Learn if refinancing your current mortgage is a good idea for you.
Lower you monthly payment with ARM products and Interest Only
programs. When you refinance, make sure to to consolidate high interest rate debts and credit cards.
securing a mortgage rate better than the one you currently have.
if you like predictable payment, you may refinance your
current mortgage to more predictable rate such as
30 year fixed. And lastly cash out refinance which is when refinancing
your first deed of trust, you want to cash out some of the equity
that has been built into the loan. Under certain conditions,
established by the lender, you can actually receive a check for an
amount of money that meets those conditions. Cash out refinancing
can be done with most of the programs.|
Refinancing a mortgage is simply getting a new mortgage. When
interest rates fall below your current mortgage rate then you need
to take advantage of the new rates and by refinancing your
current mortgage, if you save at least $200 a month, it worth doing it.
beside lowering your interest rate,
there are many other benefit of refinancing such as consolidate
higher-interest debt, like credit card or department store
balances, with your existing home mortgage into a new lower-rate
mortgage. You can use the money you free up through
refinancing to fund home improvements, make a major purchase, or
finance your child's education
Cash Out Refinancing – What Is It?
Many homeowners have occasions that arise when they need to get
hold of some extra money quickly. Such a situation may arise if
you want to do some home decorating; or it may be the case that
you want to finance your child’s college education; even still,
you may feel yourself overburdened with short-term debt, like your
credit cards, and you want to find a quick solution to this. At
times like these your financial advisor may suggest to you a
number of ways that you can finance these urgent money needs. One
suggestion might be that you take out a personal loan. Another may
be that you think of a second mortgage. However, as a homeowner,
it’s likely that your financial advisor will suggest cash out
refinancing as an option you may want to consider. So, exactly
what is “cash out refinancing”, and: is this a sensible way to
solve your short-term money needs?
Cash Out Refinancing
As its name suggests, “cash out refinancing” is a financing
arrangement where the amount of money you receive from new
financing exceeds the amount of your outstanding debt. So, for
example, say you have a house that is worth $150,000, but where
the outstanding mortgage is only $100,000. You need to borrow
$30,000 to pay for your child’s college education – but you don’t
want a personal loan because the financing costs are too high. In
this case you can consider (a) applying for a second mortgage for
the $30,000; or (b) doing a refinancing where you ask a lender to
lend you $130,000, in return for which you’ll give the lender a
mortgage over your house. Should the lender lend you the money,
you repay your existing $100,000 mortgage loan and pocket the
$30,000 to pay for your child’s college education. The second of
these two scenarios is a cash out refinancing scheme.
Why Would I Want To Consider Cash Out Refinancing?
Most of the realistic reasons why homeowners want to consider a
cash out refinancing have already been mentioned – like to pay for
a child’s college education, or to do some home decorating.
However, one reason why more and more homeowners are considering
cash out refinancing as a financing option, regardless of whether
or not they have an immediate cash need, has something to do with
a three-letter word - tax.
As a homeowner, with an outstanding mortgage loan, the interest
part of your home mortgage loan repayments are tax deductible
against your income. However, if you no longer have a home
mortgage loan: you no longer have any entitlement to claim for a
tax reduction of your income tax based on your home mortgage
repayments. For this reason, it becomes lucrative and financially
rewarding for those with money, as well as those without, to
consider a cash out refinancing option every now and then so that
they can maintain their income tax reduction entitlement.
Having said that: sadly the older you get the less likely it is
that you’ll be able to obtain a mortgage over any significant
period of time; say 10 to 20 years. So, if you are close to your
50s, in the prime of your career earnings, coming near to the end
of your mortgage repayments, this is exactly the time when you
could do with a tax reduction – but you’re just about to lose it!
In such an event, you should have considered a cash out
refinancing option in your mid-40s, before it was too late, taken
the holiday of a life-time, and then used the increased mortgage
on your house as a tax reduction on your future earnings!
In short then, homeowners may want to consider a cash out
refinancing option to:
* pay for their child’s education;
* consolidate their debt;
* do home improvements;
* use it as a tax avoidance scheme.
Are There Any Issues To Be Aware Of?
Yes; because of its very nature, applying for cash out refinancing
can take some time. For example, to do cash out refinancing you
need to have your house’s value appraised by an appraiser (of your
lender’s choosing) to determine that the house’s value is indeed
the same as what you say it is in your mortgage loan application
form. You also need to repay your existing lender, then arrange
the mortgage for your new lender. This will all take time.
Consequently, whilst cash out refinancing is a superb option
available to homeowners, it can rarely be used if your financial
needs, as a borrower, are immediate.
Also, when considering the cash out refinancing option, you do
need to give considerable thought to what fees and costs your
existing lender may charge you. It’s very common to find, in
mortgage loan agreements, terms that penalize borrowers if they
try and make a full repayment before the completion of their
existing mortgage loan – so check this out!
Any Other Consideration If I want to Do Cash Out Refinancing?
Yes; as mentioned cash out refinancing is an excellent option –
but you do need to consider some issues, as follows:
* Will my new lender penalize me if I do another cash out
refinancing in a few years time?
* What interest rate am I really paying? – check the Annual
Percentage Rate (APR);
* What fees will I need to pay? – like application fees; appraisal
* How soon will I need the money – and is a cash out refinancing
going to give me the money soon enough?
* Are there any restrictive covenants, in the new home mortgage
loan agreement, meaning I cannot do what I want with the house?
* Is there not a cheaper way of financing the borrowing?
* Are my monthly repayments going to be higher or lower than they
* Can I refinance against the whole appraisal value? – the answer
here is likely to be “no”. In most cases your refinancing lender
will only allow you the opportunity to refinance up to 80 percent
of the appraised value of the house – not 100 percent. In this
regard, cash out refinancing is very similar in nature to a
mortgage agreement – part equity / part debt borrowing.
And so, if you’re looking to repay your outstanding personal loan,
put your children through school, or even pay for that second home
near the beach, a cash out refinancing may be the best, and most
sensible, option available to you!
If you would like to learn more about this program, please
100% Cash out refinancing
is a refinance transaction in which the amount of money
received from the new loan exceeds the total of the money needed
to repay the existing first mortgage, closing costs, points, and
the amount required to satisfy any outstanding subordinate
mortgage liens. In other words, a refinance transaction in which
the borrower receives additional cash that can be used for any
100% Cash out refinancing
100% Cash Out Refinancing is like any normal refinancing
transaction but you get 100% cash out refinancing instead
of 70% or 80% of your home equity. Most people don't know about 100%
Cash out refinancing so they keep getting 70% or 80% of the
value of their house because
they think that they need to have a 15, 20 or 30% of equity in their home.
However, 100% cash out refinancing is ONLY suitable
for those borrowers who burred with other bills such as high
credit/debts cards, several car loans and many others monthly
Cash out and None cash out refinancing
No matter what your credit is as long as above 500, homeowners
find great rates for home refinancing, second mortgage,
debt consolidation or home improvement. With the lowest mortgage
rates in over 40 years, the refinance boom is still very
much ongoing. At New World Mortgage we recognize the refinance
process can be confusing due to the difficulty of mortgage
programs options offered in today's marketplace. We research
continuously for new loan products that best suited your need and
bring you the best refinance and purchase loan products
available. We are here to share with you all the refinancing
programs out there so that you can make the decision that's right
When interest rates are low, refinancing your mortgage could
reduce your monthly home payments and free up cash to pay
higher-interest debts or other expenses.
The truth is you can get cash out refinancing and
paying off all your high interest credit/debt cards and save $400
or $500 each month on your monthly bills! Mortgage lenders realize that it's hard for
homeowners to have many bills beside their mortgage payment. That's why they
offer up to 100% cash out financing option so that those
whom burred with bills can get relieved. Not every bank or lending company
offers 100% cash out refinancing but it's pretty easy to find those that do.
Here's how it works: When you apply for 100% cash out refinancing you are asking for
what lenders call a "piggyback" or 80/20 loan or sometimes 100% one loan.
It depends on your credit. On 80/20 loan which is a 100%
cash out refinancing loan
is amounts to receiving a first and a second mortgage at the same time.
The first mortgage covers 80% of the home's value while the second
mortgage covers the remaining 20%. When you add them up you've got 100% cash
To learn more about these programs and benefits Please