a five year low and that the FHA refinance loans have been updated and are once again very popular. Fortunately for you, FHA loans now present an excellent opportunity for you to refinance and save some money in the process…and it is no more difficult to get an FHA loan than a traditional mortgage loan.

Qualifying For FHA Mortgage Loans

Before you jump into FHA refinancing it is important to know the basic requirements for FHA mortgage loans. In order to qualify for FHA refinance loans your monthly mortgage costs including principle, interest, taxes and insurance must be less than 31% of your gross monthly income. You also need to have enough money coming in to pay your mortgage and any other debts on a monthly basis. Your total debt-to-income ratio must be less than 43% of your monthly income unless there are other compensating factors to make up the difference.

FHA Mortgage Credit Requirements

Your credit history is another factor in qualifying for an FHA refinance loan. Qualifying is not entirely based on your credit history; however, having a FICO score greater than 580 will help your cause. The FHA guidelines help borrowers with credit challenges…if you’ve had problems in the past and can show you’ve recovered in a reasonable fashion your credit will not necessarily prevent you from refinancing with an FHA mortgage loan.

What About Bankruptcy?

If you’ve had a bankruptcy recently, you may still be able to refinance with an FHA mortgage. If your Chapter Seven bankruptcy has been discharged for at least two years you can qualify for FHA mortgage refinancing. If you are in Chapter Thirteen and are making all of your payments on time for at least one year you will also be eligible for FHA mortgage loans.

If you have equity in your home it could be possible to refinance up to 98% of your home’s appraised value, even with your closing costs. If you are considering taking cash back it is possible to refinance up to 95% of your home’s value…depending on your circumstances. If you lack equity in your home it is possible to find a lender willing to write down or write off the excess owed to refinance the loan. You can learn more about refinancing your mortgage with paying too much by registering for the free mortgage video guide found on this website.

Your home loan’s amortization schedule is the breakdown of repayment necessary to pay off your mortgage loan. There are two parts to your mortgage payment: loan principle that pays down your balance and loan interest. Your amortization schedule shows you how much of your payment is applied to the loan principle and how much is paid to interest over time.

One of the disadvantages you should be aware of when refinancing your mortgage is that you will be starting your amortization schedule from the beginning every time you refinance. Refinancing slows the growth of equity in your home because most of your mortgage payments will be applied to loan interest. Still, mortgage refinancing can be advantageous if you are reducing your payment amount with a lower mortgage rate.

What are mortgage bankers? You hear the term a lot but what’s the actual difference between a mortgage banker and a lender? Simply put, mortgage banks are retail loan originators that fund loans with their own cash. A mortgage broker resells loans for wholesale lenders but the mortgage bank cuts out the middleman, dealing directly with the public.

Cutting out the broker is a good thing right? Mortgage banks like Countrywide or Wells Fargo Mortgage must have the best deals because they deal directly with the public. Guess again…both Countrywide and Wells Fargo are at the top of the list of Predatory lenders in the United States.

Mortgage banks like Countrywide Home loans do not have to disclose their markup or profit margins due to a loophole in the Real Estate Settlement Procedures Act. This law, also known as RESPA, requires mortgage brokers to disclose the amount of Yield Spread Premium associated with your mortgage loan. Yield Spread Premium is a percentage of your loan amount created when the broker locks and closes your loan with an above market interest rate.

Mortgage banks do the same thing by charging you an above market mortgage rate; however, since they fund your loan with their own funds the profit they generate by inflating your interest rate is called Service Release Premium. Countrywide does this and pockets the cash from your higher mortgage rate by selling the loan to investors on the secondary mortgage market.

Because Countrywide Home Loans is exempt from the Real Estate Settlement Procedures Act they will never tell you how much they profited by overcharging you.

Wholesale lenders do not charge a fee for locking in your mortgage rate. It is in fact possible to refinance your home with a wholesale mortgage rate if you find the right broker to arrange your loan. There are brokers out there willing to work for a one percent origination fee without taking Yield Spread Premium on your loan.

This allows you to get as close to a “par” or wholesale mortgage rate as possible. Par is a term used to describe mortgage rates that have not been marked up with Yield Spread Premium or one that requires you to pay points to qualify for that rate.

You can learn more about refinancing your home loan with a wholesale mortgage rate by registering for the free videos available on this website.

If you are refinancing your home loan, the mortgage rate you receive is one of the most important aspect of your loan. One of the most important aspects of your refinancing mortgage rates is whether or not the person arranging your loan is generating a commission for them self by marking up your mortgage rate. Here are the basics you need to know about mortgage rates when refinancing your mortgage to avoid paying too much.

Mortgage rates are the most familiar aspect of refinancing; however, the overwhelming majority of homeowners do not understand how mortgage rates work. In fact, this is so bad in the United States that the Secretary of Housing and Urban Development recently announced that American homeowners will overpay nearly sixteen billion dollars this year alone!

Because your mortgage rate is the means to a better commission by the person arranging the loan most people never get the mortgage rate they deserve. You can refinance with mortgage rates you deserve by investing a little time doing your homework and learning about something called Yield Spread Premium.

Yield Spread Premium and Your Mortgage Rates

The commission paid by a wholesale lender to the person arranging your mortgage is known as Yield Spread Premium. This fee is paid in addition to any origination fees you are already paying, probably even overpaying, for this person’s services in arranging your home loan.

Yield Spread Premium is paid at one percent of your loan amount for every quarter percent your refinancing mortgage rate is marked up. The problem with this markup is that it artificially inflates your monthly payment. To learn more about avoiding this unnecessary inflation of your mortgage payment and other junk fees when refinancing, register for the free videos available on this web site.