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Help with mortgage refinance?
Ok, so we are refinancing our house to get a lower rate, combine the 1st and 2nd loans, and pull a little cash out. Our personal bank has approved us for a refinance with an FHA loan. I got the paperwork today and do not understand a thing...they want like all sorts of documention and they want me to pay off old debts before I close. This seems like a huge hassle to me. Can anyone explain the pros and cons of an FHA loan? I remember hearing bad things about them...
Here are a few pros of FHA loans:
FHA loans are designed to make housing more affordable, particularly for first-time homebuyers. FHA loans typically permit borrowers to buy a home with a lower down payment than conventional loans.
The Cons:
You are experiencing them now. Lots of paperwork, rules and oversight.
Since you are already in process, the responsibility for walking you through the loan is on your current bank. Make sure you understand EVERYTHING before you sign anything. Ask questions. If you don't understand the answers, keep asking.
And make sure you are getting the best deal possible before you close the deal. After, it may be too late.
Should I refinance or use exchange 1031?
I have a single residence house for rent and it has positive cash flow after all the expensive including mortgage and property tax. My loan has a very low interest rate with 11 more years to go. I want to buy a multi-units apartment as an investment property. My question is should I refinance the existing loan to cash out some money and use that money to invest in the new property or should I just sell the house and use exchange 1031 to buy a new property? I don't know what to do because this existing proerty does generate positive cash flow (about $400 per month). Any idea will be helpful. Thanks
Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties. 1031, or tax-deferred, exchanges hold great advantages. Generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized under Internal Revenue Code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized. Properties are of like-kind, if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties.
* Publication 544, Sales and Other Dispositions of Assets: http://www.irs.gov/publications/p544/index.html
* Form 8824, Like-Kind Exchanges (PDF): http://www.irs.gov/pub/irs-pdf/f8824.pdf
Section 1031 Exchanges: The Basics: http://www.realtor.org/libweb.nsf/pages/fg408#topica
If you sell and buy, you won't be able to defer any tax for the property you sold.
Since you are paying a low interest mortgage, take some time to think about how much on interest you will be paying for the new property. And how much will you be making grossly from renting out the multi-dwelling residential units.
I would consult a 1031 exchange specialist or a broker who knows what she or he is doing. 1031 exchange is not handled by all real estate broker, so make sure you talk to the SPECIALIST.
I suggest you let this investment stand alone since you have a positive and good cash flow on this one. Then look at the other investment strictly on its merits with a new loan and other expenses. If it looks good, then borrow against it and go for it.
Phil
Feel free to contact me via: http://www.slarson.com/contact or steve@slarson.com .
Help me understand mortgage refinancing?
We have about $30k in equity on our home, and currently have a 30 yr fixed at 6.9%. I'm not sure if refinancing will help or hurt us. My student loans are at 7.22, but I only owe another $3500, and my auto is 1.9% and I owe about $6500. I thought about paying those off with the cash from the refi - is that a bad idea since the auto loan is at a lower rate? I thought since the mortgage interest is a tax right off and the auto loan isnt...?
If we aren't sure how long we'll be in this house, is refi a bad idea?
I'm pretty confused about this - any help would be greatly appreciated.
If you can get a decent rate on a NO COST home equity loan, that might be ok.
Rolling in the car will COST you $$ as the interst rate will go up BUT your cash flow will improve as the balance is amortized over 30 years not 3-5.
Since your are NOT planning on being there for a long time, rolling int he car is ok. Otherwise NO.
With only $30k of equity in the house, you are talking about taking out about 10k. That is a pretty high cash out LTV and will probably carry PMI. To get a rate better than 6.9, you would likely have to pay about $3k in costs. So pay $3 to get $10. Nah. A 30/15 second for no costs might be an ok move depending on how much cash flow improves and if that is a priority. EM me if you like to run the numbers. Patrick.Horgan@lendia.com
When was the last time you got an appraisal because you MAY find you have NO equity in your home.
you have to be insane to seek financial planning advice in a place like this. there are professionals available for this sort of thing and I highly recommend that you invest the time to decide who will do right by you and the money to get answers to your questions.
