Compare Mortgage Interest Rates Today – Fixed VA and FHA Wells Fargo, Chase ... Subprime Blogger (blog)
As we get closer to the fall of 2011 it will be very interesting to see what happens with home loans. If the 10 year treasury rate yield continues to decline to all time low levels then we can fully expect to see 30 year fixed mortgage rates well below 4% soon. This will be the lowest level in the history of rates in this country .With this in mind it might be a very good choice to improve a financial history. By reducing a debt to income ratio and improving a credit score many will find that there are opportunities to gain access to low rates. There are many free mortgage calculators online that can help individuals better understand how much money that can be saved.
Over the next few weeks it will likely be the case that many people submit mortgage refinance applications. When doing this make sure to have a credit score above 740 and a debt to income ratio under 40% to have a chance to lock in to low rates. If these are not possible financial requirements then individuals can expect to see higher rate offers.
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Is An Interest Only Refinance Loan Right For You?
www.sellerassisteddownpayment. com To learn more about interest only refinance loans & whether or not an interest only refinance loan can help ...
How good is an interest only refinance loan fixed for 7 or ten years at 6.125 interest rate?
We bought a home in FEBRUARY of 2005 the payments are pretty high we have a fixed 30 years mortgage at 6.125 and we are trying to reduce our mortgage payments, we are being offerd a 7 years fixed at 5.37 and a 10 years fixed at 6.125 both which is interest only which is the best refinance plan or should we stay with our present mortgage of 6.125 for 30 years.
Depends on what your looking to accomplish in the refinance..
what i mean by that is there are different ways to take advantage of a homes equity, and home ownership itself...
If you want to have your mortgage paid off ASAP, at the least amount of itnerest as possible, then definitely stay with your mortgage.. You are alreasy paying principal, and there is no sense in starting over..
If thats no the MAIN concern, and the main thing is that you need to save money or have a lower payement, then paying off the house quickly may bot be the best bet...
How long do you paln to live in this house? If for the rest of your life, again stay with your current mortgage...
If less then 10 years, then you need to focus on what is the best way to get the lowest possible monthly payment on a monthly basis...
What i suggest is a new loan program on the market called a flexpay...
Basically it is a program that gives you 3 monthly payment options each month...
1. principal and interest payemnt (what you have now)
2. interest only payment (only obligates you to interest)
MINIMUM PAYEMNT (Obligates you to pay less then the interest due each month)
For instance if you have a mortgage with a principal and interest payment of $2000, your interest only would be roughly $1800, and your minimum payment would only be $1000 (half of p&i)
Again this program works if you are simply looking for the added flexibility of knowing when money is tight, you are only obligated to half of the full payment each month..
This program is really strong for people who own their own business.. They dont know how much $$ they wil lmake each and every month... On good months, they will send the full payment..On bad months, when unexpected expenses arise, you are only obligated to the minimum payment option..
Now be advised if you ONLy send the minimum payment all year long, you will actually owe more money on your mortgage because you arent satisfying all of the interest due each month...
Thi sprogram is primarily to give you flexibility (hence the flexpay)
it isnt to have a low payemt at all times, unless of course if you live in an appreciating area..
For instance, if house prices are rising, then adding interest to your loan at the end of the year (by makin gonly minimum payemnts) wouldn tbe that bad.. As your principal balance increases, you rhouses value goes up as well..
There are many things to consider, and it would be easier for me if i knew more about what you are looking to accomplish...
Any one can answer your question here, but truly the answers given are only going to be an opinion of what they think of these 2 options you ahve listed... Without knowing what you want to do, its impossinble to accurately give you advice...
If you want, i am available mon-sat every week to s\assist you with a mortgage refinance.. I work with Providential Bancorp, we are a nationwide mortgage lender...
Feel free to call me at your earliest convenience!
Jason Fry
Licensed Mortgage Banker of 13 years
Providential Bancorp
jasonf@providential.com
312-264-6448
W/ your conventional loan, you are building equity, be it ever so slowly. Some of each payment goes to owning the home.
