Who Will Refinance My Mortgage?

Are you struggling finding a lender to answer the question “Who will refinance my mortgage?” There are millions of homeowners unable to take advantage of historically low interest rates for one reason or another. Here are several tips to help you find a program and a lender to get your application for mortgage refinancing approved and save thousands in the process.

How Do I Refinance My Mortgage?

The most common reason people have been unable to refinance since the housing market meltdown is a lack of equity. If you’re underwater in your home loan and have not looked into the Home Affordable Refinance Program (HARP) you’re missing a great opportunity. The only catch with this government refinance program is that your home loan must be backed by Fannie Mae or Freddie Mac prior to June 1st, 2009.

Most underwater homeowners that are not HARP eligible do not qualify for this reason. HARP 3.0 is rumored to remove this requirement but has not happened yet.

Should I Refinance My Mortgage?

The first thing you need to do is answer the question “Should I Refinance My Mortgage?” Most homeowners do this by figuring out how long it’s going to take breaking even on closing costs. The way you break even recouping your out-of-pocket expenses when refinancing is by lowering your monthly payment.

You can approximate the amount of time it’s going to take you to break even by adding up all of your closing costs and dividing by the amount your payment is going down. This will tell you the number of months it’s going to take to break even. If you sell or refinance again before breaking even you’re losing money no matter how low your interest rate.

Who’s Going To Refinance My Mortgage?

Shopping for a mortgage lender can be a confusing and frustrating process, especially if you’re shopping for a lender’s approval. Many homeowners throw fees and rates out the window only focusing on getting the first approval available. Others focus on getting the lowest refinance rates at the expense of fees. Either approach results in overpaying thousands of dollars, something that can be avoided.

Are you shopping for mortgage approval? Consider focusing your efforts on government refinance programs from the VA, FHA, or HARP 3.0 when available.

You still need to focus on fees and rates but in this case enlisting the help of a mortgage broker can help balance finding an approval with paying less in closing costs.

How Do I Pay Less To Refinance My Mortgage?

Once you’ve decided if refinancing is worthwhile for you the next step is to choose a program. If you need an FHA home loan with a 30-year fixed interest rate then all of your quotes should be for that program. Don’t let a fast-talking loan officer confuse you by quoting refinance rates across different programs.

Comparing mortgage offers across different lenders from identical programs is the only way to make an apples to apples comparison of refinance rates and fees.

Your next step in getting the best deal for your home mortgage is to focus on the fees you can control. Page two of your Good Faith Estimate details the loan origination fee, yield spread premium and any discount points. For most people paying discount points is a waste of money so requesting zero point quotes is a good starting point.

Page three has a comparison table you can refer to if you’d like to see how points affect your monthly payment.

The next largest fee that you control is the loan origination fee. This is paid to the person or company arranging your home loan. Most brokers will tell you that one percent is standard; however, I’ve reviewed community based credit unions that charge as little as $400 for loan origination.

You might find that some loan officers are unwilling to negotiate settlement charges because if they do the lender takes the difference out of their commission. If this is the case simply move on to the next lender. The less you pay closing on your new home loan the more you’ll benefit from today’s low refinance rates.

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You can learn more about getting the best deal from today’s best mortgage lenders by checking out my free Underground Mortgage Videos.

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Should You Refinance Again in 2013?

You refinanced your mortgage a couple years ago when refinance rates were rock bottom…or so you thought. Since then refinance rates have fallen even lower and you’re thinking should I refinance again? There is a downside to serial refinancing that can wind up costing you a lot of money; however, in some situations it makes sense to refinance that mortgage again. Here are the pros and cons of refinancing to help you make an informed decision and avoid losing money.

Serial Mortgage Refinancing Can Bite You

Refinance rates averaged 5.5 percent in 2009 at the height of the refinancing boom. Many people, including most financial analysts predicted we had reached the bottom and rates would correct higher to just above six percent.

