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Refinancing With Cash Out

If you have lived in your home for a reasonable amount of time and have acquired equity through appreciation and monthly mortgage payments, you may be considering liquidating some of that equity by refinancing with cash out.

Refinancing with cash out in laymen terms simply means to refinance your existing mortgage and borrow some of the equity in the home to be received in a lump sum at the closing table.

People refinance with cash out all the time and for a variety of reasons. The number one reason being to get a lower rate on their mortgage. The cash out scenario you can use for all sorts of reasons. Such as debt consolidation, buying a new vehicle, home improvement, college tuition, family vacation, etc.

If you are seriously considering refinancing with cash out, you may want to consider shopping around for a mortgage. By shopping around you can compare rates, and fees.

Also, be sure to educate yourself as much as possible. Take the time to learn as much as you can about the mortgage industry, so when the time comes to dealing with a loan officer you will have a strong grasp on your options.

Once you are done educating yourself, you will be able to track down a mortgage company to assist you with your cash out refinance.

Once you begin your search, don't limit yourself to one company, talk with up to four at the very least. Allow them to assess your scenario and do inform them that you are shopping around.

By letting the loan officer know that you are shopping around, it will be in their best interest to offer you their best rate to prohibit you from going to their competition.

The mortgage industry is a very competitive one, and they will compete for your business. So sit back, relax, and wait for the best offer to come your way. Good luck.

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Author Bio
Jennifer Hershey has more than twenty years of experience in the Mortgage Industry as a loan officer. She is the owner of a mortgage resource site devoted to making mortgage terms and products easy to understand.

Article Source: http://www.ArticleGeek.com - Free Website Content

APR vs Interest Rate

Whenever I wished to compare loan quotes, I was always baffled by the confusing financial jargon, like APR, interest rate, points, closing costs, etc. For all those that go through the same trauma while loan hunting, I have an article explaining 'annual percentage rate vs interest rates'. Here's a low down on Annual Percentage Rate or APR vs interest rates...

Till I started my full fledged finance studies, I always thought that Annual Percentage Rates (APR) and interest rates were one and the same thing, just results of different calculation methods. Now I know that such is not the case. So here I am, trying to relieve you of all your similar doubts about APR and interest rates, through this 'APR vs interest rate' article. This APR vs mortgage interest rate article should help you in understanding the APR and interest rate difference as well as the annual percentage rate formula. Read more on loan calculators.

Simple Mortgage Interest Rates
Interest rate is a simple percentage figure that stands as the basic borrowing cost on the principal borrowed. The interest amount is a direct percentage of the actual amount of borrowed funds. In other words, interest rate is the rent compensation paid by the borrower to the lender to compensate for his opportunity cost of lending you that money, as opposed to investing it elsewhere. Interest rates are usually the ones taken into account when making initial comparisons between various loans, as they directly affect the monthly payments of the borrower, something that most debtors are most concerned with.

Though low interest rates are the first thing that people look for when hunting for good deals on loans, interest rates are usually not the only monthly expense that goes towards the loans. As there is usually a trade-off between interest rates and other upfront costs of acquiring the loan, i.e. lower the interest rates, higher the associated costs and vice versa, just hunting for a low interest rate deal is not always the most beneficial option. This is where the APR comes into the picture.

Annual Percentage Rate (APR)
The best way to explain an APR to a layman, is to say that it represents the 'true cost of his loan'. The basic difference between APR and interest rate happens to be just this - while the interest rate is just the intrinsic borrowing cost, calculated as a percentage of the loan amount, the APR includes the other associated loan expenses that usually cannot be seen from the actual interest rate figures. In simple terms, APR is nothing but another representation of the effective rate of interest that the borrower will be burdened with, and so, the APR is always higher than the normal interest rate.

Theoretically, all fees required to finance the loan are incorporated into the calculation of APR, but as different lenders incorporate different fees and leave out different ones, not all lenders with similar loan terms and conditions reach to the same APR. Either way, whatever the expenses to be taken into account, the APR calculation requires that all such amounts be totaled and amortized over the entire loan period. The new rate calculated after included all such additional payments into the interest rate calculation is what is known as an APR. Know more on amortization.

