Many people may have heard that the Chinese expression for “crisis” consists of two characters, “challenge” and “opportunity.” The expression could also describe the dual nature of the current housing market downturn – peril and potential.

Whether you are taking advantage of current prices to buy a house or trying to cope with a difficult financial situation to keep your home, it is important to understand how a mortgage works and what to do if you start to encounter payment problems.

According to an HSBC-North America consumer survey, one out of three people don’t even know if they currently have a fixed rate mortgage or adjustable rate mortgage. Moreover, three out of ten consumers surveyed have no idea of what types of fees are associated with their mortgage loan.  Loretta Abrams, senior vice president of HSBC’s Consumer Affairs, says improving mortgage know-how will help consumers protect their investment     

Before you obtain a mortgage or a mortgage refinance loan, make sure you understand the following:

•  What types of mortgages are you considering? Is it a fixed rate mortgage or adjustable rate mortgage (ARM)? What are the advantages and disadvantages to your personal situation?
• What’s the interest rate and how much are the fees associated with the mortgage loan? Costs such as points and processing fees can be an added two to ten percent of the loan. You don’t want to be surprised by an extra $2,000 or $10,000  in fees when you close your loan;
• As a general rule, you should spend no more than 28 percent of your gross monthly income on housing expenses. Besides the mortgage, remember to include taxes, insurance and other related expenses;
• If you have an adjustable rate mortgage (ARM) loan, make sure you know when the payment can change, by how much, and what the maximum payment can be. Check into options like mortgage refinancing before your adjustable mortgage resets.
• Do you have money to cover costs if your roof suddenly leaks or your furnace goes out? Set aside an emergency fund (three percent of your home value) for maintenance and other unexpected costs.  

If you have payment problems or you’re just having trouble keeping up with your mortgage payments, remember it’s never appropriate to “do nothing.”  No one – neither you nor your lender – wants you to lose your home. The earlier you take action, the more options you may have.

 Take the following steps:

•  Contact your lender at the first sign of trouble.  Respond to all your lender’s communications, describing your circumstances;
• If you prefer to speak first to a trusted third party about your options, call Homeowner’s HOPE™ Hotline, 888-995-HOPE. You can also dial 1-800-569-4287 or visit www.HUD.gov for a HUD approved counselor
• Take advantage of free resources on YourMoneyCounts.com, available in both Spanish and English, to find information that will help you manage your finances.

 Did You Know?

According to a  Financial Literacy Survey, one out of three people don’t even know if they currently have a fixed rate mortgage or adjustable rate mortgage. To learn more about mortgages, visit http://www.beneficial.com.

Here are 3 common scenarios where using a mortgage calculator can help you decide what to do …

1.  Should I Refinance?

First, determine your main goal.  For example:  Are you more concerned with short term savings – (reducing your monthly payment now), or, do you want to save more money in the long run? .

For example. If you had a 30 year loan at 5% interest, and you’d been making monthly payments on it for the last 5 years (60 months), you’d reduce your monthly payment if you refinanced for a new 30 year period, say at 4.5%.

But you could still end up paying more over the long run.  The problem is you have no way of knowing that until all the related expenses are factored in.  And this is where a mortgage loan calculator can help you.  The calculator has places for you to input the various closing costs, fees, taxes, etc. And only after considering all the related expenses will you know whether or not you’re coming out ahead.

2.  How Much Income Will I Need to Qualify?

Nothing feels worse than finding the home of  your dreams and then being turned down when you try to arrange financing.  Once again, this is a case where using a mortgage calculator can really help.  Wouldn’t you rather know if you can qualify for the loan before you apply?

Here’s what you’ll need to know …

First:  the cost of the home;  the expected interest rate;  the term of the mortgage (i.e., how many years?);  and your down payment.  This will show you the total monthly payment on the principal and interest.  But you’re not finished yet!

Next, add in the annual property taxes and annual insurance costs.  Using all the above criteria the calculator will tell you what your gross monthly income needs to be in order to qualify for a loan on your dream home.

3.  Should I Rent or Buy?

Remember the days when we were told that buying a home is ALWAYS a good investment?  Emotionally that’s probably true.  But it’s not always the case mathematically.  Sometimes you’re better off renting, especially in uncertain times.

