Is a Cash-In Refinance a Good Idea? NASDAQ

16.08.11

Does it make sense to pay down your mortgage in order to be able to refinance at today's super-low rates? Is this a good strategy for homeowners who are underwater on their mortgages?

A lot of homeowners seem to think so. According to Freddie Mac, over one-quarter of all mortgages refinanced in the second quarter of 2011 were "cash-in" refinances, where borrowers paid down a significant part of their mortgage balance as part of the transaction.

At first glance, a cash-in refinance is a fairly straightforward solution for borrowers who'd like to refinance, but can't because declining property values have left them owing more on their mortgage than their property is worth. But it tends to be expensive. To get back into positive equity, underwater homeowners may have to write a check for several tens of thousands of dollars, if not more.

Generally, you don't want to do a cash-in refinance unless you're certain it's the best use of your money. Here's some of the main things to consider when deciding whether a cash-in refinance makes sense for you.

Source:

Refinancing Your Home Mortgage

Refinancing Your Home Mortgage Article by Lovemore Ncube As a first time home buyer you can not always get the best rate. Maybe you did not have twenty percent to put down or maybe your credit needed a little rebuilding. If you have been in the house for a few years now and you have [...]

Refinancing Your Home Mortgage is a post from: Campus Durable

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Getting the Best Refinance Mortgage Rates

For real information click HERE: best-refinance-home-mortgage-l oan-rates.com Getting the best refinance home mortgage loan rate, then, can be ...

Looking to find lowest refinance home mortgage rates?

Feb 11, 2008 by TJR | Posted in Personal Finance

I’m looking for a better home loan mortgage rate than I currently have with my bank. So I am seriously considering refinancing. Does anyone know where I can currently check for the lowest refinance home mortgage rates?

You can actually get a better mortgage rate – without refinancing. There is a website which allows you to check for free if there is a better rate available with your current lender.

You can avoid the costs and all the paperwork and hassle associated with refinancing. Your bank won’t tell you that there is a better rate available with them, but there usually is.

Check for a lower rate here free:

http://www.checkmyrate.com.au

webllinks | Feb 11, 2008

The first thing I would do is get a copy of your credit report and score. Lending tree is a comparable rate lender that offers you several rates from competing banks, but you should know what your score is first! This is what the banks will be looking at!

Abc D | Feb 11, 2008

first get your credit score card -- next shop around just like you are buying a car!!!

mister ed | Feb 11, 2008

The only way for you to get the lowest rate possible is to shop around. There are several websites that get you multiple quotes from qualified lenders. You will have to be willing to give out your information online. Try a service such as https://www.bills.com/homeloan/mortgage_refinance/ they have a separate section to get quotes for refinance loans. You may be matched with up to 4 lenders, who will call you to discuss your options. The service is free to use. Also check on www.bankrate.com for the current interest rates for a refinance loan to get an idea.

Dharwadian | Feb 12, 2008

Mortgage help i just refinanced my home and got a adjustable rate can i still refinance and keep my loan 50k?

Sep 05, 2007 by Andrew W | Posted in Renting & Real Estate

i just refinanced my home the original value was 45k and i had it paid down to 35k. when i refinanced it brought the value i need to pay back up to 51k. i have a adjustable rate now that will kick in may of 09 my percent is 12.750 i think. i pay 500 a month now for the mortgage and 720 total with all the taxes and stuff. i dont have a penalty for paying the loan of early so i want to pay it off in the next five years but with the arm my percent can go as high as 18.750. i dont want the bank to take my house from me because of the mistake i made by refinancing in the first place. so is it possible to refinance into a fixed rate and still keep the loan at 50k and still pay it of early with out any penalty. this is my first post so plz any and all help is great

Whether or not you personally can do any kind of refinance depends on your credit, income, and the value of the home.

If you're asking if no or low closing cost mortgages exist? Absolutely. Typically the rates are a little bit higher, but honestly your rate is really high right now, it should still be significantly cheaper than 12.75 even with the bank paying the closing costs.
By the way check your Adjustable Rate Rider from your original mortgage. Odds are there are caps on how much and how often your rate will adjust. If you're paying this loan off in the next few years it may not even be possible for it to adjust up to 18.75 that quickly.

matzael | Sep 06, 2007

Before you refinance again try credit repair... Improve your FICO score for a better rate....

too l | Sep 06, 2007

If you have room on your credit card, you can use a service like http://cardit.com to pay your mortgage with it. The purchase is not a cash advance, so if you have a good rate on your card, it will be fixed and possibly better than your adjustable.

rechdxs | Sep 07, 2007

if i take out a home equity loan now will this loan affect me if i want to refinance my mortgage.?

