Cash In Mortgage Refinancing Is an Option

Are you struggling to qualify for refinance mortgage rates with today’s best mortgage lenders like Amerisave because of your loan-to-value ratio? While the President promises to submit broad based mortgage refinancing to Congress, many homeowners are qualifying for better refinance rates with cash-in mortgage refinancing. In fact, according to Freddie Mac one half of mortgage refinance transactions today paid to qualify. Here are several tips to help you decide if cash-in mortgage refinancing is right for you.

What is Cash-in Mortgage Refinacing?

Everyone’s familiar with borrowing against your home equity when refinancing; however, cash-in options are a relatively new phenomenon spurred on by the housing crisis. If you’re underwater in your existing home loan qualifying for mortgage refinancing can be difficult unless you’ve got sufficient money on hand to pay down your home loan balance to a suitable loan-to-value ratio.

According to mortgage giant Freddie Mac, 49% of mortgage refinance transactions in the fourth quarter of last year were of the pay to qualify variety. That’s the highest levels in nearly 26 years. As for those equity tapping mortgage refinance loans responsible for putting so many homeowners underwater, they’re down to 15 percent and the lowest levels in 26 years.

Is Cash-In Mortgage Refinancing Right For You?

Mortgage refinance rates are at their lowest levels in sixty years which is motivation for most to take advantage and lower their payment amount. The average homeowner saves nearly $3,000 a year by lowering their interest rate by 1.5% on a $200,000 home loan.

Should you consider cash-in mortgage refinancing? Well, first of all you have to have sufficient money on hand to buy yourself a favorable loan-to-value ratio. Second, you have to have a high enough credit score to qualify for today’s low refinance mortgage rates and pay the loan origination fee, discount points, and closing costs.

It is possible to recoup your out-of-pocket expenses, including the expenses you’re paying up front to qualify from the lower payment amount. While recouping the money you paid to qualify is actually repaying yourself it’s nice to know you’ll get that money back, including lender fees and any mortgage broker fees.

How to Recoup Your Closing Costs

The goal for cash-in mortgage refinancing is simple, lower your payment as much as possible allowing you to recoup your out-of-pocket expenses as quickly as possible. The way to do this is qualify for the lowest possible refinance rates while avoiding junk fees. The most commonly overpaid fees are the mortgage loan origination fee paid to the broker and discount points paid to the lender. There’s no sense paying discount points if the benefit you’re getting from buying down your mortgage rate doesn’t allow you to recoup the fee.

Remember to Calculate Your Break Even Point

You can figure out how long it’s going to take to get your cash back by adding up your total costs, including the cash-in and dividing by how much your payment will go down each month. This will tell you the number of months it’s going to take to break even. If you refinance or sell your home before the break-even point you’re actually losing money, no matter how low your new interest rate.

Bonus Tip: Some unnecessary fees you’ll want to avoid when refinancing your home include rate lock fees, application fees, loan processing and courier fees. These fees are pure junk and make it more difficult, even impossible to break even recouping your closing costs. Don’t be afraid to call out your lender on junk fees or threaten to take your business elsewhere. Mortgage brokers and lenders are a dime a dozen and in this economy you can find honest professionals willing to work for your business.

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You can learn more about your cash-in mortgage refinancing options, including strategies for avoiding unnecessary lender fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started saving that $3,000 a year on your mortgage loan just like your neighbors did…

Refinancing a Mortgage Without Losing Your Shirt

Are you thinking about refinancing a mortgage but want to avoid paying unnecessary fees or lender markup? One of the most common mortgage mistakes is focusing on getting the lowest refinance mortgage rates from lenders like Amerisave at the expense of closing costs. Unnecessary fees and markup when refinancing a mortgage makes it difficult (if not impossible) to recoup your expenses, making your new home loan a losing proposition. Here are several tips before you refi to help you get the best refinance mortgage rates without paying lender junk fees.

Refinancing a Mortgage Online

The Internet is an excellent tool for getting quotes for refinancing a mortgage loan; however, there is a lot of bad advice online that could cost you thousands of dollars. One example of terrible advice commonly given by financial advisors is the two percent rule of refinancing a mortgage. This archaic “rule” states that you should never consider refinancing a mortgage unless the new interest rate is at least two percent lower than your old rate. This is bad advice because there are many perfectly good reasons for refinancing a mortgage that don’t always lower your payment amount. Also, it is possible to recoup your out-of-pocket expenses refinancing a mortgage with less than a two percent decrease in your interest rate.