Here’s how to know …

First, understand you’re going to be using your “best guess” estimates.  But with a little research you should be able to come pretty close (most of the research simply involves presenting a couple of questions to a knowledgeable realtor or property manager).  Here are the questions on the home ownership side of the equation:

What annual maintenance costs are typical for a home like this?  What’s the annual appreciation %  I could expect on this property?  What % selling costs should I expect?  What are the annual taxes and insurance?  What is the PMI (private mortgage insurance).

Your rental questions are much simpler.  First, – how many years do you plan on being in the home before selling?  Second, how much is the monthly rental payment?  And third, what is the annual rate increase % expected to rent this home?  Now you’re ready.

Using all the factors above a mortgage calculator will tell you — 1.  The total of the payments you’d make buying vs renting, 2.  the total you’d save on rent, and,  3. the total home purchase benefits.  This will help you make an objective decision based solely upon the financial implications.

Other Uses

Other ways you can use a mortgage calculator include finding answers to the following:  What would the monthly payment be?  What is the mortgage principal?  What if I pay extra each month?  Should I pay points to lower my interest rate?  Which loan is better between two or more offers?  What difference would a bi-weekly mortgage vs. a standard mortgage make?

As you may imagine we haven’t even “scratched the surface” of the many benefits of using a mortgage calculator.  They can pay off handsomely.

One must not be caught asleep and incoherent when it comes to refinancing mortgages. You may either be quick or careful about it, but if it turns out to be a pathetic effort, it tends to show all throughout the whole thing. Why rely on rabbit’s feet and horseshoes if you can learn about the things that you need to consider as you go through the whole process? These things need not be so hard as long as every bit of it is thought out and acted upon appropriately.

Since a mortgage refinance is basically loaning money to pay an existing loan. The logic of doing this is that the loan that you end up with may likely have a lower interest rate than the previous one, as well as having improved credit scores, and being able to use your home’s existing equities once you do. Lenders mostly reserve their best loan terms for people who have high credit scores, since they would consider those who have that to be less liable and more likely to pay up. They then do what they can to give such people some incentives such as a lower interest rate and more. So if you have gained such, refinancing is a good course of action.

Your queue to refinance is a significant lowering of interest rates. Always remember this if you are paying mortgage and stay vigilant. There is no reason not to and everything that entails it does have its benefits, one of these being great cost savings as time goes by, which shows how good it can be. You have to be careful though so that the new interest rates that you are considering are actually low enough to offset the costs of the new loan. If you are in doubt, consult an online mortgage refinance calculator that is readily available with one shot in a search engine.

It also gives you a chance to use the existing equities of your home, including cash out options which gives you the ability to use it for anything you wish to use it on. You can use them for maybe new furniture, getting your plumbing fixed, a new coat of paint, or some ornaments. Basically, home improvements are a good idea to use it on, which can potentially increase the value of your home to a good extent. Also, you can spend it on tuition fees, emergencies, a new business, and so on. It is not just about saving money, it is spending that money in the most worthwhile way. You are not to refinance your mortgage only to use that money you saved with reckless abandon. To do so, you can gain it through a equity credit line where the funds are there for homeowners but not given until requested, so you will have to do some work in that. There is usually a limited time for this “grace period.”

You will certainly be looking forward to grapple and bang with bureaucracy just to save yourself from spending too much, as most people certainly do. One thing worth remembering before you set off to this endeavor is basically to think things through before you take it to the next level. Nothing is beneficial without risk, after all.

Improve Your Finances with a Debt Consolidation Mortgage Refinancing Loan

If your high-interest rate credit card debts are costing you a fortune, you could save money, reduce your taxes, and pay off your debts faster with a debt consolidation mortgage-refinancing loan. You have two options for a debt consolidation loan: mortgage refinance or home equity.

Mortgage Refinance Is Best for Big Debts

If you have credit card debt totaling more than $50,000 dollars or other high interest debts, then a mortgage refinance loan is the way to go. You’ll need to qualify for a new loan, but most people are offered a low rate if they’ve built equity in their homes and have a credit score over 700.

With a mortgage refinance loan, you can set a term anywhere from 10-30 years and the interest is tax deductible. It’s recommended for larger loans because the longer time frame stretches out the payments to an affordable level. Depending on the amount of equity you have, you could also borrow extra money to make home improvements like installing a new roof or remodeling an antiquated kitchen or bathroom.