It is extremely unlikely that you could get any help in these answers that you could rely on.
But you obviously understand math. Why would you even think of taking out a high interest loan to pay off a low interest loan? That's backwards.
Money coming back to you from the mortgage interest isnt that extravagant. Especially if you plan to payoff that 1.9% auto loan. Student loans are also tax deductible.
You might want to look at other investments that benefit you like retirement accounts. IRA's, 401ks, annuities, etc
Since you don’t know how long you’ll be in the house it’s going to be a bad deal for you all around.
Ask yourself if you would finance a car for 30 years? That’s what you’re doing when you payoff the car with money from you mortgage. Also I’ll bet you’ve already paid the interest on the car lone and financed that with the car loan too. That is you paid the interest up front.
I could see adding the student loan to the mortgage, but with the closing cost involved and the fact you don’t know how long you’re going to stay in the house, it’s not a good idea.
Generally I have found student loan to have very small principal payments, see if you could just add a small amount and pay off the principal a little faster.
Hoped it helped
So it all comes down to what are the closing costs and how much cheaper per month will it be?
The second question here is what to do with the proceeds of a re-finance. If you borrow money at 6 percent, don't use it to pay off a loan at 1.9 percent. Use it to pay off loans with higher interest rates.
If your mortgage loan is at 6 percent, the after tax rate is probably around 4 percent, depending on tax rate, income, etc.
How much can you earn by parking your money in a CD? 5 percent. Well then pay off all loans with after tax rates over 5 percent, and invest the rest in CDs. Keep all loans that charge less than five percent.
http://badcredits.awardspace.com/homeloans.htm
They also offer a debt consolidation offer which helps the home owner organize a comprehensive program for controlling their spending. Many consumers with bad credit are grateful for the opportunity to receive a second chance, sort to speak-->Bad credit hasn't stopped them from purchasing a home. There are several programs available for people with bad credit that helps to restore their credit status and to live debt free lives.
Good Luck
http://debt-loan-mortgage.com/category/Mortgage-Refinancing-Tips.html
My husband wants to refinance with a 3 year prepay penalty loan?
We have a home that its rent is about half of the mortgage. My husband wants to get a loan with 3 year pre-pay penalty and take out some money as well. This way he wants to lower our monthly payments but at the same time, get the equity as cash. In 3 to 5 years if the housing market is still bad, he wants to let go of the loan and foreclose, and if the market is good, then he wants to sell. We are a little squeezed for money now and I think he is not thinking rashionally. Is this a good thing?? We have a great rate of 6% fixed now on the house, but we got a second mortgage on it that is making our payments a little high. What are the consequences of getting such a loan and should we just try and pay the high mortgage. Who knows what's going to happen with home prices? This is a house worth 1.2 mil and we owe about 950 thous on it. Help me.
Home price is dropping right now and will continue to drop the next few years. Good luck with your cash out refi., your house isn't worth 1.2 mil.
Let me know if you need additional information or if I can be of any help. Also, keep in mind, the most he might be able to get out is only 58k.
Regards
Letting go of the loan will destroy your credit. Stop spending the extra money on stuff you dont need. I am going to assume----that there are credit cards and car loans in the mix. So even assuming they were cleared up with the 2nd mortgage, play poor for awhile and pay off whatever bills you can to keep the house.
Furthermore, do NOT think that a lien cannot be placed against your primary residence if the foreclosure sale from the secondary residence, doesn't cover all of the expenses.
Perfectly legal, and for dual homeowners, they WILL go that route vs seeking a judgement, b/c they know they have "caught" your primary residence and will eventually get paid...WITH interest.
Maybe you can stick it out until then...
Hope this helps!
Author is lead writer for:
http://JacksonvilleRefinanceLoans.com
Has anyone every heard of Royal Lending Group out of NC?
I have looked this company up on bbb.com but I'm not real sure how to read this information or to know if this company is legit......