Rather than basing your decision for refinancing a mortgage on some financial advisor’s bad advice, it makes more sense to test your options on a cost/savings basis. You can do this for yourself by determining how much you’ll save each month based on your new payment amount. The difference between your new mortgage payment and old payment is your savings. Assuming you’re refinancing a mortgage to lower your payment, subtract your new payment from the old and you’ve got your savings.

How Much Will Mortgage Refinancing Cost You?

Every home loan has fees that need to be paid at closing. Those no fee refinance offers aren’t really free, you’re simply accepting a higher mortgage rate with prepayment penalties in exchange for the lender paying your closing costs. You can also expect to pay a mortgage origination fee to the broker or company arranging your new home loan. The best place to find out how much a new home loan will cost you is with the HUD-1 Settlement Statement. Don’t rely on the Good Faith Estimate to compare lender fees as this is little more than a marketing tool used by lenders to market their loan offers. The last word on fees, including the loan origination fee is on your HUD-1.

Don’t be afraid to question anything you find on your HUD-1 statement. Did you know that all of your out-of-pocket expenses are negotiable and vary among lenders like Amerisave and Wells Fargo Refinance? Spend a little time being that difficult homeowner haggling over fees and you can quickly save yourself hundreds, even a thousand dollars out-of-pocket at closing.

When Does Refinancing a Mortgage Make Sense?

Once you know how much mortgage refinancing will cost you and have negotiated that amount down as much as your lender is willing to go you’re ready to calculate how long it’s going to take to recoup your out-of-pocket expenses. Simply divide your total closing costs by the amount you’re saving each month and you’ll have the number of months it’s going to take you to break even recouping your closing costs. If this timeframe for recovery is acceptable to you then it probably makes sense in your situation. When making this decision bear in mind that the average homeowner refinances every 4-5 years.

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You can learn more about refinancing a mortgage without paying unnecessary lender fees and markup by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to help you avoid those lender junk fees boosting their profits at your expense…

Finding The Best Mortgage Companies For Your Next Home Loan

If you’re shopping for the best mortgage companies when refinancing your home loan there are several things you should know to avoid paying unnecessary fees and markup. Interest rates are at historic lows so even the best refinance companies are trying to boost their profits at your expense with junk charges. Here are several tips before you refi to help you find the best mortgage companies without overpaying one red cent for new home loan.

Best Mortgage Refinance Companies

How do you find the best mortgage companies when refinancing your home? Should you trust the Good Faith Estimate (GFE) companies like Amerisave give you when shopping for rate quotes? The problem with relying on your GFE is that while Truth-in-Lending laws require lenders to give you this documentation there are no standards for what fees they must include or even how the Annual Percentage Rate is calculated. This makes it nearly impossible to make an apples-to-apples comparison of the costs you’ll pay when mortgage refinancing.

A Better Way to Shop for the Best Mortgage Lenders

There is a better way to find the best mortgage companies without paying junk fees. Before signing with one of the so-called top mortgage lenders (see my Amerisave Reviews for one example) it makes sense to focus on finding the right person to arrange your home loan. Mortgage brokers not only have access to the best mortgage refinance rates but finding the right person to arrange your refi will help avoid overpaying.

What charges should you keep an eye out for once you’ve found a broker to arrange your refi with the best refinance companies? Beware any mortgage broker that quotes you a fee for locking your interest rate from any of the top mortgage lenders as none of them charge rate lock fees. (This is a sure sign that you’re dealing with a dishonest broker) Other junk fees include an application fee, loan processing fee, and mortgage broker courier fee. Carefully review your Good Faith Estimate and Hud-1 statement and don’t be afraid to question any of the charges you find in these documents.

All of Your Mortgage Closing Costs Are Negotiable

One of the most common mistakes when refinancing is neglecting to negotiate closing costs. All of the fees associated with closing are negotiable and vary widely among the best mortgage companies. Spend a little time haggling with your lender over fees and you can save yourself hundreds, even a thousand dollars at closing. Remember closing costs are cash out of your pocket; the less you pay in lender fees the faster you’ll break even recouping your out-of-pocket expenses and start benefiting from your lower payment amount.

