Aug
23
Rob K. Blake asked:
Many consumers consider consolidating debts when doing a refinance. This is something that could be beneficial to many people, but there are also some disadvantages to this action that need to be considered as well. Taking these into consideration prior to refinancing will help you in deciding if this is a proper alternative for your situation.
Pros of Consolidating Debts With A Refinance
-Less creditors
-Lower monthly payments
-Lower interest rate
-Interest may be tax deductible
One of the major advantages of consolidating debts when you refinance a mortgage is the fact that you won’t have as many creditors to pay. Instead of having to pay several creditors each month, you will now only have to pay one creditor. This makes things much more convenient when mailing out your bills or visiting an office to make your payment, as you now only have one place to mail a check to or visit.
Since the term of a mortgage is longer than a credit card or consumer loan, the monthly payment will be much lower. Also, when your bills are combined the monthly payment will be less than the total monthly payments of all the bills added together.
Another factor in why the payment will be lower is due to the interest rate. Interest rates on a mortgage will be much lower than a credit card interest rate or the interest rate you will be paying on a consumer loan.
The interest you pay on a mortgage can also help when it comes to tax time. Interest on mortgages can provide a deduction on your taxes, while interest paid on any other debts have no bearing on your taxes.
Cons of Consolidating Debt With a Refinance
-Harder approval due to larger loan amount
-The possibility of reopening credit cards
-Debt now secured by home
The more you borrow, the harder it is for a refinance to be approved. Lenders typically use what is called an equity ratio to determine things such as your interest rate and how much you can borrow. For example, if you are borrowing $80,000 on a home that is worth $100,000, you will be using up 80 percent of the value of your home. If you are only borrowing $50,000, resulting in only a 50 percent equity ratio, the loan will be approved much easier, and you may even get a lower interest rate.
One thing that seems to cause problems for many people after consolidating their credit cards is the temptation to use them again after they have been consolidated. This leads to problems because now not only do you have to make payments on the money you used to consolidate these bills through your refinance, but you will also have to start making payments to these credit card companies again.
Another thing to keep in mind when consolidating with a refinance is that the bills you are paying off will now be part of what you owe on your home. This means that if you default on your payments, the bank can foreclose on your property.
Knowing the cons as well as the pros of consolidating with a refinance can help in making the correct decision as to if this is the correct choice for you. While many people may not be aware that consolidating debts with a refinance has some negative aspects, they are something that should be thought about before making a decision.
Norma
Many consumers consider consolidating debts when doing a refinance. This is something that could be beneficial to many people, but there are also some disadvantages to this action that need to be considered as well. Taking these into consideration prior to refinancing will help you in deciding if this is a proper alternative for your situation.
Pros of Consolidating Debts With A Refinance
-Less creditors
-Lower monthly payments
-Lower interest rate
-Interest may be tax deductible
One of the major advantages of consolidating debts when you refinance a mortgage is the fact that you won’t have as many creditors to pay. Instead of having to pay several creditors each month, you will now only have to pay one creditor. This makes things much more convenient when mailing out your bills or visiting an office to make your payment, as you now only have one place to mail a check to or visit.
Since the term of a mortgage is longer than a credit card or consumer loan, the monthly payment will be much lower. Also, when your bills are combined the monthly payment will be less than the total monthly payments of all the bills added together.
Another factor in why the payment will be lower is due to the interest rate. Interest rates on a mortgage will be much lower than a credit card interest rate or the interest rate you will be paying on a consumer loan.
The interest you pay on a mortgage can also help when it comes to tax time. Interest on mortgages can provide a deduction on your taxes, while interest paid on any other debts have no bearing on your taxes.
Cons of Consolidating Debt With a Refinance
-Harder approval due to larger loan amount
-The possibility of reopening credit cards
-Debt now secured by home
The more you borrow, the harder it is for a refinance to be approved. Lenders typically use what is called an equity ratio to determine things such as your interest rate and how much you can borrow. For example, if you are borrowing $80,000 on a home that is worth $100,000, you will be using up 80 percent of the value of your home. If you are only borrowing $50,000, resulting in only a 50 percent equity ratio, the loan will be approved much easier, and you may even get a lower interest rate.
One thing that seems to cause problems for many people after consolidating their credit cards is the temptation to use them again after they have been consolidated. This leads to problems because now not only do you have to make payments on the money you used to consolidate these bills through your refinance, but you will also have to start making payments to these credit card companies again.
