How to Get a Low Mortgage Rate Refinance
By : Steve Faber
If you're one of the millions of homeowners who used an ARM to finance their home, you need to know how to get a low mortgage rate refinance before your ARM resets. Adjustable Rate Mortgages (ARMs) were very popular because they allow a lower initial payment for the same amount a buyer spends on their home. What many buyers don't take into account is that they are called adjustable rate mortgages for a reason; their interest rate adjusts.
The interest rate always adjusts upwards. It's written into the terms of the mortgage for all to see. Buyers tend to ignore the fact that the clock is running, although with the massive publicity that adjustable rate mortgages have received recently, that's getting much harder to do. The other contributing factor is that many buyers bought using ARMs but were planning to refinance into a fixed rate mortgage before their ARM reset. Historically home values rose, so that the buyers could refinance their ARMs into fixed rate mortgages at fairly low interest rates and even pull out some of their home equity in the process.
Unfortunately buyers in many areas counted on the historical home value appreciation, and either waited too long or bought too late, because many areas of the country began experiencing real estate depreciation. The decline in home values left many buyers with ARMs unable to refinance into fixed rate mortgages because the value of their homes was no longer high enough to provide the lender enough collateral for the loan.
If, for example, a home was purchased 3 years ago using an ARM for $395,000, in some areas of the country it may be only worth $325,000 now. If the balance owed on the mortgage is still $392,000, a lender won't give enough of a loan against the property to refinance the ARM into a fixed rate mortgage. The borrower would have to write a check for the difference between the home's value and the outstanding balance on the existing mortgage. Writing such a large check is something few homeowners are able to do, so when their ARM's interest rate adjusts upwards, their payment grows and they're stuck with a much high monthly house payment. The high payment, combined with the rising price of fuel and food, can put many homeowners over the edge.
If you're stuck in this scenario, here's what can you do to get a low mortgage rate refinance and get out of your ARM before it resets, or resets again. The better your credit and the more equity or less underwater you are in your current mortgage, the better options you'll have to refinance your existing mortgage.
Here are ways to help yourself get a low mortgage rate refinance:
Be proactive.
Don't wait until your loan resets and your mortgage payment goes through the roof until you try to refinance. That's huge mistake that homeowners make for many reasons. If you wait until your house payment rises, your total monthly debt payments will rise and that could affect your credit score, and may make you miss or be late on other bills. Don't let that happen.
Do everything you can to increase your credit score before you apply for a refinance.
The difference in just a few points on your FICO score can make up to an entire percentage point difference in the mortgage interest rate you'll pay on your new mortgage. For example as this is written someone with a FICO credit score of 674 will pay an 8.159% mortgage interest rate, while someone with a FICO credit score of 675 will pay an interest rate of only 7.009%. It doesn't take much to go from a 674 to a 675, but you can see that the benefits are huge.
Take advantage of the Federal Mortgage Relief Initiative.
This government program was designed to help homeowners who need to refinance their mortgages at a lower interest rate. The Federal Reserve Bank of Boston and the Massachusetts Bankers Association (MBA) announced in June of 2008 that the Mortgage Relief initiative is growing beyond the initial 5 banks involved with the program. Now more than 50 banks throughout New England are participating in the mortgage program that could end up helping thousands of homeowners refinance their mortgages.
Get an FHA refinance through the federal FHASecure program.
This program allows homeowners to refinance their non FHA ARMs into a low rate FHA mortgage through hundreds of FHA approved lenders.To refinance with FHA Secure you have to be current on your mortgage or be in default because either your ARM reset or your option ARM recast and you could no longer afford the payments.
If you have a adjustable rate mortgage, don't be a statistic. There's no reason you have to endure higher mortgage payments. Help is available to you if you look for it. The key is to act early if you want to get a low rate mortgage refinance.
Discover how you can get out from under your ARM or high interest rate conventional mortgage. We're not mortgage brokers or lenders. We can just help you get the information you need to refinance your mortgage and save money every month. Go to the [http://www.opportunitiesaplenty.com/bad_credit_refinance.html]bad credit refinance guide right now, and start saving money too.