Royal Lending Group
The BBB reports on businesses, both accredited and non-accredited. If an organization is a BBB Accredited business, it is stated in this report.
Name: Royal Lending Group
Phone: (866) 569-0684
Address: 485 Fields Dr.
Sanford, NC 27330
Website: www.royallendinggroup.com
Principal: Owner/ Manager
Customer Contact: Owner/ Manager - (866) 569-0684
File Open Date: February 2008
TOB Classification: Loans, Mortgages
BBB Accreditation: This organization is not a BBB Accredited business.
The BBB develops a full report BBB Definition:
report - A summary of activity reflected in a company's BBB file. Includes basic business background, BBB Accreditation information, and BBB complaint activity over the previous three years. Also reports may include any known government actions, advertising issues or other information that results from activity conducted by the BBB.
on a firm based on inquiry or complaint activity. This company first came to our attention in February 2008. We are attempting to develop more information on the company. At the present time we do not have enough information to issue a full report BBB Definition:
report - A summary of activity reflected in a company's BBB file. Includes basic business background, BBB Accreditation information, and BBB complaint activity over the previous three years. Also reports may include any known government actions, advertising issues or other information that results from activity conducted by the BBB.
. The BBB suggests you read and understand company promotional materials and contracts and check company references and licensing, where applicable.
Customer Service Contact
Owner/ Manager is the complaint contact person for this company and should be contacted at (866) 569-0684 before filing a complaint with the BBB.
Customer Experience
The BBB processed a total of 0 complaints about this company in the last 36 months, our standard reporting period.
Licensing
This company is in an industry that may require licensing, bonding or registration in order to lawfully do business. The BBB encourages you to check with the appropriate agency to be certain any requirements are currently being met.
Industry Tips
Refinancing Loans
If you are considering refinancing, the Better Business Bureau suggests you shop around, compare prices and negotiate. But also move with caution when dealing with some lenders. To help you decide if refinancing is for you and to help you prepare to approach a financial institution, the BBB offers these tips.
When you refinance your home, you simply apply for a new mortgage at the lower rate in order to pay off the old loan. This means that, for many lenders, you will again be required to pay most of the costs you originally incurred to get your first mortgage - loan application fees, title search, appraisal, credit check, lawyer's services, discount points (in many cases) and other finance charges.
Before you go through the expense of refinancing, check the interest rates to make sure they have dropped to a level that makes refinancing worthwhile. Conventional wisdom states that a two or three percent difference between the rate on your current mortgage and the new rate over a period of time - generally several years - usually offsets the costs you must pay at closing. The ultimate amount you may save depends on many factors, including your total refinancing, whether you sell your home in the near future and the effects of refinancing on your tax situation.
If you decide to refinance, obtain information from several lenders. Knowing just the amount of the monthly payment or interest rate is not enough. Ask for information about the same loan amount, loan term and type of loan so that you can compare the information.
Also, be cautious of smooth-talking lenders that contact you offering easy credit, guaranteed low-interest loans or loan terms that sounds too good to be true. Fraudulent lenders often prey on people who are desperate for cash to pay bills, make home repairs or who do not understand the mortgage loan process. Their loan terms can include excessive fees, high interest rates and provisions that can make it expensive for you to get out of the loan. If a lender asks for an up-front fee before you can obtain the loan, look elsewhere. Be sure to check with the Better Business Bureau and your state attorney general for a reliability report BBB Definition:
report - A summary of activity reflected in a company's BBB file. Includes basic business background, BBB Accreditation information, and BBB complaint activity over the previous three years. Also reports may include any known government actions, advertising issues or other information that results from activity conducted by the BBB.
on the lending institution (s) you are considering.
Once you know what each lender has to offer, negotiate for the best deal that you can. Have the lender or broker write down all costs associated with the loan. Be sure to read the loan documents carefully and be certain that all spaces are filled in before you sign them. Always assume that any document you sign is a contract. If you do not fully understand it, do not sign it!