Jan 30, 2008 by michael o | Posted in Personal Finance

I have 24 years left on 30 year mortgage. I am thinking about a home equity loan at a favorable rate, rather than roll in to refinance consolidation. If rates are favorable later this year i may like to refinance 1st mortgage at 15 years. Will home equity loan affect my refinancing even if i am not looking for any cash out.

Right now rates are LOW, I would just refi instead of the HELOC that might cost you 7% on up. Why pay for 2 transactions.

Deliah | Jan 30, 2008

You bet it will affect your ability to refi. A refi with cash out is always better than a second loan.

engineer50 | Jan 30, 2008

All of your borrowing is based on the equity you have in your home, your credit, and ability to repay the loans. In your case if you have the equity for the 2nd, and take it out now - and then re-fi the first later on down the road you will likely have more closing costs for these transactions that if you did one, but as long as you have equity, credit, and ability to pay, then a lender will do the transactions for you.

Note: as the year goes on, it's possible that the value of housing may decline some (negating some of the equity you have), and if you go from a 30 to a 15, then your higher payement will bring your debt to income ratio up - which means that your loan won't look as favorable to take advantage of the best rates offered, which may make that waiting game not so good an idea.

best bet, make an appointment with a mortgage lender that has the tools on his/her desk to run the numbers though the scenario and find the best solution for you.

jon b | Jan 31, 2008

if you pay your loan out early be carful that there is no penalty for doing so.. ask your lender

Rob Day | Jan 31, 2008

Can a person refinance a home equity loan, as opposed to a refinancing a mortgage? ?

Jan 23, 2009 by km | Posted in Renting & Real Estate

A couple of years ago, my spouse and I doubled the size of our home which we had owned "free and clear." To do so, we took out a 20 year home equity loan for $250,000 at a rate of 5.85%. Since we already owned the home and this was technically not a mortgage, there was no downpayment on this loan. With rates coming down, do we have any hope of refinancing our home equity loan? Or, is refinancing basically restricted to mortgages? Thanks.

because the loan was secured by real estate it is technically a mortgage. If you do refinance you will be looking at a either a new conventional mortgage or a new home equity loan.

Noneya | Jan 24, 2009

You can refinance a home equity loan. 5.85 seem like a very low rate as it is for a home equity though.

scottsmylie | Jan 23, 2009

Refinance Mortgage or Home Equity Loan?

Sep 16, 2008 by Bleaker | Posted in Renting & Real Estate

I need to get some home repairs done and have the option to refinance my mortgage at the same rate (6%) for 30yrs or go the Home Equity loan route with 7.85% for 15 years. Does anyone know if one option is better than the other in the long run?

If you could get 6% on a cash out refinance without PMI and minimal costs, the new first mortgage would give you a lower average cost of funds and monthly payments.

On the other hand, if you have to pay a couple thousand in closing costs on a new first, the low closing cost on the 2nd might be better. It may really come down to how much additional borrowing you would be doing at the higher rate vs. what the difference in closing costs is.

To do a proper analysis, I would need more information. I would suggest calling a couple banks and having them put together some good faith estimates. The analysis is not difficult so any competent loan officer should be able to help you with it. Watch out for pressure to refinance the first. If you are only borrowing a few thousand on the 2nd (home equity), you are probably going to be better off going that route, the the LO may try to steer you into a new first as they can't make any money on a little loan.

Good luck.

Dale H | Sep 16, 2008

find a new mortgage company and do a refinance. rates are not 6% right now. they are 5.625% anything higher is a rip off.

home equity lines of credit are not fixed rates and rates are the lowest they have been in over a year. makes no sense to get on an adjustable rate when all rates are going to do is go up from here...

good luck.

Kain | Sep 16, 2008

You have to look at the whole picture. If you have your mortgage loan for long time and had paid most of the interest, refinancing means you start over again to pay those interest plus closing cost. How much are you gonna need for your home repair? If it's a small amount like $5k to $30k, you may want to lend from your HELOC instead because it's a interest only and very flexible with payment. You can pay extra each month to bring it down in few years. Its interest rate usually lower than a 30 years loan. Bank of America is about 4.5% and no closing cost at all. Check it yourself and do the calculation. Most of the HELOC interest you paid is tax deductible. Usually after 15 years it will turn to a fixed rate or you can refinance to a fixed rate any time you want.