As you can see there’s more to getting a good deal for your next home loan than simply finding the best mortgage refinance companies. People who focus only on getting the lowest refinance mortgage rates wind up paying unnecessary points or lender junk fees. Remember the fees you pay when refinancing make or break your home loan because you have to recoup your origination fee and closing costs before benefiting from today’s historically low mortgage rates.

Click Here For More Details…

You can learn more about finding the best mortgage companies for your next refi without overpaying one red cent by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started refinancing with today’s best mortgage companies without overpaying lender fees.

What Are Reasonable Closing Costs of Refinancing?

If you’re in the process of mortgage refinancing you might be wondering what are reasonable closing costs of refinancing your home loan. Low closing cost refinancing can be difficult to find because most homeowners fall for common mortgage mistakes like no fee refinance offers that drive up costs making it difficult, if not impossible, to recoup out-of-pocket expenses. Here are several tips before you refi to help you find the best deals to refinance mortgage loans without overpaying one red cent, unlike most of your neighbors.

Finding a Mortgage Refi Company

How to shop for refinancing is a common question I get from readers of my blog. Should you go with a nationwide giant like Amerisave or concentrate on finding a local, small-time mortgage broker to arrange your loan with the best mortgage lenders? It’s true that refinance rates are at historically low levels so if you have a decent credit score it’s not difficult to get good mortgage rates; however, most homeowners focus solely on getting the lowest refinance rates at the cost of closing costs and overpay thousands of dollars.

If you could refinance for a fixed fee it would make everything easier; however, mortgage lenders are out to make the process as confusing as possible to boost their profits at your expense. So what are reasonable closing costs of refinancing? The first thing you need to know is that all closing costs, lender and broker fees are negotiable and vary widely across lenders. Most people haggle over mortgage rates but not fees. Considering that closing costs are an out-of-pocket cost you’ll have to fork over it’s in your best interest to haggle. Remember your mortgage broker and lender aren’t your friends…Question Everything. Don’t be afraid to be an ass…It’s your money.

Should I Refinance My Mortgage?

Closing costs make or break your refi…plain and simple The reason these fees are so important when refinancing is that you’ll have to recoup your fees before benefiting from the new home loan. The more you pay, the longer it’s going to take to break even recouping your refinancing closing costs. Here’s an example to illustrate how you can calculate how long it’s going to take to break even and possibly save $100 a month on your mortgage loan.
Suppose for conversation sake that you’re refinancing your home for $315,000 at 5.5 percent. Your out-of-pocket expenses will be $5,500 (at closing) to secure the new home loan. Using a simple mortgage payment calculator your new mortgage payment will be $1,788. In this example your existing mortgage rate is 6.25% and you’re currently paying $1,939 per month which means mortgage refinancing will net you a monthly savings of $151 per month. Considering mortgage refinancing will cost you $5,500 to save $151 a month is it going to be worthwhile?

Simply divide the amount you’re paying to close by the amount you’re saving each month and you’ve got the amount of time it’s going to take to break even. In this case you’re paying out $5,500 to save $151 ($5,550 / $151 = 37 months). It’s going to take you 37 months, just over three years to break even recouping your closing costs. Is this a good deal? According to the Mortgage Bankers Association the average homeowner refinances every four years so this would give you a full year to benefit from your new home loan.

The Hidden Cost of Mortgage Refinancing

There is a hidden cost of refinancing that people rarely talk about. I’m referring to your home loan’s amortization schedule. Loan amortization is defined as the process of paying down your home loan over time. The problem with refinancing is that home loans are front-loaded with interest meaning that in the early years the majority of your payment goes into the lender’s pocket as interest and very little is applied to the principle loan balance. As time passes this shifts and more of your payment is applied to the principle; however, refinancing resets the clock and you’re right back to stuffing cash in your lender’s pockets. There is one way to overcome this by continuing to make your old payment amount after refinancing. Most homeowners are looking to lower their monthly payment so this strategy may not work for you.

Getting back to our original question: “What are reasonable closing costs of refinancing?” the single best answer I have for you is as little as possible. The less you pay at closing the faster you’re going to break even recouping your out-of-pocket expenses. Question everything on your Good Faith Estimate and HUD-1 Settlement Statement keeping a sharp eye out for anything resembling a rate lock fee, application fee, processing fee, and mortgage broker courier fee as these are pure junk fees.

Click Here For More Details…

You can learn more about getting today’s best refinance rates without overpaying one red cent in closing costs by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Free Underground Mortgage Videos

Here’s a quick sample to get you started squashing lender junk fees on your next home loan.