Another thing to keep in mind when consolidating with a refinance is that the bills you are paying off will now be part of what you owe on your home. This means that if you default on your payments, the bank can foreclose on your property.
Knowing the cons as well as the pros of consolidating with a refinance can help in making the correct decision as to if this is the correct choice for you. While many people may not be aware that consolidating debts with a refinance has some negative aspects, they are something that should be thought about before making a decision.
Norma
May
4
Carrie Reeder asked:
If you have a home loan, perhaps you have considered refinancing your
loan. Homeowners may refinance their home loan to cash-out and pay
outstanding credit card balances and consumer loans. In addition,
refinancing a home loan is ideal if you have two mortgages. Combining a first and
second mortgage into a new loan is a great way to consolidate debt.
Why Get a Second Home Mortgage?
Many homeowners obtain a second mortgage. The reasons vary. Some may
get a second mortgage to eliminate credit card debt, whereas others may
borrow money to complete home improvements. If you get a second
mortgage, the funds are secured by your home’s equity. In addition, a second
mortgage is a separate loan amount. Because these loan amounts are
smaller, the monthly payments are lower than first mortgages. However, the
interest rates on second mortgages tend to be higher.
Nevertheless, the interest rates on second mortgages are considerably
less than credit cards. Plus, the loan terms are fixed, which allows you
to pay the balance within a few years. If you are hoping to eliminate
debt, and simplify your finances, consolidating your first and second
mortgage is the perfect solution.
Mortgage Loan Refinancing
Refinancing your first and second mortgage into a single loan is ideal
if you have a higher interest rate on both loans. For example,
homeowners with less than perfect credit may receive an initial home loan with
a higher percentage. Moreover, their second mortgage may also carry a
higher interest rate. If you are in this situation, try and improve your
credit rating, and then apply for a new mortgage. This way, you
increase your chances of being able to consolidate your first and second
mortgage at a lower fixed rate.
In some instances, homeowners obtain a first and second mortgage with
an adjustable rate. This is beneficial in the beginning because the
rates are low. However, as market trends shift, the interest rate on both
loans may increase, which will increase the monthly payments. This is
dangerous. If a homeowner is unable to pay either mortgage, the lender
may foreclose. Thus, it is wise to refinance both mortgages into a single
loan before interest rates increase.
Arthur
If you have a home loan, perhaps you have considered refinancing your
loan. Homeowners may refinance their home loan to cash-out and pay
outstanding credit card balances and consumer loans. In addition,
refinancing a home loan is ideal if you have two mortgages. Combining a first and
second mortgage into a new loan is a great way to consolidate debt.
Why Get a Second Home Mortgage?
Many homeowners obtain a second mortgage. The reasons vary. Some may
get a second mortgage to eliminate credit card debt, whereas others may
borrow money to complete home improvements. If you get a second
mortgage, the funds are secured by your home’s equity. In addition, a second
mortgage is a separate loan amount. Because these loan amounts are
smaller, the monthly payments are lower than first mortgages. However, the
interest rates on second mortgages tend to be higher.
Nevertheless, the interest rates on second mortgages are considerably
less than credit cards. Plus, the loan terms are fixed, which allows you
to pay the balance within a few years. If you are hoping to eliminate
debt, and simplify your finances, consolidating your first and second
mortgage is the perfect solution.
Mortgage Loan Refinancing
Refinancing your first and second mortgage into a single loan is ideal
if you have a higher interest rate on both loans. For example,
homeowners with less than perfect credit may receive an initial home loan with
a higher percentage. Moreover, their second mortgage may also carry a
higher interest rate. If you are in this situation, try and improve your
credit rating, and then apply for a new mortgage. This way, you
increase your chances of being able to consolidate your first and second
mortgage at a lower fixed rate.
In some instances, homeowners obtain a first and second mortgage with
an adjustable rate. This is beneficial in the beginning because the
rates are low. However, as market trends shift, the interest rate on both
loans may increase, which will increase the monthly payments. This is
dangerous. If a homeowner is unable to pay either mortgage, the lender
may foreclose. Thus, it is wise to refinance both mortgages into a single
loan before interest rates increase.
