Refinancing is a very valuable tool. So that there is no possibility of confusion, we have answered frequently asked key questions for you. Now you can focus on using refinance to leverage your investment and business.
Q. Is refinancing beneficial in all situations?
Whether to refinance or not depends on your individual situation and financial outlook. It is not the way out always. You want lower interest rates and want to decrease your monthly payment and you go to shop for refinancing options, you will find out that there are certain questions to be answered to refinance. Whether having lower payments make up for the closing costs, expenses associated with refinancing? What time you expect to be in your home? How much equity is there in your home? Can you pay points to get a lower rate?
Q. I have no income verification and a history of non-payment of certain bills of my home, which I mortgaged few years back. Can I get a good refinance quote?
A good quote largely depends on your credit score. But you can refinance even if you have a bad credit history but the rates are high compared to other people. You can refinance now, use money saved through refinancing to clear your debts and this in turn will repair your credit report to some extent and you can again go refinancing, which will now be offered at comparatively lower rates.
Q. Which refinance option is better an adjustable rate or a fixed rate?
The initial low fixed rate of ARM never bothers you but after that if the rates increases, you are worried. Then if you do not plan to stay long in your home say not more than 3 to 4 years then refinancing does not make any sense. But if you have a long-term stay in your home and if the rate on your ARM is about to rise to a higher value, then it may make sense to get a long term fixed rate mortgage.
Q. If I go for a cash-out refinance, will I have to pay more interest?
No, you do not have to pay more as the interest rate you pay on a cash out refinance loan will generally be the same as what you pay on a non cash out mortgage where you do not take cash out. However there is a fee associated with cash out refinance loan depending on the amount you want in cash, the particular loan you choose and the loan to value ratio. Loan to value is the ratio of how much you borrow compared to the value of the home you're borrowing against. It is calculated as the home value divided by the amount borrowed. The equity in your home can be used to pay off other high-interest credit cards bills, personal loans and any other debts.
Q. Its tough to decide on one interest rate. When should I finalize a rate?
Traditionally, interest rates rise sharply and come down slowly, yet they are unpredictable. Therefore if you want to buy a home or refinance your mortgage, do it now through the prevailing rates, a refinance option can be thought of later if rates drop again. A gradual drop in rates may not be sharp enough to bang your monthly mortgage payment, but again that depends on your personal situation.
Q. How long does it take to refinance?
Generally, refinancing normally takes between two and four weeks, depending on a few things:
1)Whether you have a recent home appraisal?
2)Are you in an area that appraisers have an easy access?
3)Are there homes like yours in your neighborhood?
Basically, getting the home appraisal is a slow process and it further slows down refinancing process. Added to it during refinancing highs, appraisers are tough to find out. Paper work, credit reports, old mortgage paper, if any, should always be ready to speed up the refinancing process.
Article Source: http://www.realestateinvestmentarticles.net
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