MM C | Sep 16, 2008

For the short run, get an home equity line of credit. These can be gotten at rates of prime to prime-1% now at 5. Todays news indicates the rates may go down, not up. Then when rates do start up, you can switch then to a long term fixed program. Often if you stay within the same bank there will be little to no closing costs.

Eternal Optimist | Sep 16, 2008

I think mortgage refinancing with cash-out could be the best option. As you can get a extra cash with paying your original loan and also you can getter better rates through refinancing. While in home equity loan even if the years are less you would have to pay for two loans.

Here is the source of a mortgage refinancing company named http://iloanshop.com/apply_mortgage.php for your reference

Laurence S | Sep 17, 2008

Should I refinance my interest only mortgage loan?

Jan 15, 2007 by madshop | Posted in Renting & Real Estate

We have a 5/1 ARM with interest only mortgage currently. Got it at 5.25% 3 yrs ago. We have been making interst only payments so far with no payments towards the principal. But our home price has gone up by above 50k over the same period which I guess would count as equity. I expect my income to increase in the next few years substantially but as we get closer to the 5 yr mark, I am getting very nervous that our payments are going to get sky high and was looking at a 30 yr fixed rate loan at abt 5.8%. We plan to stay in this house for atleast another 3-4 yrs. Do you think it is wise to refinance at this point?

Honestly, no I don't. You have two years of security left at a rate that is currently pretty hard to find. If you are planning on being in your home only 3-4 more years, then find out what your adjustment cap is. All 5-year ARM's have an adjustment cap that limits what the loan can adjust to initially, and depending on what that is, you may find it in your best interest to ride it out until you decide to sell. You have to consider the cost to refinance versus the monthly savings you'll get by refinancing. So, let's say that you decide to stay in the home for three years. You're rate is fixed for the next two years, and depending on it's adjustment cap, let's say two percent, your rate would be fixed for the third year at 7.25%. Depending on the size of your loan amount, your payment may only increase by $100 a month. Let's say the cost to refinance is $2000, it would then take you 20 months to break even on your costs, and if you were only in the home for 12 more months it would not make sense to refinance.

If you would like further details, or if you would like me to take a look at it, email me directly, I would be more than happy to. Hope this helps.

Justin | Jan 15, 2007

How much is it going to cost you to refinance? Rates re still low, but you may be able to hold out.

ron d | Jan 15, 2007

Well, there are a couple things to consider. First, you should determine what your MARGIN (a % determined in advance by your lender) and INDEX (a financial index measuring interest rates, such as LIBOR) are for your current mortgage. This should be located on your monthly statement or closing statement.

The margin + the index determines what your mortgage rate is. However, be aware that a great many adjustable mortgages are discounted for the INITIAL fixed period i.e. 5 years in your case. This means that your rate can rise significantly even if the market interest rates do not change. So, try adding the margin plus the index. This % is what your mortgage rate would be if it were to adjust today.

Second, how long is the interest only payment option available? Five years? Longer? If it does not last any longer than the initial fixed rate, your payment will obviously jump up.

Consider the above and decide what is the most important: a stable payment, but paying some closing costs OR the chance of a high payment, but a lower mortgage balance? Also, be aware that you can arrange for a mortgage with very low closing costs, but a slightly higher rate - this is often beneficial for those who plan on selling in the relatively near future.

I have a very detailed article on adjustable mortgage margins, caps, indexes, etc. on my website (and no, it is not an "application" or sales site): http://www.mortgagemystery.com/

Hope this was helpful, you can contact me with questions.

robert_byrne | Jan 16, 2007

The points & costs you will pay are more important than the rate if you are looking short term. You may be better off waiting. Contact me to discuss in detail.

Web: http://www.SLarson.com/contact
Email: Steve@SLarson.com

stevelarsondirect | Jan 16, 2007

Always worth a look. Get a free quote from these guys ( the banner at the top ). It's a big name company that's helped lots of people. I'd give their link here but that's advertising for them. They helped my wife and I a few years back when we purchased our current home. It never hurts to look around for a better rate. Good luck!

http://loan.divinfo.com/

ddnc_dave | Jan 17, 2007

In my opinion I would say yes. I am a loan officer and I amazed at how many people never pay their houses off. I think people now tend to think of the monthly mortgage payment a way of life for life. I suppose I am too honest because most loan officers want return refinances every couple of years, but I think it is well worth your time to look into refinancing and getting your home paid at a long term fixed rate. Imagine owning a home free and clear with no payments! So what I would do is shop around now while the rates are still pretty low. You should be able to find something decent still. It just seems (and please take no offense to this as I am being honest) paying interest only on a house makes no sense and your just making your lender rich while you get NOTHING in return. Think about it. Any how that's my advice as unpopular as it might turn out to be!

