mortgage refinance

Refinancing Your Mortgage – Less Means More

If you are thinking about refinancing your mortgage, you may want to consider refinancing into a shorter-term loan. According to a recent report from Freddie Mac, one of the largest mortgage financing companies, almost a third of borrowers refinancing 30-year fixed loans chose new loans with 15-20 year terms (April – June 2010). This is the highest level of 15-20 year loans since 2004.

The reason for the switch? Lower interest rates that have been dropping week by week, making a shorter-term loan more attractive than higher interest, longer term loans. For example, the average rates on a fixed 15-year mortgage are about 3.92%. The average interest rate on a fixed 30-year loan: 4.44%.

In layman’s terms, this means that by switching to a lesser term mortgage (with lower interest rate), borrowers can save more money in the long run, instead of paying it in interest. People looking to take advantage of this “perk”, however, must be able to financially support a larger payment, so be prepared to prove this to your lender.

Information for this article provided courtesy of USA Today and Florida Realtor, 2010.

mortgage refinance

FHA Announces Refinance Opportunity

For those of you that have mortgages worth more than what your property worth is, this news is for you! The Dept. of Housing and Urban Development (better known as HUD) recently provided more details on a refinancing opportunity that was announced earlier this year. The refinance program is focused on helping out homeowners with underwater mortgages, who are still current on their payments.

The details of the program state that starting September, 7th, 2010, certain underwater borrowers (from non-FHA loans) may be able to obtain a new, FHA-insured mortgage. In order for this to qualify, the homeowner must be current on their mortgage payments, and their lender must approve a write off of at least 10% of the homeowner’s unpaid principle on the first mortgage.

Here are some other qualifications that a homeowner must meet for eligibility:

*Homeowner’s existing loan cannot be FHA insured 

*The refinanced loan must have a loan-to-value ratio of no more than 97.75%

*Homeowner must qualify for the new loan under standard FHA guidelines, and have a credit score of 500 or higher

*Property must be the homeowner’s primary residence 

*New debt must bring the borrower’s combined loan-to-value ration to no greater than 115%

If you are interested in participating in the program, contact your lender to find out if you qualify – remember, your lender must agree to write down a percentage of your principle in order to be eligible.

Information for this article provided courtesy of Florida Realtors, 2010.