If you have been contemplating a cash-out refinance, there are some important questions to ask yourself before moving forward. Since a cash-out refinance is essentially an action that will replace your current mortgage with a larger one, be sure to gather all the facts before finalizing the plan. In a cash-out refi, you are accessing some of your home’s equity, or taking out cash on the portion of your home that you have already paid for. For those who plan to stay in their home and do not mind extending the length of their mortgage, it could be a good fit. On the other hand, while this is an excellent way to put your hands on a lump sum of cash that can be used in a variety of ways, there are a few pitfalls. [Read more...]
On November 28th the Federal Housing Finance Agency, or FHFA, released its September Refinance Report. The report detailed the efforts of Fannie Mae and Freddie Mac through the Home Affordable Refinance Program known as HARP. It was noted that through the third quarter of 2012, approximately 25% of all mortgage refinances were done through the assistance program.
It was revealed that since the beginning of 2012, over 709,000 loans were refinanced through HARP. In September alone, more than 90,000 borrowers took advantage of HARP. Many attribute the high volume of participation to changes that made the program more accessible and to the continuing low mortgage rates.
Further analysis of the Federal Housing Finance Agency report showed that nearly 50% of the homeowners seeking refinancing assistance in September had LTV ratios more than 105%. Approximately one fourth of them held loans with LTV ratios that exceeded 125%. September’s figures also brought to light that 19% of HARP refinances were changed to 15- and 20-year mortgages. As opposed to the more traditional 30-year loans, the shorter terms allow homeowners to build equity at a faster rate. [Read more...]
For anyone who has equity built up in their home, today’s extremely low mortgage rates make refinancing a great way to free up some cash. If you’re contemplating refinancing your property, start by considering these two to factors:
Terms – Since rate-and-term refinancing is essentially taking out a new loan for the balance on your mortgage; you have the freedom to make some changes. One of those is the term of your loan. You may have the option to keep it the same, shorten it, or extend it for a longer period of time. Of course there are many factors to consider when zeroing in on the term. For example, you may have had a few pay raises and now have a better cash flow. In that case, you may want to go for the shorter term. That may increase your monthly payments, however, you’ll build equity faster and likely save money over the course of the loan. If your salary has not changed or you anticipate big expenses such as college tuition, a renovation project or want to use the funds for debt consolidation, then keeping the same term or extending it may be a better alternative.