Home Equity Loans Are Best for Small Debts

If you have smaller debts in the $10-20,000 range, then a home equity loan is a better choice. Your rate will be slightly higher than a fixed rate mortgage loan, but you’ll have little or no closing costs and receive the money much faster. You can also set payment terms for just a few years rather than 25-30.

There are several advantages to getting a home equity loan instead of other debt consolidation loans:

* Your interest rate will be lower than you can get with a credit card

* You won’t pay any balance transfer fees

* Your interest is tax deductible.

Borrow Safely to Protect Your Home

Whether you get a home equity or mortgage refinance loan, make sure you only borrow an amount you can afford to repay. If you can’t make your payments, you could lose your home. When deciding how much to borrow, keep in mind that you should never borrow more than 80% of the current value of your home so you have a cash cushion in case home prices decline and you need to sell.

You should only borrow funds against your home if the interest rate on the debt is higher than the interest rate on your home equity loan and isn’t tax deductible. It wouldn’t be worthwhile to get a 7% home equity loan to pay off a student loan fixed at 4%.

If you borrow smartly, a debt consolidation mortgage refinance loan or home equity loan can save you hundreds of dollars in interest and reduce your taxes. If you own a home, consider this solution for medium to large debts.

For more articles on Debt Consolidation Mortgage Refinancing Loans, visit: http://www.bills.com/debt-consolidation-mortgage-refinancing-loan/

Refinancing your home mortgage is the cheapest type of credit you can access when you have a poor credit history. Based on your property’s value and equity, you can pull out cash for home improvements or to consolidate bills. Or you can decide simply to reduce your rates and monthly payments. To get the best deal on your next mortgage loan, follow these three tips.

1. Check Out Rates

Before you dive into a mortgage contract, check out rates first. This will give you an idea of what you can borrow and at what rates. It will also help you find the most competitive lender for your type of credit.

At this point, you don’t want to give permission for financing companies to look at your credit report. Too many credit inquires can really hurt your credit score. While loan estimates aren’t guaranteed, they can give a good idea of loan costs, especially if they ask about your credit score.

2. Do Some Preventative Maintenance On Your Credit Report

Prior to completing a loan application, do a check up on your credit report. It doesn’t hurt to check for any mistakes. And you may be surprised to find that you actually have a decent credit history.

If you have the chance, pay off part of your debt to improve your loan application. Having several accounts with low balances rather than one or two maxed accounts will also help you qualify for better rates.

3. Opt For Easier Terms

Sub prime lenders offer a variety of mortgage loan terms to help you qualify for lower rates and payments. In general, adjustable rate mortgages offer the lowest initial rates. The risk, however, is that your payments will increase if rates go up.

But be open to lender suggestions. They may offer a unique package that meets your future financial goals. For example, some mortgages refi after two years if your credit score improves.

In today’s financing market, you don’t have to be worried about getting approved or not for a refinanced mortgage. You should be concerned over finding the lowest costing financing. Luckily, online lenders make the search so much easier.

Buying points is a standard offer given to most people when they consider a mortgage refinance. This option was most likely presented to you when you applied for the initial mortgage and its benefits are equally as important to a mortgage refinance.

Points are an upfront fee charged by the lender. This fee is separate from interest and is designed to increase the profit to the lender. The cost to purchase one point is equal to 1% of the total principal amount of the loan. By purchasing points will lower your interest rate.

Whether purchase points is a good idea for you or not depends on if you will maintain the property long enough to recover the additional cost incurred from purchasing the points. For example, a lender gives Jane Jordan the option of a $90,000 loan at an 8% fixed interest rate. A 2-point purchase would cost $1800 due and payable at closing. The lender also offers a $90,000 loan at 9% with no points available. It will take over 2 ½ years to recover the $1800 paid for points. If Jane plans to remain at that location for longer than that time she will break even or make a profit. If she anticipates relocation under that time frame, refinancing and purchasing points will cost her money and is not worth it.

When considering buying points, also crunch some numbers on what that same amount of money invested in another way could generate if there were a higher rate of return. It is important to know what your goals are when refinancing so that you can make good decisions.

If you are financing new mortgage loans, purchasing points on a residential mortgage can deduct the money that you need to pay on that year’s income tax return. However, if you are buying points to refinance your home, the IRS considers this prepaid interest. This means, you will have to deduct them over the life of the loan rather than all at once at closing. You will need to some advice from your tax advisor or your accountant for his or her expert opinion on point deduction.

