Is a Cash-In Refinance a Good Idea? NASDAQ
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.
Does it pay for me to Refinance my House
Does it pay for me to Refinance my House?
There are lots of question always has been asked by the borrower. One of these question is “Does it pay for me to refinance my house?”. The homeowners should know everything before they think of refinance. The refinance is a replacement of the existing mortgage loan obligation with a different term loan obligation to the borrower. The refinance is used for many reasons like to take advantage of the low rate of interest, to consolidate all the debt including mortgage or to cash the buildup equity to you home with help of cash out refinance.
The most of the homeowners like to refinance when the market rate of interest is low enough that they can maximum reduce their monthly payments to the mortgage loan. There may be a chance that only interest rate change will not reduce the monthly payment but also you have to ask to the lender that the refinance must make sense to as it will be a overall profitable to you. So this is the time to check how much equity you have in your home and after that measure the degree of you need to get the refinance to make lower monthly payments and use the extra cash out.
So you can get your result that you will take refinance loan or not. If you decide to sale your home as early as possible due to job transfer or relocation, it is meaningless to refinance you loan. Finally you should think about how long you are going to stay at your home as you can decide that the refinance is making sense to you or not.
The refinance is the good way to get relief from the debt as well as saving on the monthly expenses. After all if you not find any economic benefit to a refinance, then leave it to do.
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FHA Mortgage Loans with Cash Out Refinancing
Nationwide Mortgage Loans provides low rate FHA loans with Cash Out refinancing options for borrowers looking to raise capital and consolidate ...
If I refinance my home to cash out equity and end up foreclosing in the future, what can happen to me?
I like many others am in financial trouble and am having problems paying my mortgage.
I'm thinking about refinancing my home (for no more than it's current market value) and taking my equity so I can pay off my car and a credit card.
If I do that, and still end up facing foreclosure in the future - what can happen to me besides having my credit ruined?
I live in Arizona - the law here states that - "A lender may not bring a deficiency suit against a person who lost a property that is 2.5 acres or less at a foreclosure provided the property is a single one-family or a single two-family dwelling."
I fall into that catagory. Basicly, I'm wondering about future pit-falls if the worst case scenerio happens and I do end up foreclosing after I do a cash-out refi.
That is not the law here in Texas but it sounds like you will be OK there except....if you do this and somehow they can tell you planned it all along...I bet that falls into the category of defrauding a bank (bank fraud).
If you innocently have hard times though, your credit is ruined, but it doesn't sound like you can have a deficiency filed against you.
The federal government is discussing passing a law that might protect you against the "phantom income" problem. "Phantom income" is when a mortgage company turns any shortfall into the IRS and you owe taxes on that amount of the mortgage you didn't pay back.
There is often a clause in mortgage applications and the promissory notes itself that require you to notify the lender of any condition that may tend to make repayment of the loan more difficult in the future, or words to that effect. So, the fact that you say you "are in financial trouble" and "having problems paying your mortgage" but you think you will be approved for the refinance loan, make me wonder if you are thinking of not disclosing material information to the lender.
Don't do that, instead, contact the lender and try to work out a better deal. You don't want fraud in your background, that will hamper you for a long long time.
Basically the only thing that will happen to you is when the bank sells your home for less than is owed, you will get a 1099-S from the lender for the difference in what was owed and what the bank could get for the property.
If you can prove financial hardship, the I.R.S. will forgive the taxes owed.
Hope this helps.
Terry S.
Http://www.Welcome2Arizona.com
P.S. Be grateful you live in Arizona! Many states DO NOT allow the homeowner to walk away from their property without paying the bank back what they lost on the foreclosure sale.
If you are having difficulty making the current loan ,
There is a snow balls chance in helll of them letting you have a Larger Loan .
So all of this is probably just fantasy on your part .
Maybe time to get a 2nd job for awhile to get your $$$$$ issues on track ?
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I seriously doubt that law exists in Arizona because if it did, banks would refuse to underwrite in a state that basically takes away all legal recourse.
Typically, how long must you own a home to do a cash-out refinance?
I am planning on buying a home that needs a lot of work. I also have some credit card debt I would like to get rid of. I have the 10% to put down and have been pre-approved for a mortgage.
If I buy this home, can I then turn around and do a cash-out refinance for, lets say, 80%-90% of appraisal value? Would I have to wait a certain period before a bank would do this?