STUART

p.s.- Depending on your loan and rarely will loan officers tell you these things. Your minimum payment may be less than your interest causing the rest to accumulate on your principal owed. Just depends on the loan you received.

stuartlichty | Jan 18, 2007

Which company is the best home mortgage lender to refinance with in california?

Aug 06, 2008 by spooky | Posted in Renting & Real Estate

I am interested in refinancing my current loan to a fixed rate 30-yr loan. I'd prefer to deal with a lender that is in california. any recommendations? i'd like to hear about your personal experience with the company recommended. thanks!

I would highly recommend Ditech.com. They're out of California but you access them through their website. We had a perfectly wonderful refi with them that went very quickly and without any unpleasant surprises.

AUTUMN M | Aug 06, 2008

There is no one lender that is best for all situations.

It all depends on your credit score, type of property, length of loan, etc. You just have to shop them to find the best deal.

We have used a mortgage broker in the past. They run your information through a number of lenders and come back with the best deals they can find.

Some will say that brokers make money off your loan. I understand that they do, I still compare the programs to find the best for me. I don;t care what they make as long as it is a good deal to me.

Tim | Aug 06, 2008

Any lender that will do the loan. It really doesn't make a difference in who does it as many loans are sold on the secondary market and that is a part of RESPA so your loan may never remain from start to close with the same lender
I am a Mortgage banker in TN & KY

golferwhoworks | Aug 06, 2008

There are certainly a lot of options out there. It really depends what you're looking for. A big lender will generally charge more fees and a slightly higher interest rate. If you want to be able to walk into a bank such as Wells Fargo to make your payment or to discuss your loan that it may be worth it for you to pay higher fees and a higher interest rate. Generally a smaller direct lender or a mortgage broker will be able to give you the best possible interest rate and fees.

My refinance was ultimately done through a local broker here in Southern California. I used a great website to find the broker. The website that I used will eliminate the fees involved in doing a refinance. It's a pretty cool concept. Hope this helps.

csulbrover | Aug 06, 2008

Here is the source which I know http://www.iloanshop.com/apply_mortgage.php who offer mortgage refinancing within California and many other states. I had used services few months before.

Laurence S | Aug 14, 2008

Is there such a loan mortgage to refinance a home with people with bad credit?

Jul 11, 2007 by dhsbc/net | Posted in Credit

intrest rate went up but having difficulty making payments and lowering my credit score

It may be too late if you have missed mortgage payments already but find an FHA Lender for a refi. The FHA program is back in favor now that people are in ARM's that are about to explode on them.

There are still plenty of Subprime Lenders who refi on bad credit but if you can go FHA, that will get you into a 30 year fixed with a very good rate. Yes, you will have to pay PMI, but it will likely be worth it depending on what your payments will adjust to.

Best wishes!

Me2Me2Me3@yahoo.com

Me2 Me2 | Jul 11, 2007

Which bank offers the lowest interest rate for mortgage refinance in California?

Mar 06, 2006 by dinofernandez66 | Posted in Renting & Real Estate

I need to refinance my second/investment home in Milpitas California and I'm looking for a mortgage broker or a bank that offers lowest interest rate based on 700 or more fico score. Preferably a loan program with minimum monthly payment is preferred.

find the best rate you can find and then add 1% (1 point is what is the standard to add when dealing with an investment home)

A mortgage broker is supposed to find you the best rate from all the companies she works with. If you don't have a good one shop around.

Here is a website to find the average and best rates:
http://www.bankrate.com/brm/default.asp

brian-the-brain | Mar 06, 2006

Refinance my mortgage and home equity loan?

Mar 18, 2008 by shawnj985 | Posted in Personal Finance

I have started the process of refinancing my home equity loan from 9% to a lower rate. It currently has a balance of $10K.

I have also started the process of refinancing my home mortgage from 6.8 to around 5 something hopefully. It has a balance of $54k with 10 years to go on the current loan. I was originally thinking of just refinancing the mortgage with a 10 year payment period without taking out any additional moneys.

Question: Should I refinance my mortgage, taking out enough to also pay off my home equity loan as well? Thanks

if you have enough equity in your home you should try wrapping these loans together into one 1st mortgage at the lowest rate possible. If you can afford the payment on a 15 year fixed loan, those are probably the best rates available right now. Some banks will even let you amortize the new loan for the amount of years remaining you currently have, especially the small local private owned banks.

tklutz | Mar 18, 2008

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