How Much Does it Cost to Refinance a Mortgage Loan?

Today I’m going to discuss the question “How much does it cost to refinance a mortgage loan? “ If you’re considering today’s best refinance rates to lower your monthly payment it’s important to consider loan origination fees and closing costs when deciding If mortgage refinancing makes sense. Here are several tips before you refi to help you avoid paying unnecessary markup and junk fees when refinancing your home loan.

How Much Does It Cost to Refinance a Mortgage Loan?

The fees you pay when mortgage refinancing actually determines how good of a deal you’re getting when taking out a new home loan. The reason mortgage refinance fees are so important is that you’ll need to break even recouping your out-of-pocket expenses before benefiting from today’s best mortgage refinance rates. You can lower your payments by refinancing; however, the fees you pay can quickly turn that shiny new mortgage refinance rate into a sour deal.

Mortgage Loan Origination Fees

One of the most common mortgage mistakes is overpaying your broker’s loan origination fee. This is the fee you’re paying at closing for the broker’s (your loan originator) work arranging your mortgage refinance loan. How much should you pay for mortgage loan origination when refinancing? One percent of your home loan is a reasonable amount to pay the mortgage broker. On a $250,000 mortgage refinance loan one percent is $2,5000, representing a large chunk of your closing costs. Keep in mind that loan origination fees are negotiable and shopping around could get you a better deal. When you’re shopping for mortgage brokers it’s not uncommon to find origination fees as high as three percent; don’t fall for a broker’s sales pitch and agree to pay more than one percent.

Beware Mortgage Junk Fees

How much does it cost to refinance a mortgage loan when you factor in junk fees? More than you’ll ever want to pay. Unfortunately these unnecessary fees are common from both the broker and the lender as they’re trying to boost profits at your expense. Common junk fees include rate lock fees, processing fees, application fees, and broker courier fees. Remember you’ll need to recoup your closing costs before benefiting from your mortgage refinance rate. You can quickly calculate how long it will take you to break even by adding up all of your closing costs including the loan origination fee and dividing by the amount you’re saving each month.

Here’s an example to illustrate how to do this. Suppose you’re refinancing your home for $275,000 with a lower refinance rate of 4.5 percent. Your old mortgage payment at 6.0% was $1,650 per month. Your new payment at 4.5 percent is only $1,390 which is a savings of $260 per month. The mortgage origination fee in this case is $2,750 (assuming you’re paying one percent) plus lender closing costs of $3,500. In this example your mortgage refinance will cost you $6,250 to close, saving you $260 per month. Divide your total closing costs of $6,250 by your savings of $260 and you’ll find it’s going to take you 24 months (two years) to break even on your mortgage refi.

The Hidden Cost of Mortgage Refinancing

There are a couple of refinancing gotchas you need to know about when answering how much does it cost to refinance a mortgage loan for yourself. One applies to FHA mortgage loans. If you’re refinancing with a government FHA home loan you have to consider the cost of mortgage insurance. All FHA loans require mortgage insurance which protects the lender from certain losses if you default. Rising mortgage insurance premiums are quickly negating the benefit of low refinance rates by driving up your monthly payment. Second, you want to consider what mortgage refinancing does to your home loan’s amortization.

Mortgage loan amortization describes the process of paying down your home loan. Mortgage loans are front loaded with interest so in the early years you’ll find the majority of your payments going to interest and less to pay down the principle balance. Over time this gradually reverses and you start building equity in your home at a faster rate. The bad news is that your mortgage refinance resets the clock on your home’s amortization schedule and you’re back to stuffing money in your lender’s pockets without building much equity in your home. One way around this refinancing trap is to keep paying the same amount from before you refinanced. The difference between your old and new payment amount is to your principle balance and you’ll build equity at a faster rate.

How much does it cost to refinance a mortgage loan? The answer is different for every homeowner depending on several factors including your credit score, loan-to-value ratio and fees. I could give you a blanket amount of $4000-$6000 like many financial advisors; however, pulling numbers out of thin air isn’t very helpful at the end of the day. The short answer to the question how much does it cost to refinance a mortgage loan is it depends; however, I can show you how to pay less.

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You can learn more about paying less for your next home loan by avoiding lender junk fees by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to help you answer the question “How Much Does it Cost to Refinance a Mortgage Loan” without overpaying.