While the APR covers all the drawbacks of the normal mortgage interest rates, APR in itself also has a few limitations of its own. For one thing, as already mentioned earlier, as there are now clearly cut out rules as to which expenses to include and which to leave out in the APR calculation, most lenders choose the expenses to suit their ends. Expenses usually not considered in the APR formula are home appraisal expenses (home loans), title fees, and credit reporting fees. It is always better to ask your lender for a disclosure of expenses included and excluded in the calculation. Secondly, APR does not work well for adjustable rate loans as all calculations are usually based on future interest rate forecasts which may not be so accurate.

Last but not the least, before you go out and grab a loan at a lower APR, consider this. Since APR amortizes all associated expenses as well as the original interest payments over the entire life of the loan, the only way such a deal is profitable is when the loan is actually held all the way to maturity. For example, if you have a plan in mind to settle a loan of 10 years in 5 years itself, looking for a low interest rate (despite a little higher APR) may be viable in your case. If you plan to refinance or retire your loan early, higher up front cost may actually turn out to be a bad deal for you, as these will unnecessarily be amortized over the entire loan period. Know more on mortgage refinance.

APR vs Interest Rate
Here are a few APR vs interest rate facts:

'Truth in Lending Act', a federal law requires that both, the APR and the interest rates, be simultaneously disclosed to the borrowers, to protect them in credit transactions through a full and fair disclosure.
In financial terminology, while the interest rate is just the 'pure cost of money', APR includes all additional costs that make it the 'true cost of money'.
While traditional interest rates exclude transaction costs and other fees in their calculations, the APR includes most of them. This makes APR a better indicator of how much the borrower is actually ending up paying to the lender, in compensation for his loan.
Because of the inclusion of additional costs, the APR is always higher than the nominal mortgage interest rates.
Loan comparisons using APR are more accurate than comparisons made on interest rates, for a low interest rate loan usually has higher other associated costs and vice versa.
Judging a book (loan) only by its cover (APR) is also not a prudent strategy, as an APR analysis does not reveal things like balloon payments, prepayment penalties and rate lock-in periods.

Anyways, this was all the information I had on the topic of 'APR vs interest rate. Hope it helps you make wise loan decisions. Remember, always be prudent when raising large amounts of debt. Be prudent and remember my 'APR vs interest rate' article, every time you go loan hunting.

By Sayali Bedekar Patil

source by : http://www.buzzle.com/articles/apr-vs-interest-rate.html

Mortgage Rates Soar, Loan Applications Plummet

In what may prove to be the largest problem yet for the struggling housing market, mortgage rates have been increasing lately, drastically reducing new loan applications.

Historically speaking, mortgage rates are still extremely low and money - for lack of a better term - is pretty cheap at the moment. But in a market as skittish and uncertain as this one, any change that can be perceived as negative is going to grab headlines and perpetuate the fear that is strangling the global economy.

The early June average fixed rate for a 30-year mortgage "jumped" to 5.57 percent, which is up nearly a full point from the record low of 4.61 percent in March. Of course, that is going to have a negative impact on the number of applications for refinancing, but it may not be quite the disastrous omen for any new home purchasers that are out there.

5.57 percent on a 30-year fixed mortgage is still very attractive and affordable to people that are in the market to buy new homes. However, it's probably not quite low enough to drive or sustain a high demand for refinancing existing loans, since most people have been able to purchase or re-finance homes in the last few years for rates that are close enough to that 5.57 percent as to not make a re-fi sensible.

That will certainly generate some ill feelings in the housing sector, but the reality is that real estate is very affordable right now, even with the recent "spike" in interest rates. Qualified buyers can almost name their price and take properties at a fraction of their purchase prices only a few short years ago. But no one seems to be willing to make those moves, so the market will continue to flounder.