Arthur
Apr
23
Buying a Home After a Foreclosure - 3 Tips to Getting Approved
Filed Under Real Estate | Leave a Comment
Carrie Reeder asked:
Foreclosures create a major blemish on your credit report. You may pay a higher percentage rate for auto loans, consumer loans, and credit cards. Moreover, some lenders are unenthusiastic to grant you a new mortgage loan. Despite setbacks, obtaining a mortgage loan after a foreclosure is possible. Here are a few guidelines to help improve your odds of obtaining a mortgage after a foreclosure.
What is a Foreclosure?
In a nutshell, foreclosures occur when banks or mortgage lenders repossess a property. Mortgage loans are protected by the home. If you refuse to submit payments for the home, the lending institution has the right to take control of your home. For the most part, mortgage lenders will not foreclose immediately. Foreclosures generally occur after your mortgage loan is three months passed due.
Re-establish Good Credit History
While a foreclosure is disheartening, it is imperative that you begin rebuilding your credit. Because a foreclosure will remain on your credit report for at least seven years, creditors who review your report are knowledgeable of past or recent foreclosures. In this case, creditors may charge higher interest rates.
On the other hand, if you opened new credit accounts, and maintained a good payment history with current creditors, this will show on your credit report. Moreover, your credit score will likely increase, which will boosts mortgage lenders faith in your dedication to repay the loan. Establishing a good credit history is effortless. Simply pay bills on time, and avoid missed payments. Lenders suggest that you wait at least two years before applying for a new home loan.
Purchase New Home with a Down Payment
Although there are several home loan programs that do not require a down payment, if you have a past or recent foreclosure, a down payment may help you obtain a reasonable rate. The typical down payment for a home is about 5% - 10%. Because a foreclosure justifies an interest rate increase, a larger down payment will give you the opportunity to negotiate a lower rate, and it will lower your monthly payment.
Get Quotes from Several Lenders
When applying for a home loan after a foreclosure, you should shop around and acquire quotes from several lenders. Contacting a mortgage loan brokers is beneficial. Brokers have dealings with a range of lenders, including sub prime lenders. Sub prime lenders are ready to grant mortgages to individuals with bankruptcies, foreclosures, and bad credit. Once you submit an application, you will receive numerous offers from lenders looking for your business.
Colleen
Foreclosures create a major blemish on your credit report. You may pay a higher percentage rate for auto loans, consumer loans, and credit cards. Moreover, some lenders are unenthusiastic to grant you a new mortgage loan. Despite setbacks, obtaining a mortgage loan after a foreclosure is possible. Here are a few guidelines to help improve your odds of obtaining a mortgage after a foreclosure.
What is a Foreclosure?
In a nutshell, foreclosures occur when banks or mortgage lenders repossess a property. Mortgage loans are protected by the home. If you refuse to submit payments for the home, the lending institution has the right to take control of your home. For the most part, mortgage lenders will not foreclose immediately. Foreclosures generally occur after your mortgage loan is three months passed due.
Re-establish Good Credit History
While a foreclosure is disheartening, it is imperative that you begin rebuilding your credit. Because a foreclosure will remain on your credit report for at least seven years, creditors who review your report are knowledgeable of past or recent foreclosures. In this case, creditors may charge higher interest rates.
On the other hand, if you opened new credit accounts, and maintained a good payment history with current creditors, this will show on your credit report. Moreover, your credit score will likely increase, which will boosts mortgage lenders faith in your dedication to repay the loan. Establishing a good credit history is effortless. Simply pay bills on time, and avoid missed payments. Lenders suggest that you wait at least two years before applying for a new home loan.
Purchase New Home with a Down Payment
Although there are several home loan programs that do not require a down payment, if you have a past or recent foreclosure, a down payment may help you obtain a reasonable rate. The typical down payment for a home is about 5% - 10%. Because a foreclosure justifies an interest rate increase, a larger down payment will give you the opportunity to negotiate a lower rate, and it will lower your monthly payment.
Get Quotes from Several Lenders
When applying for a home loan after a foreclosure, you should shop around and acquire quotes from several lenders. Contacting a mortgage loan brokers is beneficial. Brokers have dealings with a range of lenders, including sub prime lenders. Sub prime lenders are ready to grant mortgages to individuals with bankruptcies, foreclosures, and bad credit. Once you submit an application, you will receive numerous offers from lenders looking for your business.
Colleen