Home Mortgage Refinance: Choosing The Best Deal

Choosing The Best To Refinance Mortgage

There are plenty of home mortgage refinance lenders doing the rounds. Almost everyone is offering you the skies, but this might be confusing for you. How do you choose the most genuine home mortgage refinance option? Here’s a quick guide on choosing the best home mortgage refinance deal!

Questions to be asked

As a borrower, there are chances you maybe taken advantage of by unscrupulous lenders. To avoid this you need to ask a few basic questions first and even do a comparison check:

What is the type of mortgage being offered? Find out if the interest rate is fixed, adjustable, FHA or conventional.

What is the minimum deposit or down payment needed on the home mortgage refinance? Knowing this will help you plan finances better.

What is the duration or length of the loan? This will affect the monthly payment on the mortgage.

What is the Annual Percentage Rate? This is quite a competitive differentiator these days and can help you select the best lending home mortgage refinance company.

What will be the monthly payment? This will be important in terms of planning your budget and finances etc.

What are the various applicable fees? There are several kinds of fees being charged by lenders these days and each lender has their own name for it. Some examples of home mortgage refinance fees include:

application fee also known as loan processing fee

Lender fee or funding fee

Appraisal fee

Attorney fee

Document preparation and recording fee

Credit report fee

Origination or underwriting fee etc.

What will be the closing fees? There maybe chances that you wish to close or settle your home mortgage refinance. In such cases you need to know applicable fees at the time, so it doesn’t shock you then. Some of the closure fees include:

State and local taxes

Flood determination

Surveys and home inspection fees

Prepaid amounts towards interest, hazard insurance, taxes, etc.

Prepaid private mortgage insurance or PMI

Is there any prepayment penalty involved?

Is the agreement for lock-in provided in writing by the home mortgage refinance lender?

Interest rates applicable

It also helps to get a free, no obligation quote from your home mortgage refinance lender. Also check with them if the rate quoted is the lowest for that day or the whole week. Check if the interest rate is fixed or adjustable in nature. In case it is the adjustable variety, find out from the lender how the payments will differ. Also be sure to check on the points. These are fees paid to the lender and are strongly linked to the current interest rate. The more points paid, lower the interest.

Negotiate

Once you have zeroed in on a specific home mortgage refinance lenderPsychology Articles, you need to try and negotiate the terms of the contract. Ask your home mortgage refinance lender to write down all associated costs and fees and then start negotiating on some of the fees.

Home Affordable Refinance Program

How To Start a Program Of Mortgage Refinancing

HARP 2.0 is the latest version of the home affordable refinance program. This program was created primarily to assist homeowners to refinance and take advantage of lower interest rates. It is most often for those who lost equity in their homes, but continued to make all their mortgage payments on time. To qualify for a HARP loan you must have no more than 1 30 day late payment in the last 12 months and the late payment cannot have been within the last 6 months. Also, you can only do one HARP refinance, so if you have already refinanced through the program before, you cannot do it again.The home affordable refinance program continues to change and hopefully when the next revision comes out (HARP 3) there will be opportunities to refinance for even more homeowners.

As of today's date, which is 6/7/2014, there are lenders who will lend up to 175% of your market value on a first mortgage. Any 2nd mortgage financing must be resubordinated, and with HARP 2 there is no upper limit on the combined loan to value. (CLTV-your combined loans to value) The second mortgage holder must agree to the refinancing and usually this is not a problem since by lowering your rate and monthly payment on your first mortgage, you are making their loan more secure. For a secondary home, it is possible to do a HARP loan however the loan to value is restricted to 125% LTV, and it is restricted to 105% on an investment property.

There are two programs for HARP, and both of them require that your loan is backed by either Fannie Mae or Freddie Mac prior to 6/1/2009. While your loan payments are usually sent to a loan servicer, it is still possible that your loan is backed by one of the two agencies. The way to find out is to search both agency databases. 

The majority of loans originated prior to 6-1-09 wound up at Fannie Mae, so it's usually best to check this database first. Both agencies have lookup tools where you can input your property address information and find out if a match is found. These two lookup tools may be found on the Pacific West Capital website on the HARP loans page.

The Fannie Mae program has more lenient guidelines as far as the LTV is concerned. The Freddie Mac Open Access program is usually capped at a maximum of 125% LTV with no upper limit for seconday financing. The interest rates on both programs are comparable to a regular refinance program with a conventional lender. In case you do have secondary financing on your home, under current HARP guidelines, it is not possible to combine your 2 loans together. This may change one day but for now this is how it works. Your existing 2nd mortgage must be resubordinated to the new first mortgage.

Another advantage is the flexibility with mortgage insurance. If you qualify for a HARP loan and your current loan does not have mortgage insurance on it, (MI) you will not be required to have any MI on the new loan regardless of your LTV. Typically any loan over 80% of market value will require MI. If you put down 20% or more when you bought your home, and your home value decreased putting your LTV above 80% Computer Technology Articles, you will not be required to have MI on the new loan since your current loan does not have MI on it.