Mortgage Financing After Foreclosure

Mortgage financing after foreclosure gives people an opportunity to avail a mortgage and stay current on their payments by refinancing to a lower rate of interest.

Mortgage financing after foreclosure is a difficult task since erstwhile homeowners find it incredibly difficult to convince mortgage lenders of their credit worthiness. The difficulty in procuring and refinancing a mortgage can be attributed to two factors. The erstwhile home owner's credit score declines by 350-400 points as a result of a foreclosure. The homeowner finds it difficult to procure both installments and revolving credit. Since these are necessary for improving credit scores, the consumer faces the seemingly insurmountable task of building credit scores and convincing the lenders of the prudence of allowing mortgage financing after foreclosure.

Mortgage Financing After Foreclosure

Although, the recent sub-prime crisis has made it difficult for people to buy a home after foreclosure, people may still be able to procure mortgage loans meant for bad credit consumers and then refinance to a lower or a more favorable rate of interest. The Federal Housing Administration (FHA) is willing to provide home loans to people who have a foreclosure on their record. Since the 1980s, the FHA also allows streamline refinancing option for FHA mortgage holders. The term 'streamline' refers to refinancing without the usual paperwork hassles.

Obtaining an FHA Insured Mortgage
An FHA-insured mortgage can be used to purchase or refinance a new or an existing one-to-four unit home, a condominium, a manufactured home or a mobile home. The borrower can opt for an FHA insured loan provided 3 years have elapsed from the date of the foreclosure sale. These loans carry a government guarantee that protects the lender in the event of default. Although, the borrower is expected to make a down payment of just 3.5 percent of the purchase price of the property, these mortgages do not require private mortgage insurance (PMI). A credit score in the range of 580-620 is sufficient for availing an FHA insured mortgage. The borrower is expected to pay a premium for the guarantee provided by the government. This premium is paid in two installments. The first installment is paid at settlement and is equal to 1.75 percent of the loan while the remaining is paid along with the monthly mortgage payments till such time the loan-to-value of the mortgage reaches 78 percent of the initial sales price or the appraised value of your home, whichever is less. People, who do not pay the first installment of the premium at settlement, are forced to pay a higher premium that stays in place throughout the term of the loan. An FHA insured mortgage can be refinanced in the following manner.

Refinancing an FHA Insured Mortgage
People, who have an FHA insured mortgage, can refinance their mortgage without having to undergo any credit checks provided they are current on their mortgage payments and their annual mortgage payment history is satisfactory. Approval is not contingent on the income, the asset or the borrower's employment history. Property appraisal is a must if the homeowner desires cash out refinancing. If the consumer just wants to refinance to a lower rate of interest, there is no need for property appraisal. If the homeowner is trying to refinance a loan, that was procured in the distant past, it may be possible to obtain a refund on the mortgage premium. The amount of refund may be applied towards the upfront premium required for the new mortgage. The process of refinancing an FHA mortgage is streamlined which is the same as saying that the process does not involve heavy paperwork.

Read more on:

Getting a Mortgage After Foreclosure
Mortgage Refinance
Mortgage Loans After Bankruptcy

The last article may provide some idea about mortgage financing after bankruptcy.

Hopefully, the article would have provided valuable insight on mortgage financing after foreclosure. The biggest advantage of availing an FHA insured loan is that, borrowers may be able to use the anticipated $8000 tax credit for availing a short term loan from a housing finance agency, assuming that they bought their first house 3 years ago. Read more on first time home buyer tax credit. The loan can then be used to fund the down payment required for an FHA insured mortgage.

100% Mortgage Financing

Quick Tips About How This Works To Your Advantage...

Learn how to work the 100% financing option
See the opportunity to use this for investment property financing
Additional factors to consider
100% Financing - Working This Option

Getting 100% financing for real estate is much more common now than even ten years ago. Lenders no longer look for clients to put down 5%, 10%, or more of the property's value as a down payment.