Instead refinance rates continued to fall and set new records for historic lows. If you took advantage of refinance rates during the past few years you might be surprised to find that some programs have dipped below three percent.

When Is Refinancing a Bad Idea?

One of the problems with refinancing your mortgage aside from the fees you pay is that you reset the clock on your home loan’s amortization. If you’re ten years into a thirty year mortgage and you refinance with a 30-year mortgage, you’re right back where you started with your amortization schedule.

Another problem with resetting the clock on your home is that your payments are front-loaded with interest. In the early years of your amortization schedule the majority of your payment goes to pay interest. Over time this changes and you begin building more equity in your home, stuffing less of your cash in the lender’s pockets.

In a down market this lack of equity building could result in being underwater, meaning you owe the lender more than your home is worth.

You might think that getting low refinance rates is the most important aspect of refinancing. It’s true that refinance rates along with the term length you choose determines your payment amount; however, the test of how good of a deal you’re getting comes from the fees you pay.

The more you pay closing on your new home loan the less benefit you’re getting from today’s best refinance rates. If you’re still recouping your out-of-pocket expenses from the last time you refinanced two years ago it’s going to take you that much longer to break even on the new mortgage.

Paying too much for things like the loan origination fee or discount points means it’s going to take longer before you realize any benefit from refinancing.

Tax Consequences of Mortgage Refinancing

Politicians love to scare people to further their agendas. That’s what all the talk about the fiscal cliff is about including axing the mortgage interest tax deduction. Many homeowners paying six percent or more have enjoyed a large deduction from their tax returns every year.

What do you think refinancing at three percent is going to do to that deduction? That’s another downside of record low refinance rates. Millions of homeowners are going to find their mortgage interest tax deduction shrink dramatically as a result of refinancing.

This is happening despite fear of falling off the fiscal cliff. It’s actually more of a fiscal slope and not a cliff but where’s the fun in falling down a hill?

Should You Refinance Your Mortgage Again?

You can calculate how long it’s going to take to break even recouping your out-of-pocket expenses to decide if getting lower refinance rates makes sense. This calculation is really just an approximation because factors like term length affect your ability to recoup closing costs. If you choose a longer term length than what you have on your existing mortgage you’ll never break even thanks to the additional years you’re financing.

To approximate your break-even point, add up all of your closing costs and divide by the amount your payment is going down by refinancing. Suppose for example refinancing is going to cost you $5,000 and lower your payment by $200. Divide your closing costs of $5,000 by the $200 you’re saving to get 25 month recovery for breaking even. This is in addition to the time left recouping fess from your first refinance if you took out the mortgage within the last year or two.

Minimize The Downside With a Shorter Term Length

If you’re paying on a 30-year mortgage you can reduce the negative impact of refinancing by choosing a 15-year term-length. It’s true that your payment might not go down with a 15-year mortgage but you’ll offset this with much higher principal reduction. Considering that 15-year refinance rates are typically a half point lower than their 30-year counterparts it’s an easy choice for the fiscally conservative.

You can also maximize the benefit you’re getting from today’s best refinance rates by minimizing what you’re paying at closing. Many of the fees you find in section 800 of your Good Faith Estimate Can be negotiated to pay less or not at all.

The loan origination fee is one of the most commonly overpaid fees found on your Good Faith Estimate. One percent is considered standard; however, I’ve reviewed community based credit unions that charge as little as $400 for their origination fee.

Invest some time comparison shopping refinance rates and fees across identical programs from different lenders and you can save yourself thousands of dollars at closing.

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You can learn more about getting the best deal on your next home loan without paying unnecessary lender fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started shopping for lower refinance rates without paying lender junk fees…

How To Lower Your Mortgage Payment By 25%

With refinance rates hovering near historic lows now is the time to take advantage, especially if you’ve been putting it off. Even if you think you won’t qualify there are government refinance programs that can get you approval quickly. Here are several tips to help take advantage of today’s low refinance rates and slash your payments by 25% or more.