Once you get the house back into good shape, and the value is back above where you financed it in the first place you can get it reappraised and start over on your new loan for the unit. Or get a second mortgage.. Time factor is not a big deal,, the equity in home is the deciding factor.
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http://nanoref.com/linksynerg/F2brKg
I have a credit score of about 560 and I want to refinance my home with a cash-out. I make over $4000 a month?
I just paid off all my bills in collections (THEY WERE ONLY MEDICAL). I just got promoted. And I really want to refinance my home and get a cash-out to pay off some debts for myself and my husband. My credit score dropped to 560 due to some unexpected hardships in the last 6 months. Does anyone know of a good bank or place to start that will work with my credit score? I am in WA State.
check out http://www.reversemortgagepage.com/topic.php?topID=18
Your e-mail address through Yahoo Answers does not work, so people can't respond to you.
The important thing, however, is that you look at the long term consequences of your new loan and whether the cash you get is worth the amount that you will have to pay to get it. The future for interest rates and the housing market is uncertain so I recommend taking a long look at what you want to accomplish and thinking this through to the end.
I specialize in helping people with low credit scores get into good programs and helping people with good credit to do loans for free. I charge a flat fee so I have no interest in putting you in a program unless it makes absolute sense for you.
Feel free to email me if you want to talk.
How Soon Can I Take Out a Home Equity Loan or Refinance After a Cash Purchase of a Foreclosure?
The house is only 10k. So if I pay 10k cash, how fast can I do a home equity loan for that 10k? I need to make repairs as it is a foreclosure in poor condition. Can I do a refinance loan and get more than I even paid for it if it appraises higher than 10k, which it will? Thanks for any help
It all depends on the difference in the value of the place and the amount owed on the loan - that is what's considered your equity. Many banks will only loan up to about 80% of the equity, but a few go higher. For example, lets say you owe $50,000, but the place is worth $60,000, then you have $10,000 in equity. Take 80% of that and you have about $8,000 you could loan against.
I found a great article about it on
www.payoffmyloansnow.com
Can you still refinance with cash out if your home has been off the market more then 3 months. ?
I have a balloon payment coming up in Sept 09 and would like to refinance with cash out. The bank told me cash out at 80% of LTV and at least 3 months off the market. Now they are changing there tune. They said that since the house has not been off the market for more then 6 months they have to drop my LTV to 70% are they legally aloud to change there tune after I have payed my lock in rate fees and signed paper work.
If you read your agreement, you will undoubtedly see that they have included language along the lines of "the bank has the right to change these (the refinance rules) conditions from time to time with proper notice."
In effect, what you signed gave you the right to refinance under certain conditions, but those conditions can change somewhat.
If you applied with a big bank you are stuck with their guide lines and they can change them at anytime. What usually happens when you have your loan locked and the guide lines change is you are given a specific time frame that you must close and fund the loan under the old guide lines but that is up to the individual lenders.
if you refinance your home and cash out 30000 is it taxable income and when do you pay capital gains?
Generally speaking, the money borrowed (even if taken as cash) is not taxable. There is not a gain since the amount borrowed is owed back to the bank. Where it will come in to play is when the house is sold. Profit will be Sell Price - (Purchase Price + Improvements). Money borrowed against the equity does not enter in to the equation.
If the house is your primary residence (or meets other criteria) you can sell the house and exempt a large part of the gain from the sale.
Every situation is different, so you should read the tax instructions and see how they apply to your situation.
I would double check this with your CPA, but I say no.
Home Equity Loan or Cash Out Refinance?
Any one know whats the difference and the pro and cons about Home Equity Loan and Cash Out Refinance? Which is better?
They’re both bad ideas. You want to owe as little as possible in comparison to your home’s value, anything you do to increase the amount you owe puts you in a a bad financial position. The biggest point to understand is that your home is not a bank, and should never be treated like one if you want to keep it.
A good number of the people losing their homes now took out these types of loans. Some of them had financial issues and couldn’t keep up with increased payments. Others just suddenly had to sell for various reasons. In either case, when selling was the only option, these people were in serious trouble because they didn’t have the equity to sell and pay the necessarily fees.