Interest only loans are a financial institution's way of renting you your home. At the end of the 7 or 10 years, you owe just as much on your home as you do now. These sound soooo good, but are only ways to shovel people into homes where banks have no risks and all rewards.
Can you refinance a interest only construction loan prior to converting to conventional?
My wife and I recently moved into a new home which we are still paying interest only on the loan. We also just sold our other home and would like to put the money we made off of it down on the loan. Can we put the money down when we convert or do we have to refinance?
I assume when you say "converting to conventional" that you have a construction loan product that automatically converts to conventional financing when the construction phase is completed. Without reading the terms of your loan, it's hard to know. Some loans have prepayment penalties. Read your loan documents or ask the lender directly, and make sure it is in writing.
I used a construction loan to purchase and rehab an investment property, where the bank would convert to conventional financing. I could pay any amount toward principal at any time, but every loan is different.
What will happen to the interest$ paid on an interest only loan when I refinance if minimum$pd to principle?
I am buying a home with an I/O loan for now until I can pay a larger sum toward principle and refi. If for now I pay minimal amts toward principle, what will happen to all the $ I've paid in interest? Will this money just be "wasted", like rent money?
If the loan is an interest only loan you don't have to refinance. If it is a balloon you do have to refinance. An interest only loan should only be used to purchase either a larger home than the one affordable using a conventional loan (if you plan on keeping it) or a home that you plan on selling it before the I/O term selected expires (very useful in hot markets where properties appreciate a lot in 5-7 yrs). But if the house is not in a hot market and you expect to live it forever then you should go with a conventional loan. As to what happens to the interest paid, you can deduct it from your taxes if your state allows for such a deduction. Another good use for an I/O loan is when interest rates are high and you plan on refinancing when these come down.
Also, the I/O period lasts for a prescribed period i.e. 12-months and so on. Once the period lapses, your payment is automatically converted to a P&I pymt.
The interest paid is the "profit or income" to the bank. That is how they make their money.
Should I refinance my interest only mortgage loan?
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.
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.
Web: http://www.SLarson.com/contact
Email: Steve@SLarson.com
http://loan.divinfo.com/
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.
What Is An Interest Only Refinance Loan?
An Interest Only refinance loan, allows homeowners to refinance their home mortgage into a new mortgage loan, where they do not pay any principal on their loan - just interest. For example, if you own a home worth $250,000 and you currently pay $1500 per month, an interest only refinance loan may reduce your monthly mortgage payment from $1500 to $1000 - a savings of $500 per month. If you've had a life event such as a new baby, divorce, death in the family or simply need to cut costs - interest only loan can be extremely advantageous.
To see the full article go:
http://www.washington-home-mortgage.net/
However, these loans can be dangerous, especially in a down housing market. The interest rates are generally fixed for the first 1, 3 or 5 years. After that, they convert to a conventional loan, with a higher monthly payment. Most borrowers take on these loans because they assume they will sell the home before the interest rate increases. In a down market, they may not be able to sell. If they cannot afford the increased payment, they may have to default on the loan, and foreclose on the home. However, you can make payments to the principal at any time. Should you have extra money every so often, just send in an extra payment.
Also this loan has a short life. Usually after 5 years the loan automatically becomes a 25 year Fixed Rate Loan. Your loan will lock at whatever the Rate is at that time, so expect your payment to increase at that time. One way to avoid this is to refinance again before the 5 years is up.
$200,000 loan, bearing interest at 6.5%. Amortized payments for a 30-year loan would be $1,254 per month, containing principal and interest.
An interest only payment is $1,083.
The difference between a P&I payment and an interest payment is a savings of $170 per month.
What is the benefit of doing an interest Only Loan versus a Principle and Interest Loan?
The beauty of doing an interest only loan is that it puts the borrower in control of how much principle is paid down while allowing for a reduced monthly payment. When doing a principle and interest loan, the bank determines how much principle is applied each month to your loan balance leaving the borrower with less options.
Interest-only mortgages are beneficial for first-time home buyers. Many new home owners struggle during the first year of ownership because they are not accustomed to paying mortgage payments, which are generally higher than rental payments.