Article Source: http://EzineArticles.com/?expert=Steve_Faber
http://EzineArticles.com/?How-to-Get-a-Low-Mortgage-Rate-Refinance&id=1313072
By : Steve Faber
If you're one of the millions of homeowners who used an ARM to finance their home, you need to know how to get a low mortgage rate refinance before your ARM resets. Adjustable Rate Mortgages (ARMs) were very popular because they allow a lower initial payment for the same amount a buyer spends on their home. What many buyers don't take into account is that they are called adjustable rate mortgages for a reason; their interest rate adjusts.
The interest rate always adjusts upwards. It's written into the terms of the mortgage for all to see. Buyers tend to ignore the fact that the clock is running, although with the massive publicity that adjustable rate mortgages have received recently, that's getting much harder to do. The other contributing factor is that many buyers bought using ARMs but were planning to refinance into a fixed rate mortgage before their ARM reset. Historically home values rose, so that the buyers could refinance their ARMs into fixed rate mortgages at fairly low interest rates and even pull out some of their home equity in the process.
Unfortunately buyers in many areas counted on the historical home value appreciation, and either waited too long or bought too late, because many areas of the country began experiencing real estate depreciation. The decline in home values left many buyers with ARMs unable to refinance into fixed rate mortgages because the value of their homes was no longer high enough to provide the lender enough collateral for the loan.
If, for example, a home was purchased 3 years ago using an ARM for $395,000, in some areas of the country it may be only worth $325,000 now. If the balance owed on the mortgage is still $392,000, a lender won't give enough of a loan against the property to refinance the ARM into a fixed rate mortgage. The borrower would have to write a check for the difference between the home's value and the outstanding balance on the existing mortgage. Writing such a large check is something few homeowners are able to do, so when their ARM's interest rate adjusts upwards, their payment grows and they're stuck with a much high monthly house payment. The high payment, combined with the rising price of fuel and food, can put many homeowners over the edge.
If you're stuck in this scenario, here's what can you do to get a low mortgage rate refinance and get out of your ARM before it resets, or resets again. The better your credit and the more equity or less underwater you are in your current mortgage, the better options you'll have to refinance your existing mortgage.
Here are ways to help yourself get a low mortgage rate refinance:
Be proactive.
Don't wait until your loan resets and your mortgage payment goes through the roof until you try to refinance. That's huge mistake that homeowners make for many reasons. If you wait until your house payment rises, your total monthly debt payments will rise and that could affect your credit score, and may make you miss or be late on other bills. Don't let that happen.
Do everything you can to increase your credit score before you apply for a refinance.
The difference in just a few points on your FICO score can make up to an entire percentage point difference in the mortgage interest rate you'll pay on your new mortgage. For example as this is written someone with a FICO credit score of 674 will pay an 8.159% mortgage interest rate, while someone with a FICO credit score of 675 will pay an interest rate of only 7.009%. It doesn't take much to go from a 674 to a 675, but you can see that the benefits are huge.
Take advantage of the Federal Mortgage Relief Initiative.
This government program was designed to help homeowners who need to refinance their mortgages at a lower interest rate. The Federal Reserve Bank of Boston and the Massachusetts Bankers Association (MBA) announced in June of 2008 that the Mortgage Relief initiative is growing beyond the initial 5 banks involved with the program. Now more than 50 banks throughout New England are participating in the mortgage program that could end up helping thousands of homeowners refinance their mortgages.
Get an FHA refinance through the federal FHASecure program.
This program allows homeowners to refinance their non FHA ARMs into a low rate FHA mortgage through hundreds of FHA approved lenders.To refinance with FHA Secure you have to be current on your mortgage or be in default because either your ARM reset or your option ARM recast and you could no longer afford the payments.
If you have a adjustable rate mortgage, don't be a statistic. There's no reason you have to endure higher mortgage payments. Help is available to you if you look for it. The key is to act early if you want to get a low rate mortgage refinance.
Discover how you can get out from under your ARM or high interest rate conventional mortgage. We're not mortgage brokers or lenders. We can just help you get the information you need to refinance your mortgage and save money every month. Go to the [http://www.opportunitiesaplenty.com/bad_credit_refinance.html]bad credit refinance guide right now, and start saving money too.
Article Source: http://EzineArticles.com/?expert=Steve_Faber
http://EzineArticles.com/?How-to-Get-a-Low-Mortgage-Rate-Refinance&id=1313072