Think about it for a second: if you have to borrow to get access to this cash, where would you get money to make up that difference if you suddenly had to? Let’s say you owe $100,000 on a $130,000 home, and you cash out $20,000 (you probably can’t get 90% of your home’s value) so that you now owe $120,000. What if you suddenly had to put your home on the market tomorrow?
Let’s say you manage to sell the home for $130,000. If you make it through the sale without having to make any repairs to the house and you’re not paying any closing costs (all of which would be a miracle in a buyer’s market), at a 6% commission you’ll wind up with $2,220 left over. That’s a pretty narrow margin these days. If you had never treated your home like a bank, you’d have a cushion of $22,220 instead to make your sale happen.
No one ever thinks they might have to sell tomorrow, but many other people have been in that spot and learned the hard way that they were wrong. Unless you need the money in your home for something vital (like say a life saving operation), don’t touch it!
If you are happy with the rate on your first mortgage then a HELOC (home equity line of credit) might be the answer for you. There are a lot less costs involved with them.
Before running to your bank for the HELOC be aware that your credit needs to be near spotless these days to get a HELOC, and there has to be a substantial amount of equity in your home for the bank to open up a line of credit.
How do I refinance my home to get cash out?
You can only do a cash-out REFI if you have equity in your house. What is the value of your home and what is the outstanding debt agst the house? That will give you an idea of how much equity you have. To go througb the process, you can use anybody...a broker, another bank, your current bank etc...it's all about who gives you the best pricing. But remember for every enquiry you make, they have to pull your credit so get your credit first and then get some preliminary quotes. Good Luck!
Unique situation... Refinance and cash out to down for a new home?
I own a 2-family home worth 370K. I still owe 88K with 12 years left on a 15 year loan. I owe a family member 200K in loan. I need to pay the family member back now. Can I (should I) refinance for the value of the home and pay off the family member with it? Basically, I'm moving from a non interest family loan to a mortgage. I know that, financially,it's a disastrous move, but the situation is what it is. Also, if I wanted to buy a new home and put this one up for rent...would it be wise to refinance for, say, 320K (200K goes to the family member, 88K for the remaining mortgage, and 32K cash out to down for the new home)? So in the end I would have one two-family home up for rent and a home I will reside in. I'm hoping the rent from the two family home will cover the new 320K 30-year mortgage and my income 126K/year (gross) will cover my primary home's mortgage. Which leads me to another question, at that income level, how much home can I afford? Thanks to any advice anyone can give!
$320 PP
$32K -down 10%
$288 @ 6.5% PITI= apr. $1700
You will have to rent each unit for about $850 minimun. Can you get a rent rate of $850 per month for each unit?
As far as for what you can afford. Based only on income level you can afford a house $380,415 purchase price.
got to:http://www.bloomberg.com/invest/calculators/qualifier.html
Refinancing home with cash out with home off market?
Are there any companies out there that don't make you wait, or wait 30 days to refi your home, after it's been taken off of the market?
Recently we have been able to refi with FHA after the home has been off the market for 30 days since we are a preferred Fannie Mae lender. Normally it is 6 mths at least.
cash home refinance - News
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Are Lower Mortgage Rates Working? For Some, Yes; for Others, No - RisMedia.com (press release) Are Lower Mortgage Rates Working? For Some, Yes; for Others, No January applications for new and refinanced home loans reached a record high for Wells Fargo Home Mortgage Group, which processed 477 applications, |
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How to Help Distressed Homeowners by Offering Free CMAs - RisMedia.com (press release) How to Help Distressed Homeowners by Offering Free CMAs Short refinance: Like a short sale, a short refinance (short refi) calls for the lender to accept less than the full balance due on the loan, |
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When Buying Bonds, Break From the Cyclical On the cash flow side, they have gone from a little over 10% cash-flow growth to low single digits. That's more of an equity story than it is a bond story |
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Will Any Other Republicans Support the Stimulus Deal? - Washington Post Will Any Other Republicans Support the Stimulus Deal? I took out 2 home equity loans one in 2003 and one in 2006 on top of the cash out refi in 2002 because a mortgage broker told me I could refinance out of |
Bank on home-loan relief - Sydney Morning Herald
RTE.ieBank on home-loan relief Refinance if possible. If you have had the same loan for more than two years then have a reputable mortgage broker provide you with a free home loan health Saving the old homestead
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