Refinancing a mortgage is a big decision involving lots of questions that you need to think about.                                                                  

• How long do you plan on staying in the home?
• Why do you want to refinance?
• Do you just want a lower rate and/or shorter term?
• Do you want to take out cash to do something (home improvements, pay for kid’s college, etc.)?

These are some of the questions you need to think about to determine if refinancing is right for you.

For those of you that don’t remember, I was in the mortgage business for 10+ years.  Well, lots has changed since I left the industry.  So, we decided to refinance to a shorter term and a fixed rate.  We had a 1-year adjustable rate with a Treasury bill index (a stable index) for the long term – they don’t offer that index anymore.  We were dead set against getting a LIBOR index adjustable, as that index will be going away.  For us, it had to be a shorter term and lower rate.  Well, now was the time!

After answering all the above questions and more, we refinanced and shortened our term to 15 years with a fixed rate of 2.375%.  The process was long, as the industry is overwhelmed.  For us, we started the mortgage application process though closing took us 101 days.  You’ll need your patience and to be organized with all your documents available.  Much longer than I remember.

All in all this worked for us and it can for you too, with some patience.

Are you tired of hearing about low mortgage interest rates?  You’re not alone. Many of us have been thinking about it for a while now.

Here are some questions you need to think about before you make your decision:

• How long are you planning on staying in this home?
• Why do you want to refinance your mortgage? Are you looking to shorten the term and/or lower the interest rate?
• What are your current mortgage terms (balance owed, years remaining, etc)?

Are there other options for you to consider which may better suited for you that will save you money:

• Have you spoken to your current lender?  You may be able to modify your existing mortgage and avoid the closing costs.
• Have you spoken to your current lender?  Do they offer faster payment schedule (bi-weekly mortgage payments).  You would be paying half your mortgage every two weeks, therefore making 13 total payments in a year.

There is lots to consider for your individual situation and you need to take the time to do what is right for you and your situation.  Talk to your professionals that know your finances (tax preparer, accountant, financial advisor, etc.) for their thoughts.  If you decide to move forward with the refinance, rates are low.

….

So, you were cooped up together all winter and realized you had fallen out of love… with your house. You stared at the same walls and little things started to drive you crazy… like that one crack in the corner, or the picture window without a view. Maybe the bedroom’s too small or the kitchen galley leaves no room to cook.

This is completely normal. Spring is the time of year when people get out and attend real estate open houses hoping to make a meaningful connection with a new home.

This year would actually be a great time to make the leap because mortgage rates are low. You could even refinance to a lower rate. (Don’t be discouraged if you’re underwater and were denied last year, because you might qualify under new regulations.)

First, you should get preapproved so you know what you can afford. The mortgage application process can be tricky. Here are some areas that could cause you trouble:

Poor Credit Score.  The average credit score is rising as people are paying more attention to their credit.  The better your score, the better your interest rate will be.  FICO scores in the mid-700’s will get you the best rate.

Employment History.  We all know that these are difficult times, and your employment will affect your application. If you’re newly employed, or there are unexplained gaps in your employment history, it can cause you trouble.

Compensation.  This means income. If you’re like most people, your weekly employment check is your only source of compensation. Or, you could have a fluctuating income because you’re self-employed, or work in a field where bonuses and commissions make up the biggest portion of your salary. If that’s your situation, your lender will view your up-and-down income as a red flag. Can you make monthly payments if you have cash flow issues depending on the season?

Down Payment. Gone are the days of the zero down mortgage with 100% financing (meaning the bank gives you a loan for the whole sale price). If you can put a big chunk of cash towards down payment, and still keep a nice buffer in savings for emergencies, you’re going to look really attractive to the lender.

Excessive Debt.  This can hurt you two ways – first by lowering your credit score and secondly by giving you a higher debt to income ratio. The lender’s going to wonder if you can make mortgage payments when you have so many other monthly payments on your plate already.

The number 1 thing you can do to avoid these issues, is to plan ahead. 

1.  Have money in savings to show the lender you can deal with whatever happens.

2.  Pay down your debt, but don’t close your credit cards.  You need to show you have a current credit history (ideally a minimum of 2 years and 3 creditors minimum).

3.  Review your credit reports and correct any errors.

4.  Take steps to improve your credit score.

5. Don’t make a big purchase just before taking out a mortgage. Don’t take out a car loan or lease, and don’t make a big purchase with cash. The first increases your debt and the second reduces your savings.

If you take some time to plan for your new mortgage, you’ll get the best interest rate possible for you. This is a great time to take advantage of those new low rates.

Are you tired of hearing about low mortgage interest rates?  You’re not alone. Many of us don’t have enough equity in our homes to refinance – thanks to falling home prices. Homeowners who are underwater need rate reductions more than anyone, but they’re finding it difficult to get them.

If you have a FNMA (Fannie Mae) or FHLMC (Freddie Mac) mortgage, and are current with your payments, there might be a way for you to get a lower rate. The Home Affordable Refinance Program (HARP) has been extended. This program was established in 2009 and is designed to assist people who cannot refinance with traditional mortgages because their property values are too low, and therefore do not meet underwriting qualifications.

There are guidelines that have to be met:

1. The mortgage must be a Fannie or Freddie mortgage.
2. The payment history must be current and not have any late payments in the recent past.
3. You must live in the home. This does not apply to investment property.
4. You must be able to afford the new payment.
5. The new payment must be more affordable or more stable.

You may want to look into this program – especially if you have an adjustable mortgage and are planning on staying in your home. This is a great time to get that rate fixed. I don’t think they can go any lower.

You will need to discuss your individual circumstances with your lender to see if you qualify.  Talk to your mortgage professional today! You never know when the rates will go up.

“Refinance, refinance, refinance!”  That’s what everyone is saying. Yes, rates are low – maybe the lowest they’ll be. You can never tell… until they go up and you’ve missed your chance.

How can you know if refinancing is right for you? You need to ask yourself these questions before deciding:

Refinancing is a long-term numbers game. Many people think that a low mortgage payment means money saved. That’s not necessarily true – it may simply mean you have more spending money this month, but you will have much less money for yourself over the next 20-30 years.

How can you tell? To find out, let’s do some math! Get out your pencil and get ready to write down some numbers.

Now that you know how long it will take you to recoup your costs, you should decide whether you’re going live in the house that long. If you plan to move before you can make up the difference, don’t refinance.