100% financing can be used to cover closing costs. For example, if a house costs $200,000 and the buyer wants it but also wants to cover the closing costs through the loan then:

the seller increases the price to $205,000
buyer gets a 100% financing loan for $205,000 with a concession to apply $5,000 towards closing costs
the seller still in the end gets a net price of $200,000 after using $5,000 to help cover closing costs
lenders can allow up to 6% of the value of a property to be used to cover closing costs (loan costs, property transfer costs, etc.)
The most obvious benefit is the ability to use leverage. If you put nothing down on a property and it rises in value then you have minimized your cash outlay for the investment return.

100% Financing For The Investment Property

Many lenders now offer 100% financing for properties that are rented out by the owner. These rental properties are usually between 1-4 unit buildings or traditional single family residences. This is not a financing option to buy a large apartment building.

Lenders can restrict the number of rental properties they will finance for a given borrower. The limit can be four properties but can be higher. The other rental properties show up on your credit report as additional mortgages.

Additional Factors To Consider About 100% Financing

The risk in 100% financing is that the property declines in value. This leaves you with negative equity, where you own more on a property than it is worth. In this case, you may be able to refinance it with a 125% loan, which is a loan that is 125% of the value of your property.

Swimming Pool Financing

Do you want to purchase a swimming pool or a swimming lap pool but do not have quite enough money? If so, then you should look into swimming pool financing and see if you can make that dream become a reality much sooner than you had previously thought.

Financing a swimming pool purchase or a lap pool's purchase is one form of financing that many people do not even think about, but really should be considered over using a traditional home-equity line of credit or other form of loan first for several reasons. In fact, there are several inground swimming pool financing companies that exist solely to provide regular pool, gunite pool, or above ground pool financing, and will be able to help you much better than a traditional banker who does not specialize in pool financing and who may not understand all the intricacies and benefits associated with adding a pool to your home.

One of the reasons why pools financing might be a good idea is that adding a pool can be an investment that adds value to your home. Yes, a pool is an expense (maintenance costs, pool service, adding pool accessories like a swimming pool slides, etc.), but it is not a depreciating asset like a vehicle is. In fact, a vehicle is not best treated as an asset since it depreciates overtime (rather quickly as well) and costs money to maintain (tires, breaks, oil change, problems, etc.). However, a pool really can add value to your home and make it easier to sell and make it so you can sell your home for more money if that time comes. So if bankers are willing to lend you money for your car, they should also be willing to lend money for your pool. Unfortunately, pool financing is not as common, which is why I suggest speaking with someone who specializes in pool financing.

What this means for you is that you need to do your homework and find the right swimming pools financing specialist. Such a specialist should offer the following benefits for you:

They will consider using a long-term mortgage as a lending option and will possibly base the value on the value of the property after the pool is installed. Since the pool is adding value to your home, then it should be included.
Find a lender who can possibly operate off of a past assessment of your home’s value. And new, full appraisal of your home will take time and cost several hundred dollars, so if you can avoid this you should. However, given the current market situation, this may not be an option so don’t let this deter you from trying to get a swimming pool financing loan.
Find a pool lender who will consider your unique situation and tailor a loan that fits your needs. Many pool loans can be structured to be either short-term or long-term loans with either fixed-rate or variable-rate loans. Also, remember that swimming pool loans can be designated as improvements to your home, and as such can carry much lower interest rates than a home line of credit or other type of financing.
Finally, find a pool lender who can also advise you on the tax ramifications of your swimming pool loan, as such a loan may be tax deductible.

One other option to consider given the current market is to use this as an opportunity to refinance your home and include your pool in the refinancing. Interest rates are still at historically low levels and depending on your situation you may be able to add the pool, refinance at a lower long-term rate, and still keep your mortgage payment either the same or possibly even lower your payment. This will obviously be an option if you have significant equity in your home. However, don’t make the same mistake millions made in the housing bubble of taking all their equity out of their homes in a refinancing, only to find themselves upside-down a year later. As always, be prudent when considering financing and make sure you understand all the risks associated with your loan, especially your pool financing loan. However, once you understand all the intricacies associated, you will still likely find that financing a swimming pool could possibly be a great option for you.