According to one survey by mortgage giant Freddie Mac the average homeowner lowered their interest rate by 31% refinancing in the third quarter of 2012. This means opportunities still exist if you’ve been procrastinating or were previously denied.

Refinancing with a 30-year fixed rate mortgage is currently averaging 3.54 percent according to Freddie Mac. Surprisingly there are still millions of homeowners out there paying six percent or more.

If you purchased your home under the conforming loan limit of $417,000, refinancing could lower your payment by an average 25% based on today’s refinance rates reported by Freddie Mac.

Underwater Mortgage No Longer a Barrier

If you’re underwater (meaning you owe more than your home is worth) the government refinance program known as the Home Affordable Refinance Program (HARP) can get you approved. President Obama eliminated the 125% loan-to-value requirement meaning millions more underwater homeowners can qualify. The only catch is that your mortgage must be backed by Fannie Mae or Freddie Mac before June 1st, 2009.

If your mortgage is privately held and you don’t meet the Fannie Mae/Freddie Mac requirement there’s not much you can do until HARP 3.0 arrives as it is rumored to remove this requirement.

How Much Will Refinancing Save You?

Suppose you purchased your home for $300,000 at 5 percent several years ago. If you have 80% equity in your home you’ll owe $240,000. Your original mortgage payment was $1610 and qualifying for today’s refinance rates at 3.54% will slash that to $1083 per month. That’s a savings of $527 per month or 33% lower payments.

Is refinancing your home worthwhile? It is if you can balance your potential savings with how much it’s going to cost you closing on the new home loan. Overpaying closing costs like the loan origination fee or discount points can make refinancing a losing proposition regardless of your refinance rates.

You Can Pay Less For Mortgage Refinancing

Assuming you have a credit score of 720 or better, qualifying for today’s best refinance rates isn’t difficult. If you’re sitting at less than 720 and you find lenders are quoting you higher interest rates than they’re advertising the likely culprit is that credit score. The quickest way to improve your credit score is to pay down the balances on all of your credit accounts below 30% of the limit.

Speaking of your credit, if you’re thinking about refinancing your mortgage the first thing you should do before anything is check your credit reports for errors. You can do this for free by visiting the government mandated website AnnualCreditReport.com. If you want to check your credit score there is a fee; however, if you’re a member of a credit union you may be able to get low cost credit monitoring that allows you to stay on top of your credit score throughout the year.

Should you pay that loan origination fee? There are still no fee refinance offers available but you’re trading higher mortgage rates for having the loan origination fee and other closing costs paid for you. The more you pay at closing or by accepting higher refinance rates you’re getting less benefit from today’s lowest refinance rates.

The good news is that many of the closing costs you find in section 800 of your Good Faith Estimate are negotiable. You can pay less for the mortgage origination fee and avoid junk fees like processing, administrative, and rate lock fees simply by questioning and negotiating to pay less or not at all.

How To Quickly Break Even On Your Closing Costs

The test of how good of a deal you’re getting refinancing your mortgage comes not from getting the lowest interest rate but how much you’re paying at closing. Closing costs can be recouped as a side effect of lowering your payment.

You can approximate your break-even point by adding up all of your out-of-pocket expenses including any discount points you’re paying and diving by the amount your payment is going down. This will tell you the number of months it’s going to take to recoup your closing costs. Keep in mind that this calculation only works if you keep the same term-length when refinancing. If you go with a longer term length, say 30-year from a 15-year mortgage you’re never going to break even recouping closing costs thanks to higher finance costs for those extra years.

Suppose for example your out-of-pocket closing costs total $4,000. Refinancing your 30-year mortgage with another 30-year home loan saves you $527 per month from the previous example. In this case it’s going to take you 8 months to break even. In this example mortgage refinancing certainly makes sense based on the savings and speedy recovery of your expenses.

Depending on how much you pay it could take as long as two years to break-even. If you sell or engage in what many financial advisors call serial refinancing you’ll never recoup your out-of-pocket costs meaning you’re losing money no matter how low your refinance rates.