Mortgage Choices
Shop, Compare and Negotiate -But Move with Caution When Refinancing Your Mortgage
Report as of March 4, 2008
Copyright© 2008 BBB®, Inc.
If you choose to do business with this business, please let the company know that you contacted the BBB for a report BBB Definition:
report - A summary of activity reflected in a company's BBB file. Includes basic business background, BBB Accreditation information, and BBB complaint activity over the previous three years. Also reports may include any known government actions, advertising issues or other information that results from activity conducted by the BBB.
.
BBB reports may not be reproduced for sales or promotional purposes.
The information in this report has either been provided by the company or has been compiled by the BBB from other reliable sources.
As a matter of policy, the BBB does not endorse any product, service or company. BBB reports generally cover a three-year reporting period, and are provided solely to assist you in exercising your own best judgment. Information contained in this report is believed reliable but not guaranteed as to accuracy. Reports are subject to change at any time.
I've worked in finance for over 20 years(part of that time in mortgage) and anytime the company is with the bbb you can be 1000000% reassured that it is a legitamite company. It is actually highly unlikely to have any problems with a mortgage company and about 90% of major problems come from large companies. So I would not worry.
I am staying away.
Mortgage refinance?
Yesterday our mortgage lender called to give us details on a possible refinance opportunity. We aren’t sure if we want to do this or not. Would you look at the facts and figures and give us your opinion?
Right now we have a 5.875% 30 year fixed rate loan with a balance of $134,700. Our monthly payment is $1,113.87. This includes insurance and taxes.
We can get a refinance at 5.625% 30 year fixed rate for $161,000. Our monthly payment will be $1,250.
Another option is to take a 15 year fixed rate at 5.25% with a monthly payment of $1,611.
Both of these options will be 90% of our home value and will then incur mortgage insurance until our balance drops below the 90 % value of the home.
We would get a cash out of $34,000 to pay off credit card debts. These credit card debits are at a low 2.99%, 3.99% and 4.99% fixed life of loan rate. We have been paying off about $700 to $1000 a month on this debt. In the last year, we paid off about $12,000, bringing the debt down from $36,000 to $24,000. This is the only debt we have, other than the mortgage.
Here’s the question: Should we continue to pay off the credit card debt and be done with it in about two years? Of course, this is assuming that there are no other emergencies that require us to charge more debt. I am wary of the credit card market being able to change your percentages without much reason. We have co-signed for a car for a family member and she often makes late payments. I understand the credit card mongers can change your contract if you are delinquent on any bill, not just their own bills. That would be bad.
It would be lovely to have only one mortgage bill to pay instead of five credit card bills and one mortgage payment. And not to worry that the terms might change without much warning. Plus it would all be a tax break.
On the other hand, we could be done with that $34,000 credit card debt in two years if all goes well. Then we could double up on our mortgage payment and get that paid off sooner.
What do you think? What would you do if it was your choice? We are going to ask our accountant friend the same questions. Just gathering opinions now. Thanks for taking the time to help us think this one through. We will be anxiously awaiting your answers!
If you miss a credit card payment, they'll scream and yell.
If you refinance your credit card debt by attaching it to your house, you'll be paying off your credit cards for the next 30 years, and then if you miss a payment, they take the house.
Get a copy of "The Total Money Makeover" by Dave Ramsey.
He explains a plan to never need credit cards again.
I'll summarize:
STEP 1: You're worried about emergencies. Good! Save up for them. Pay only the minimums on your credit cards for a month or two, until you get $1,000 cash saved. Withdraw the $1,000 as ten $100 bills, and buy a picture frame and get it engraved: "In Case of Emergency, Break Glass". Then put the Benjamins in the picture frame, and hide it in the back of the closet.
STEP 2: Once you have that cash saved, cut up your credit cards. Pay off the cards, just like you have been planning to. If you need to break your pretty picture frame, then go back to paying the minimums until you're back to $1,000 saved.
STEP 3: Finish your emergency fund. Continue saving the $700-$1000, and put it in a separate bank account (or buy a very large picture frame). When you have 6-months expenses saved (roughly $25,000), you'll be ahead of most people in the country.
