Mortgage Rate News

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There has been a lot of focus lately on the fact that the first time home buyer tax credit has been extended, and and expanded to include some who have not bought a home yet. However, in all of this interest over buying a home, it is also important to consider refinancing. There are a number of advantages associated with refinancing. Dale Siegel, a mortgage expert, offers some advantages of refinancing in her recent book, The New Rules for Mortgages:

1. Lower mortgage interest rate: If you can get an interest rate of a point lower, it can be worth your while to refinance. You’ll pay less in interest, and less overall.
2. Shorten your mortgage term: If you are interested in shortening the amount of time you have to pay a mortgage, you can refinance to a lower term, such as a 10, 15, or 20 year loan. Just be sure you can afford the higher payments.
3. Reduce monthly payment: You can actually reduce your mortgage payment by refinancing to a longer term. This way, you spread out your payment, and lower how much you owe each month. However, you will pay more overall.
4. Consolidate debt: In some cases you can use a cash-out refinance to consolidate debt and make it easier to pay down. Just make sure that you understand the implications, and that you change your debt habits so that you aren’t just getting in deeper.
5. Use the equity in your home: Refinancing can help you access your home equity for use on home improvement projects, or to pay other expenses.
6. Pay down principle: You can also use a refinance as a chance to pay down some of the principle on your home, reducing how much you pay in the long run in terms of interest, and increasing your home equity.

It is important to carefully consider the costs associated with refinancing, and make sure that the benefits outweigh the costs.

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Many seniors are lamenting the hit taken to their retirement accounts and other investments. As a result, they are looking for a little extra cash to help them ride out this recession while not depleting the principal in investment accounts. One of the ways to do this is through a reverse mortgage. And, with conditions starting to improve a bit, some seniors can get a little more in terms of a reverse mortgage. Golden Gateway Financial offers this information in a recent press release:

New legislation temporarily increased the reverse mortgage limit available to homeowners in 2009 to $625,500. This means that many seniors can now extract even more equity from their home as cash in a reverse mortgage. At the same time, the latest S&P/Case-Shiller Home Prices Indices showed that home prices are once again beginning to climb. Together, these two factors have provided seniors with a short window in which they can potentially earn more from their available equity than before and more than they might be eligible for next year.

However, it is important to be careful when getting a reverse mortgage. Interest charges can be very high, as can other fees. It is also important to realize that when the house is sold, or if you no longer live in it as a primary residence, the loan has to be paid back — it is a mortgage, after all. This means that the proceeds of the sale must be used pay off the loan, or some other payment schedule must be arranged.

At any rate, before deciding on a reverse mortgage, it is important to consult with a trusted and knowledgeable advisor who can help you determine the best course of action for you. It may be that a reverse mortgage is just the thing — or you may be better served with some other financial product or service.

Many people are looking to use debt consolidation as a way to better manage debt or to lower overall payment amounts. However, not just anyone can consolidate debt. There are requirements to be met.

What kind of debt do you have?

Interestingly, Chris Bibey points out on the Bankruptcy & Foreclosures blog, you can’t usually consolidate secured debt. Car loans and home mortgage loans cannot be wrapped up with other loans. You have to consider the type of debt you have before you can get approved fro debt consolidation. Credit card debt and other unsecured debt — such as payday loans or medical bills — can usually be consolidated. However, there are other considerations when it comes to qualifying for debt consolidation.

Can you get a debt consolidation loan?

Right now, it is somewhat difficult to get a debt consolidation loan. It is possible to qualify for a loan, but you will need to make sure everything is in order, especially if you plan to use a second mortgage loan in order to secure your debt consolidation loan. Here the biggest concerns any lender will have when arranging debt consolidation loans:

• Home equity: This is important if you plan to secure your debt consolidation with a second mortgage loan. You have to have sufficient equity to be able to cash out and cover your other debts. This is difficult right now, since home values have fallen.
• Credit score: Even with sufficient equity, or if you try to consolidate without using a second mortgage loan, you still need to have a good credit score. Most lenders want to see at least a 680 before helping you with these types of loans.
• Debt-to-income ratio: Your lender will want to know that you can handle the payments. Many lenders are going back to an old rule of thumb that states that no more than 30% to 36% of your monthly income is taken up in making debt payments.

Before you apply for a debt consolidation loan, make sure that you double check your situation. You can even talk with a financial professional to get a true idea of your options.