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You can can learn more about getting the best deal shopping for your next home loan while avoiding unnecessary lender fees and markup by checking out my free Underground Mortgage Videos.

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10 Steps to Lower Refinance Rates

Getting the lowest refinance rates for your next home loan is important. Overpaying at closing can quickly turn even the best refinance rates into an expensive mistake. Mortgage rate shopping isn’t an apples-to-apples comparison, especially when you’re considering closing costs like the origination fee. Here are ten tips to make sure you’re getting today’s lowest refinance rates without paying unnecessary discount points or junk fees.

1. Beware Unnecessary Discount Points

Lenders usually advertise refinance rates that include discount points. That means if you want the interest rate being advertised you’ll have to come up with the cash at closing. One discount point is one percent of your loan amount which typically lowers your refinance rates by .25 percent.

It doesn’t matter if you’re seeing refinance rates quoted online, on the television or the radio, take a look at the fine print and nine times out of ten the offer requires discount points. Suppose you find refinance rates quoted at 3.25% with one discount point. On a $300,000 mortgage you’d be required to pay $3,000 at closing to qualify for the offer being advertised. Discount points are paid on top of any other lender fees and closing costs you’re required to pay for mortgage refinancing.

Should you pay mortgage discount points? Refinance rates are at their lowest levels in history. One common mortgage mistake made by many homeowners is trying to get the lowest possible interest rate at the expense of fees. Remember when refinancing you won’t benefit from today’s lowest refinance rates until you break even recouping your out-of-pocket expenses. Paying unnecessary discount points means it’s going to take that much longer to break even before you’ll benefit from your new home loan.

2. Lowest Refinance Rates Could Be The Worst Deal

As I mentioned, the loan with the lowest refinance rates could have the highest closing costs even if the Annual Percentage Rate (APR) is lower. The most expensive home loan often has the lowest APR because of the way lenders factor discount points as prepaid interest into their calculations. This is one of the many reasons Annual Percentage Rate is a flawed calculation and should never be used for mortgage rate shopping.

3. Compare Closing Costs On Every Mortgage Offer

When shopping for the lowest refinance rates make sure you’re comparing loan offers using the lender’s par rate. Par mortgage rates do not include discount points or markup for Yield Spread Premium (YSP). YSP is cash paid by the lender when you accept higher than necessary refinance rates. If you eliminate discount points and Yield Spread Premium from your quotes you can focus on comparing the loan origination fee for each offer. Loan origination and discount points are the most commonly overpaid mortgage fees. If you’re short on cash for closing Yield Spread Premium could cover your closing costs and origination fee at the expense of a higher refinance rates.

4. Consider Shorter Loan Term Lengths

When shopping for a new home loan consider 15 year refinance rates. 15 year mortgage rates recently dipped below three percent which could save you a significant amount of cash over the duration of your home loan, especially if you’re still paying six percent or more.

While it’s true that your payment on a 15 year mortgage will be higher than if you had a 30 year term length the amount you’re saving by eliminating that extra 15 years can be staggering.

5. Beware Bad Financial Advice

If your bank or broker is pushing a loan program on you that could overextend your budget don’t be afraid tell them no. Pushy brokers often recommend programs that don’t have your best interests at heart so it’s best to do your homework comparing refinance rates AND fees before accepting a loan officers recommendation.

Many loan officers pitch riskier adjustable rate mortgage rates when you’re shopping for fixed refinance rates because the lower payment seems more attractive. Always check the fine print for discount points and pay close attention to your broker’s loan origination fee.

6. Don’t Overlook Community Based Credit Unions

Just because Wells Fargo is the largest nationwide lender doesn’t mean they’re the best. I’ve reviewed dozens of mortgage lenders on this site and the best deals I’ve found when it comes to fees were from small community based credit unions. If you don’t have the time to shop for the lowest refinance mortgage rates an honest broker can find you a good deal while helping you avoid unnecessary fees and points.

