Tags: home | refinancing | mortgage | rates | refinancing home mortgage | home refinancing loan | refinancing home equity

Home Refinancing: What you Need to Know

Thursday, 13 Jan 2011 02:57 PM

In today's tough economy many people are considering refinancing their home mortgages. Low interest rates are a big plus. However, home values have fallen and lenders are doubtful.
Here are five things you need to know if you want to refinance your home.
1. Refinancing Equity: Equity is nothing but the value of your home without any loans on it. With the down payment already wiped out due to falling home value, you may face the bitter prospect of being burdened with more mortgage debt than your house is worth. However, the Home Affordable Refinance Program (HARP) helps those with little or no equity.
2. Credit Scores: Your credit score determines if you are going to get a good loan. Generally, scores of 700 or above will land you good deals. Also, consider the fact that while applying for a mortgage loan, the up-front fee of a few hundred dollars is non-refundable. Unless your score is good enough for the qualification, don’t apply.
3. Debt Ratios: Lenders estimate whether you can manage the new refinancing based on your debt ratio. It’s not the payments you made in the past. If you qualify for refinancing, your mortgage payment has to be less than 30% of your gross monthly income and your total debt payments should be less than 40% of your gross income. Total debt payments include credit card, car, and student loans, while the gross income is what you earn before any deduction like income tax.
4. Planning: Against the present 4.6% rate for 30-year fixed mortgages, you can get a cheaper loan if you opt for a hybrid one like an Adjustable Rate Mortgage. This offers a fixed rate for five years. Significant benefits will come your way only if you pay before the fixed period.
5. Annual Percentage Rate: APR determines both the fees and the interest rates. Lenders will charge high fees for lower monthly mortgage payments. 
Other considerations include the length of the repayment and rules and regulations. You also need to calculate whether a lower payment means lesser cost to you in the end.

© Newsmax. All rights reserved.

PLEASE NOTE: All information presented on Newsmax.com is for informational purposes only. It is not specific medical advice for any individual. All answers to reader questions are provided for informational purposes only. All information presented on our websites should not be construed as medical consultation or instruction. You should take no action solely on the basis of this publication’s contents. Readers are advised to consult a health professional about any issue regarding their health and well-being. While the information found on our websites is believed to be sensible and accurate based on the author’s best judgment, readers who fail to seek counsel from appropriate health professionals assume risk of any potential ill effects. The opinions expressed in Newsmaxhealth.com and Newsmax.com do not necessarily reflect those of Newsmax Media. Please note that this advice is generic and not specific to any individual. You should consult with your doctor before undertaking any medical or nutritional course of action.

Keeping you up to speed on Lifestyle, health, and money-saving tips
Get me on Fast Features
Keeping you up to speed on Lifestyle, health, and money-saving tips
Zip Code:
Privacy: We never share your email.
Follow Newsmax
Top Stories

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved