San Diego Home Loan

Five Reasons to Refinance - Five Reasons to Refinance Your Mortgage

There is an old adage that says if you can improve your interest rate by at least two percentage points, then it is a good time to refinance. While that may work as a general rule of thumb, the truth is there are other reasons to refinance:

1. Lower your interest rate
Securing a lower interest rate is one of the top reasons for refinancing. This can make a big difference in your monthly out-of-pocket costs for housing and save money on financing fees.

2. Build equity faster
If you are in a position to make higher monthly payments due to an increase in salary or other good fortune, you may want to switch from a 30-year loan program into a 15 or 20-year loan structure. This enables you to build equity faster and save a tremendous amount of money on financing fees.

3. Change your loan program
Many homeowners who start with Adjustable Rate Mortgages desire to move to the stability of a Fixed Rate mortgage later on down the road. As interest rates fluctuate, making original deals less attractive, people will change their loan programs in order to capitalize on the best rates available.

We can provide you with loan comparison charts to find out what you can save with various loan programs.

4. Credit score has improved
If your credit score has improved as a result of making your mortgage payments on time and in full, you may be in a position to take advantage of your improved credit standing.

We can review your current credit score, the terms of your existing mortgage, and review options for other loan programs that could not only reduce your monthly payment, but also save on interest fees paid over the life of the loan.

5. Use the equity you have established
A cash-out refinance allows you to tap into the equity you have built up in your home. You may want to pay off revolving credit card accounts, send a child to college, or use the money for home improvements or personal expenses.

Regardless of your reasons for wanting to refinance, my team and I are interested in helping you make a decision that works best for you.

We will begin by reviewing the terms of your existing mortgage program. It will be important for us to know the purpose of the refinance and how long you plan to stay in the home. This helps us to determine whether or not it is beneficial for you to pay points up front to secure a lower interest rate on your new financing.

Throughout the process, we will present you with spreadsheets outlining various loan programs, and continue to monitor rates in order to inform you of the best time to refinance.

You may consider refinancing if you have a variable rate second mortgage which you would like to roll together with your first mortgage, for one lower monthly payment which is fixed.

Traditionally in days past, the primary reason to refinance was to lower the interest rate. Nowadays, with the huge variety of different loan programs that each offer some specific financial advantage to a homeowner depending on his particular situation, lowering the rate is no longer the primary reason for a homeowner to refinance.

Mortgage Refinance - A mortgage refinance is done by applying and qualifying for a new mortgage loan and then using the proceeds from the new home loan to pay off the old home mortgage loan. You can refinance for many reasons: to take cash out of the equity in your home, to lower your interest rate, to lower your mortgage payment, to simply switch mortgage companies because you are not pleased with your current mortgage company, to consolidate debt, to pay off high rate credit cards, to lower the term of your mortgage, to increase the term of your mortgage, to combine a first and a second mortgage, to switch from a fixed rate to an adjustable rate, or to switch from an adjustable rate to a fixed rate, and for many, many other reasons. Consult with your mortgage professional or mortgage broker to find out what your best options are.

When refinancing in order to payoff credit card debt, keep in mind that credit cards are unsecured debts.
When you refinance, you are transfering unsecure debt into debt secured by your home. Make sure you are financially savvy enough not to continue the patterns that resulted in the credit card debt or your could be putting your home at risk.

One of the most popular reasons for doing a mortgage refinance would be to obtain funds for improvements on the home. Since the money spendt on such improvements often directly increases the value of the home, it is a very sensible way to obtain such funds. Some of the most popular improvements include new kitchens and bathrooms, new windows, landscaping and swimming pools.

One Time Close - A One Time Close or an OTC is a construction loan that converts into a permanent loan after the construction is completed.

These loans normally allow the option for the borrower to "float down" the rate within 30 days of completion of construction if the rates have dropped.

Another name for a loan such as this is a construction to permanent loan. A loan like this is advantageous during periods of rising or unstable interest rates. The borrower is able to secure permanent financing before the construction is completed rather than possibly exposing himself to higher rates after completion.

Seller carry back - A home seller may be able to loan a portion of the selling price to the buyer and secure it with a mortgage or trust deed against the home. The seller would not get his portion of the sale imediatly in cash but would get income in the form of the payments made by the buyer.

This is a popular form of financing, when borrowers cannot otherwise qualify for a traditional piggy back loan, or are unable to come up with an otherwise required down payment.

The lender will want to see the terms and agreement of the seller held second. The lender will figure in the payments of the seller held second when qualifying the borrower for the first mortgage.

Disputing a Debt - Disputing a Debt requires that you write the collection agency within 30 days of receiving the first notice. You should inform them that you are disputing the debt in question and be sure to explain why you are doing so. You must be sure your letter is dated and properly addressed. Be sure to include the account number that is displayed on the notice. It would also be wise to keep a copy of all correspondence between you and the collection agency for your records.

Using certified mail is often the best way to correspond in these matters.

You may also dispute any credit report errors online at the websites of the 3 reporting agencies. You will need a copy of your credit report to dispute any items.