Don’t stop with just one or two mortgage refinancing quotes. You could be missing out on thousands of dollars in savings if you go about refinance rate shopping the wrong way. If your neighbors put as much effort into mortgage rate shopping as they did shopping for a new plasma television they wouldn’t be overpaying thousands of dollars on their current home loan.

7. Research The Best Mortgage Lenders

When shopping for the lowest refinance rates take a close look at the top mortgage companies. Look for lender reviews like the ones I’ve published here and find out who services the loan. Many lenders sell your home loan as soon as you’ve closed on it meaning you’re dealing with a servicing company for your payments and when problems arises.

This is another selling point for small community based credit unions. Most credit unions service their own home loans and you’ll always have a real person to deal with in person if you hit a snag.

8. Check Your Credit Reports First

The mortgage refinance rates you’re quoted depend primarily on your credit score and loan-to-value ratio. If your quotes are coming in higher than what lenders are advertising the likely culprit is your credit score. Check your credit reports for errors at AnnualCreditReport.com and avoid opening new credit accounts until after closing on your new home loan.

If you find mistakes in your credit reports be sure to dispute the errors as any negative information found in your credit reports drags down your credit score.

9. Should You Float or Lock Refinance Rates?

Knowing when to lock or float your refinance rates could mean the difference between getting the lowest refinance rates and just missing the best deal. Once you lock a great refinance rate it’s yours forever. (Almost) The duration of your rate lock needs to allow you enough time to close and get your mortgage funded. Lock for too long and you’ll get higher refinance rates. Lock too short and you could find your lock expires if you hit a snag during underwriting.

If refinance rates continue to fall as they have been consider floating your rate. Also, watch out for rate lock fees. This is a common junk fee that raises your closing costs unnecessarily. Some lenders require a rate lock deposit which is applied to your closing costs. This is still cash out of your pocket that you could be using for other things.

10. Don’t Rush To Get Mortgage Refinancing Done

Mortgage Refinancing isn’t something you should take lightly. According to the HUD Secretary most homeowners are overpaying because they neglected to do their homework. If you find a pushy broker or loan officer don’t feel obligated to continue working with them.

Take your time and pay close attention to the mortgage origination fee as this is one of the most commonly overpaid closing costs. The time you spend comparing loan offers AND fees will be well worth your while and can save you thousands of dollars.

Click Here For More Details…

You can learn more about getting the lowest refinance rates without unnecessary discount points or junk fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started refinancing with the best mortgage lenders while avoiding junk fees…

5 Tips For Cutting Your Mortgage Refinancing Expenses

If you’re like six million other Americans looking to take advantage of the lowest refinance mortgage rates in sixty years, now is the time. The question of how good of a deal you’re getting isn’t about how low the new interest rate is, but how much you’re paying at closing. Here are five helpful tips from HSH.com about lowering your closing costs when refinancing with the best mortgage lenders like Amerisave:

You don’t have to face sticker shock when you’re signing on the dotted line for your next mortgage loan. Here are five tips to help you avoid junk fees and erroneous closing costs so you can sail through closing with the least amount of anxiety — all while getting the best mortgage deal possible.

Read More:

http://library.hsh.com/articles/first-time-homebuyers/5-tips-for-cutting-costs-at-closing.html

Avoiding lender junk fees will not only save you cash at closing but increase the benefit you’re getting from mortgage refinancing. The less you pay at closing the faster you’re going reach the break-even point recouping lender fees.

Remember government fees aren’t going away…you have to pay them just like most escrow fees. Lender and third-party fees are negotiable and you don’t always have to pay them. Don’t be afraid to ask to have those “application,” or “processing” fees removed from your transaction. Take the Fox Mulder approach to mortgage refinancing and question everything. Administrative and processing fees are pure garbage that can be avoided when closing on your new home loan.

You can learn more about getting today’s lowest refinance rates without paying lender junk fees or markup by checking out my free Underground Mortgage Videos.