An interest-only mortgage does not require that the home owner pay an interest-only payment. What it does do is give the borrower the OPTION to pay a lower payment during the early years of the loan. If a home owner faces an unexpected bill -- say, the water heater needs to be replaced -- that could cost the owner $500 or more. By exercising the option that month to pay a lower payment, that option can help to balance the home owner's budget.
If you have a interest only loan, when the interest only part is up, can you refinance for another IO loan?
we have an investment property and we do not want to have to pay more per month then we need to right now. in 3 years the Interest only part is up and we will have to catch up on principal and interest. Can we refinaince for another Interest only loan?
yes you can. You will have to pay clsoing costs so make sure it is in your best interest.
Your income and credit report and job situation. Can you guarantee times will be better in 3 years than they are now?
What will the property be worth in 3 years? What guarantee do you have that it will still be worth what you owe on it today? Risky business in this market.
So, you may find yourself screwed in 3 years, or things may be great.
People need to realize that when they lease cars, or pay interest only loans that mature, that if things are not going well at the time of re-finance or lease maturity, you could end up with no car or losing the house if your credit has dramatically changed.
This is one of the reasons so many are losing houses to foreclosure. They lost their jobs, their property values dropped and now they don't qualify to refi.
Is it worth while to do an Interest only loan when refinancing your home?
There's a company that's offering 1.5% APR interest only loan for anyone that has a credit score of 620 or above. They advised that if I take the $800 in savings and invest it, I can use the savings to pay off all of my outstanding debt. In 5 yrs after the loan is over we would do it again but because it's interest only that I'm paying the amount of the new loan will be more than the original loan. We just need some professional advise.
He is offering you a negative amortization loan or in the mortgage world an option arm. It has 4 payment options
1 minimum payment
2 Interest Only
3 15 year payment
4 30 year payment
Here is how it works if your loan amount is say 100,000 and you take an option arm at a fully amortized rate (meaning the index plus the margin) say that rate is 7% they will also give you a start rate of the 1.5% you mentioned if you pay the minimum payment based on that start rate you are deferring interest meaning as many times as you do that you are adding to the principle of your loan. Here are your payments based on the hypothetical loan amount and rate listed above
Minimum on 1.5%= 345.12
interest only based on 7%=583.33
15 year based on 7%=898.83
30 year based on 7%=665.30
as you can see the difference between the minimum payment and the interest only is 238.21 so every time you pay the minimum payment you are adding 238.21 to your principle balance in turn you could possibly owe more than your house is worth. At that time the bank will take the minimum payment option from you and you will be left paying an amount you probably cant afford and will not be able to refinance because you now owe more. If i were you i would make your loan officer explain everything to you so you can understand it before signing anything because you could be screwed in the long run and your loan officer is going to make a ton of money. I dont want to solicite your business but i want you to understand what you are getting yourself into so if you have any questions please email me.
Ok, if you take an interest only loan, you don't pay any principal. If after a few years of not paying principle you stand a good chance of being upside down in the loan. Meaning you would owe more than the property would sell for. Now if you were going to do this for less than 6 months to 1 year, it might be ok. But don't risk your investment and equity to save a few bucks now and waste it all later. No Don't Do An Interest Only Loan.
Would you refinance your home for an interest only loan? We are strapped for cash and we have over 65K equity
Instead of moving into a cheaper home, I thought about refinancing for interest only. We have lived in the home for 2 years, but have over 65K worth of equity already.
Why not, If you are strapped for cash now, but do intend to have more cash flow in a few years. It makes even more sense if you can lower your current interest rate. Try to get a loan that is fixed, and allows interest only for at least 5 years. The trouble comes if you can not make those payments comfortably. If that is the case it may be wiser to sell your house, and use the profits to purchase another that is in your price range.
I own a home now, but I want to go out and refinance that home and get an interest only loan. That would free?
Refinance one house with a interest only loan, then rent that house. Buy another house and sell the first house when market is better in a few years.
Need more information to answer the never ending question.
Have a 5 year interest only loan on home, upside down on home Can i refinance or how can i switch to 30yr fix?
My mortgage company is Chase. What can i do?
Contact your company and see how they would feel about refinancing. Its better to do 30 years, and over pay.. and beat the bank.
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