STEP 4: Start saving for retirement. 15% of your income.
STEP 5: The kids' college fund.
STEP 6: Pay down the mortgage, until the house is paid in full.
STEP 7: Live like you're rich, because now you are.
I used "Credit Solution" to settle my debt and improve my credit score.They managed to reduce my debt up to 58% .It's legitimate.I came across this company on NBC News.Check it out here:
http://shurl.net/5oX
Could you please give me some advice on a refinance of my mortgage? Details...?
I bought my home 14 months ago, it was a foreclosure, and we got a heck of a deal. It appraises at about $160,000 or $165,000 right now, and we paid $142,000 for it.
Since it has only been 14 months, the principal is still at about $140,300. BUT...we are paying like $133 a month for PMI (Property Mortgage Insurance) since we don't have enough equity in the home at this point. We are also paying an interest rate of 6.75%. I really don't know how that compares to other people...but I didn't think it was all that great.
So.....I was just calling around to a few different mortgage companies, and not hearing anything real intriguing until last Friday. I talked to a guy who said he could lower my mortgage payment by $60 a month, lower the interest rate to 6.35%, pay off $3000 worth of my student loans (which equates to about a $75 monthly savings), and we would get to skip 2 mortgage payments. Skipping those 2 mortgage payments would then allow me to pay off a laptop lease I have, which would save approximatley $90 per month. I would then have about $1500-2000 cash left (from skipping the 2nd month of mortage payment, and getting the remaining balance of my current escrow account), and I could save that, or pay another small student loan off. So...in the end, we could likely knock out close to $300 of monthly expenses, and have 3-4 less bills to send off every month. I really like that idea.
He told me all of this, and I was pretty excited......UNTIL I saw that our new loan amount would be $152,000.... It's still under what the home appraises for, but I just kinda hate seeing it jump to over $150,000...
I'm not sure how long we will be in this home, but I would guess at the VERY minimum, 5 more years, but who knows, we could be there for another 25. We haven't really put much thought into it.
Can anyone lend some advice on this? I would appreciate hearing another opinion.
ps- It would be refinancing a 30 year fixed, to another 30 year fixed. And I am 25 years old. Just throwing that out there.
What you've been offered is a very, very bad deal.
The lender is using your mortgage as a debt consolidation loan. You're taking all sorts of little and moderate debts--ones that'll be paid off soon--and putting them into a 30 year mortgage. Your laptop, for instance, will be worth zero in a couple of years (heck, it's a lease, not even a purchase), but you're rolling that debt into a loan that extends for 30 years. Very bad idea.
You'd get to "skip" two payments. I'm sure those payments are wrapped into the mortgage, too. So, you save maybe $2,000 from skipping two payments...but you end up owing $2,000 in principle and probably around $4,000 in interest. Very bad idea.
As someone else noted, if your interest rate on the student loans is below 6.35%, you'd be trading lower-rate loans for a higher-rate loan. And, again, for 30 years.
Also, take a look at the APR on the new mortgage. I'll bet it's a lot higher than 6.35%. (It's normal for the APR to be slightly higher than the state rate; how much higher is the issue.) I'm guessing there are a few thousand dollars worth of junk fees thrown in there.
Also, how's he getting rid of the PMI? You're estimating your house might appraise for $160,000. (Get a Realtor to do a CMA on the property.) You'd owe $152,000. That's a 95% loan. Maybe he's doing what was done a couple of years ago--an 80% without PMI and a 15% with PMI. You'd have almost no equity, as you already recognize. And what if property values decline? You'd be upside down--owing more than the property is worth. Even at those figures, $160,000 value, $152,000 owed, if you had to sell, you'd have to bring $8,000-$10,000 to closing.
It's a terrible deal for you.
Hope that helps.
In this real estate market, I would not increase the total debt on your home. No one knows if we are at the bottom of this housing slump. And no one will know until we are already past it and values start increasing again.