If your ultimate goal is to be debt-free then purchasing points may allow you to achieve that goal in less time. Only you know the details of your situation and it is important that you consider all aspects of your life and finances that could affect your goals, your mortgage refinance and your overall financial plan before making any significant financial decisions. See below for more information on Mortgage Refinancing.

Based on study conducted by the Mortgage Bankers Association of America indicates that every four years Americans take out a refinance loan for their home mortgage. Do You think It’s a need to refinance your home mortgage as well?

Before making decision whether refinancing is suitable for you or not, first of all it’s important for you to know how refinancing works. For one, refinancing your home mortgage will not cancel out your debt but it gives you the opportunity to do that and more.

Here are 5 good reasons to refinance home mortgage

Invest Your Money

You’ve come up with an excellent business idea but no one wants to take a risk on your proposal. But if you’re really sure about the profitability of your business plan then why not take the risk yourself? Refinance your home mortgage and use the cash you’ll get from it to start your own business. You may be the sole investor in the business and it may mean shouldering all the risk alone, but when your business starts generating income, it also means getting to solely enjoy the business’s profits.

Obtain Lower Rates

Desperate times call for desperate measures and this could’ve been the reason why you’ve taken out a loan with outrageous rates in the past. But you don’t need to continue suffering when there’s an option to refinance.

Refinancing allows you to get rid of your old loan and replace it with a better one. Your mortgage refinance loan can come with lower rates, allowing you to breathe more easily because you know you can pay on time and maybe set aside a little more for savings.

Pay for Your Children’s Education

Sure, the government promises to fulfill every child’s right to education but the White House as well as your state and local government can only do so much. If you want your child to have the kind of education he deserves, you’ll need to contribute your own money for his tuition.

Education, however, is a costly matter. What you’re earning each month may not be enough, but if you refinance your home mortgage, you’ll have the means to put your child through college. After that, you’ll just have to wait a few years more and then you can reap your rewards when your child returns the favor by paying off the loan. The table will turn and this time, your child will be the one supporting you!

Prepare for Emergencies

There’s no way to know when emergencies can take place but things tend to get better when you’re prepared for them. Financially speaking, you can prepare for such emergencies by taking out a refinance mortgage. Whatever happens, having extra cash from refinancing can at least give you a semblance of comfort!

Pay Off Your Debts

Revolving debts are the worst and credit cards are the classic source for them. Refinancing your home mortgage to pay off such debts will be a smart decision on your part. These debts charge exorbitant interest rates but do not offer anything in return as they’re not investments able to earn profit. They only serve to eat more and more of your income especially when you can’t pay on time.

Worse, having too many of such debts can only spell bad things for your credit rating. If you want to free yourself from debts, credit cards should be the first thing to go. Take the first step to financial freedom by refinancing your home mortgage.

Get more guides, resources and information on how to deal with mortgage loan, visit :

www.mortgagerefinanceadvice.info

and Other resources regarding credit report, visit :

www.creditreportresource.info

Got a “bad” mortgage refinance deal? Blame yourself…

And what to do about it now in 5 simple steps…

First of all, let me clarify one thing:

There is no such thing as a “bad mortgage”, it’s just that the mortgage you have may not be the right one for you.

The primary reason why you got that particular mortgage, was probably because you really did not know what questions to ask and the loan officer was more interested in getting a fat paycheck from your “deal”.

Granted, there are exceptions to every rule. In this article however, I will not talk about the possibility that you were lied to by your loan officer or other circumstances. And even then, it’s still your responsibility because you signed the loan documents!

For most people, a home is the largest investment they ever make, yet people seem to think that “shopping” for a loan is as easy as finding the cheapest gas for their cars.

The way you probably ended up with your current mortgage probably started one of two ways:

1.A “telemarketer”, who tried to get you to refinance, contacted you.

2. Being bombarded with tons of advertisements, for mortgage products, you contacted various lenders yourself.

Either way, your first question was probably “What’s your rate?” and the next question most likely “How much are your fees?”

In the spirit of “shopping around” and pretending you actually knew what you were doing, you probably called a few more lenders, until you heard what you wanted to hear.

This was Strike one, two and three before you really got started!

But now what?

The past is the past. Following are 5 simple and easy to follow steps to move forward now:

1. Find a mortgage broker you can trust. Don’t know how? Ask your attorney, financial planner or CPA/Tax consultant for referrals and select someone you feel comfortable with and who you can trust. Stick with them, and build a long-term relationship. Just like you do with your family doctor, or auto mechanic.

