Whenever the rates are low, homeowners often ask this question: “Should I refinance?”
While low rates are often tempting and may be a good indication that mortgage refinancing is a good idea, that doesn’t mean it can apply to all. Strange as it may seem, a lot of homeowners will be better off sticking to their current loan and ignore the current low rates.
That said, there are certain situations when refinancing doesn’t make any sense. Let us take a look at those scenarios:
• When you don’t plan to live in your home for long
This is really something you should heavily consider. A lot of homeowners believe that refinancing is a good choice whenever the rates are low. The fact is, there are certain fees involved in mortgage refinancing that could only be recouped by staying in your property for a certain period of time (called the ‘break-even period”) – which may take several years. Hence, if you think that you will be selling your house a few years from now, mortgage refinancing may not be for you.
• When the current market value of your property is low
Obviously, it makes no sense to refinance your mortgage if the amount of new loan is not sufficient enough to pay for the existing one. In the same manner, if the appraised value of your property is low, your monthly payment for the new loan may be higher than your current loan.
• When you are paying for your loan for several years
Say you are on the tenth or twentieth of payment on a 30-year loan. Refinancing it to another 30 years will only increase the overall cost of your loan.
• When you have a few years left on your loan
Even if you’re in dire need of cash, it not a good idea to refinance your home with only a few years left in it. Extending your payment terms will push you to pay more. For example, you have 5 years left on your mortgage and you apply of refinancing which will extend it to 10 more years (15 years loan), the total cost of the new loan will be more than what you should pay for the 5 remaining years even if the monthly payment are significantly lower.
• When you don’t know how to budget your cash well
It is a common strategy to use refinancing to pay for credit card bills. While this may be a wise choice for some, others who cannot manage their finances well may find it rewarding at first but very painful in the end. Not only will you place your house on the line, you are also placing you’re your whole financial standing at risk. (Take note: refinancing doesn’t erase your credit, you are just restructuring it.)
• When you have already used up all the equity of your home
One factor that will greatly influence the rates of your new loan is the amount of equity you have in your property. If you have already borrowed ninety percent of you more of your equity, chances are, you are just adding on your financial burden and not really benefiting from the advantages of refinancing.
• When you have a bad credit score
Aside from equity, your credit score is a significant measure whether you get a good rate or not. So if you have missed payments and pilled up credit card bills, you may not be qualified to a better rate.
Watch the video related to refinancing
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Help answer the question about refinancing
Refinancing >> Car Payments >> Could it cause my interest rate to go UP?I've been paying on my car for over 2 yrs now. I know that it is possible to "refinance". My credit score is probably in slightly sadder shape than it was at the time when I purchased the vehicle. Is it possibe that refinancing could blow up in my face, resulting in a higher interest rate?
It could take serveral weeks before you can close the loan. Do you have an agent working for you? If so have that person press for a closing date.
When you/your agent ask the financial institution what do they say?
I would go to a reputable, bricks and mortar (physical location) of a known bank to refi. Part of the mortgage debacle was using anyone and everyone (including the big banks, though) and it is critical to be sure you know who you are dealing with and what you are dealing with! Get a referral and go with someone with a good track record. Also, start with the bank you deal with. They want to keep your business and may not charge closing costs like another lender would. The credit score will determine the "good rate" that sounds low but still depends on credit score.
I'm not sure if it's different in community property states, but generally speaking, if there is only one name on the mortgage, only that person's credit will be affected. The deed just refers to who has title to the home.
Options would be to rent it (which he's trying to do) or sell it before it goes into foreclosure. But if he sells the property, the wife will get some of the proceeds because she's on the deed. He should try to get her to sign off on the deed so it is under his name only.
Actually, your brother has no say in it. The only one who can release you from the mortgage is the lender. They have you both on there, and it is part of their security of the property that if the loan isn't paid they can come after all of you, especially since you have a job with a steady income.
So talk to the lender, but really, you have almost no chance to do this
Sorry
What ever you do DONT! do an ARM. There have been some bad press about them. your situation does not sound bad. I know some people who would love to have your current rate. Do you really need to refi at this time?
Keep it simple – and cheap. Assume the first mortgage. Ask your friend to allow you to continue to carry the second mortgage. As it is a second, and smaller, it will have less of an impact on your buddies Income to Debt ratio. If he is cool with it, then just get a Limited and Durable power of attorney from your friend, and that way you can continue to service the mortgage, and you can refinance or sell at any time you want in the future, and won't need his signature.
Power of attorney is to allow you to continue to service the mortgage – i.e. make payments, talk to the financial reps, make changes – as well as being able to sell or refinance. When a house is being sold or refinanced, all parties must agree to the transaction and be present during the transaction – UNLESS, there is a POA in hand. The holder of the POA can sign for and authorize the transaction.
until you are no longer on the mortgage you will always be ultimately liable in case he defaults
relinquishing the right to the house did not absolve you of the loan obligation and until he refinances under his name only chances are slim and slimmer for your new loan