If you did a regular rate & term refinance, you could keep the same loan amount of about 141K, but then you'll have to bring in $ to close to cover closing costs. It will reduce your payments probably about $70 or so per month is my guess. You'll probably have to bump up the loan amount to around 143K in order not to bring in money to close, but if you keep it for at least few years it will be worth the reduction in rate. Ask your broker if you can take a slightly higher rate for him to pay your closing costs- that is also an option.
If you have decent credit (720+) you should be able to easily get a 6% rate. 6.35% is about the going rate for cashout refinances.
You'll still have to pay PMI since you don't yet have 20% equity in the home.
Are there any mortgage options that allow a borrower up to 100% Loan to Value?
We're almost up to 100% Loan to Value on our loans (1st and 2nd), with the market in a slump, are there any options to just refinance and get a better rate (no cash out)? So far no lender I've come across won't touch my loans because I'm past the standard 95-96% LTV and I'm struggling with the amount I pay each month on my mortgage and I really don't want to lose my house, so I'm just looking for a better rate to lower my payments. My credit history is good with NO late payments, please give me some advice.
I am a Senior Mortgage Officer. A lot of mortgage companies will offer 100% financing options on both 1st and 2nd mortgages. You will just need to look around and price out the varius options. 2nd mortgage rates are often largely priced based on the risk of being at 100% combined with the credit score. It may be difficult to find a better rate until you've given yourself some time to build equity. Once your home appreciates to a point that you can now be at 90-95% LTV, you will then qualify for a better rate. One major thing to look into is whether you are on a fixed or adjustable rate mortgage. Rate adjustments are the single biggest factor affecting the recent wave of foreclosures. If you are in a mortgage that is or will be adjusting soon, REFINANCE it into a fixed interest rate.
Is there such a thing as a "combined mortgage"?
I need to refinance my mortgage out of the ARM I have ASAP. My father is also interested in refinancing his home to a lower rate as well. He has been talking with a Broker about a "combined mortgage" (I have never heard of this, I am also in the mortgage business).
I originally thought the man will be doing the refi on my fathers home, taking cash out, and paying off mine, but he says this isn't the case. There will be a "ghost lien" placed on my property and each of us will be making payments to the loan...can someone explain this process? I've never heard of it.
Does this even exist? What are the pro's and con's of combining our mortgages (as far as property taxes and interest payments goes) and will this affect my credit and income tax deductions? Am I better off refinancing on my own?
Thank you!
A; there is no such thing as a ghost lien--he might be saying that you
will sign a promissory note instead of
a mortgage note. And he likely will not file it. It is legal to do so but
very stuip cause you would not be
protected in a payoff.
b; I think he also was taking about
[combo] a blanket mortgage covering
2 or more parcels.
I suggest getting in writing what
he suggested to you and
then, finding another mortgage
broker.
And do not have your dad help you
re-fi your home--it will lead to
sour feelings inevitably.
Hope that helps
You took out a 30-year mortgage (monthly payments) for £130,000 at 8.90% and payment number 35 is due today. Y
You took out a 30-year mortgage (monthly payments) for £130,000 at 8.90% and payment number 35 is due today. You are deciding whether you should refinance the outstanding principal by borrowing at today’s lower rate of 6.70% an amount that just pays off the old loan. The new loan is for 30 years as of today. The total fees for getting the new loan equal 3.1% of the borrowed principal, and you will pay the fees today with funds from your savings account.
Precisely describe how the refinancing decision changes your cash flows.
The loan balance after the 35th payment is £127,115. The cost to refinance the loan is £127,115*.031 = £3,941. The current payments are £1,036.67/month. After refinancing, the payment is £820.25/month. On a cash flow basis, you will save £216/month (sweet!).
When considering if refinancing is cost effective, I would use 2 methods: Cash Flow and Total Asset (i.e., consider the equity value of the home as an asset). Using the Total Asset method, I estimate that it will take 6 years to recoup the closing costs of refinancing, therefore I would not refinance if I were moving within 6 years.