2. Discuss your current financial situation and future goals with your “newly found” mortgage consultant. Obtaining a mortgage should not be viewed as an isolated transaction. It needs to complement and be part of your overall financial plan.

3. With literally hundreds of different loan products in the marketplace, your mortgage consultant should narrow down the field of potential scenarios, depending on your circumstances and future plans. The different programs need to be explained, as well as the advantages and disadvantages.

4. Ask yourself if it makes sense to refinance in the first place If the answer is yes, you will now be able to make an informed decision, and select the loan program that you feel most comfortable with.

5. Start the “actual” application process, and work with your loan consultant to ensure a smooth transaction.

For a FREE complimentary mortgage review, other Real Estate related articles or to subscribe to our newsletter, visit:

http://www.arelimortgage.com

Obtaining a refinance loan in California is easy regardless of credit. Because rates are low, homebuyers across the country are taking advantage of lower monthly payments and enjoying the long term savings. Furthermore, refinancing your home loan may put immediate cash in your pocket. Here are a few tips to help you find the best refinance home loan in California.

Reasons for Refinancing Existing Mortgage Loan

Homeowners refinance their current mortgage for various reasons. For many, the idea of lowering their mortgage payment is a welcoming mat. Homes purchased in the 1990’s likely have interest rates approximately 3 percentage points higher than current market trends. If you had bad credit, you may have a much higher interest rate.

By refinancing your mortgage and obtaining rates at low as 5 percent, you will save hundreds each month. The savings is a relief for homeowners who find themselves financially strapped. Moreover, if you opt for a cash-out refinance and borrow from your home’s equity, the funds received can be used for debt consolidations, home improvements, large expenses, etc.

Another good reason to refinance your existing mortgage is to lock in at a low rate. Fixed rates are predictable, unlike adjustable rate mortgages which may fluctuate over time. There are several perks to an adjustable rate mortgage. However, if rates begin to increase, so will your mortgage payment.

Ways to Get a Low Rate Refi Loan

If your credit is good, getting approved for a low rate refi is simple. On the other hand, if your have a negative credit rating, some lenders may not approve you for prime rates. In this case, carefully consider whether refinancing is the best option. Remember, the goal is to ultimately get a better mortgage rate. If a lender is unwilling to offer a significant rate reduction, refinancing may be a waste of time and money.

Nonetheless, attempt to boost your chances of getting a low rate refi. For starters, improve your credit. Paying your bills on time and reducing your debts will greatly improve your current credit standing. Furthermore, contact several types of refi lenders for quotes. Online mortgage brokers are very helpful. They provide applicants with multiple offers from prime and sub prime lenders. This is the best way to ensure getting the lowest rate.

Maybe you need a little extra cash for a home remodel or college tuition, or perhaps you simply want to save some money. Whatever your reason, refinancing your home loan can be a smart move as long as you get a low rate. Here are some simple tips that can ensure you get the lowest rate possible on your Home Refinance Loan:

Clean up your credit

Lenders use your credit score as one tool for determining your interest rate. In general, the better your score, the lower your rate. Before applying to refinance your mortgage, check your credit report and look for any errors. If you find a mistake that’s negatively affecting your score–such as a payment marked as “late” when you sent it on time, or a line of credit that doesn’t belong to you–be sure to correct those errors.

Shop around

You might not necessarily get the best deal from the same finance company that holds your mortgage loan. Make sure you check out offers from other lenders. You can do this by submitting your application to multiple lending companies, or by hiring a mortgage broker that will check out numerous lenders for you. To get the largest variety of offers, try different types of companies, such as banks, credit unions, online mortgage lenders and local mortgage brokers.

Negotiate

Once you’ve received a few offers, take the time to negotiate with lenders. Let them know that you have other options and that you’re looking for a great deal. Mention their competitors so they know you’re serious about your loan, and be prepared to walk away if the loan company won’t give you the best rate. However, once you find a deal you like, ask the lender to “lock it in.” Interest rates change daily, and locking it in guarantees that you still get a low rate even if rates soar the next week.

Remember: the interest rate is only part of the expense of refinancing. In many cases you’ll have to pay fees, points and other extra charges. You can lower the cost of your loan by asking to have these fees waived or lowered.