Home Refinancing Information

Homeowners can find home refinancing information online or through a local mortgage lender or banker. Actually, shopping online for information before discussing refinancing options with a banker equips homeowners with an arsenal of data which can help them make wise choices when applying for a home equity loan. Anyone who has owned property for a substantial amount of time has a built-in source of ready cash. As a rule, real estate increases in value; and a house purchased twenty to thirty years ago can double in price, especially if improvements have been made. Smart homeowners can tap into the equity in an existing residence by obtaining a second mortgage, hopefully at a lower interest rate.

Equity is computed as the difference between the appraised market value of a house and the amount of money remaining on the mortgage. Homeowners who have paid on a first mortgage for at least ten to fifteen years may have enough equity built in the residence to secure a substantial loan. A second mortgage is taken out which pays off the first loan; and the remaining balance used for whatever purpose homeowners choose: applied to college tuition, deposited into a tax-deferred Individual Retirement Account, or used for renovations and repairs. The original or new mortgage lender will be able to furnish home refinancing information, such as the amount of principal and interest on the second loan; the term, usually fifteen to twenty years; and the amount of payments due if the new loan is an adjustable or fixed rate mortgage.

The best advice for homeowners who are considering a second mortgage is to collect as much home refinancing information as possible before signing a long term agreement. Knowing what options exist and what lenders require before making a commitment protects borrowers from getting locked into contracts that prove to be more of a headache and a hassle in the long run. Borrowers should resist the temptation to quickly agree to a contract to alleviate the burden of debt without taking the time to consider the consequences of acquiring a second mortgage. Finding the right refinancing requires wisdom: "If any of you lack wisdom, let him ask of God, that giveth to all men liberally, and upbraideth not; and it shall be given him. But let him ask in faith, nothing wavering. For he that wavereth is like a wave of the sea driven with the wind and tossed" (James 1:5-6).

Lenders may offer refinancing home equity in the form of a lump sum loan with a fixed interest rate or as a line of credit from which borrowers can access funds as they are needed. Also called a "closed end home equity loan," a lump sum payout provides homeowners with a one-time cash windfall which can go a long way in paying off excess debt and thereby freeing up some money for other expenses. Parents can realize the dream of sending their children to college, or stashing away money towards a tax-deferred retirement fund. Mortgage banks, credit unions, and other lending institutions may provide home refinancing information which helps borrowers make the best use of lump sum amounts, based on specific financial needs. Borrowers who are seasoned investors may consult financial planners to assess whether cash from home equity loans can be re-invested in portfolio holdings, such as certificates of deposit, stocks, and bonds; or used to purchase safe liquid assets, such as gold or other precious metals, which hold their value in spite of stock market fluctuations.

Borrowers who opt for loans which provide a revolving line of credit may be able to gradually reduce debt or making much needed property improvements or renovations. An open-ended line of credit is subject to fluctuating interest rates based on the current prime rate, plus margin. Borrowers commit to a minimum monthly repayment with interest-only options in order to keep credit lines open. The lower interest-only payments and ready access to cash make an open ended home equity loan attractive to borrowers who prefer to withdraw money as needs arise. Lenders will be able to provide home refinancing information on open or closed end home equity loans so that borrowers can make an informed decision which best suits their individual needs.

Whether homeowners decide to apply for a second mortgage to reduce existing loans and/or interest rates, pay off debts, save for retirement, or plan a dream vacation, borrowers can surf the Internet and compare rates and options for the best deal. Most home refinancing information can be found on real estate or mortgage lender websites. Some sites gather principal and interest rates from around the nation and post a comparison of lenders. Web-based home refinancing information usually includes an automatic calculator to determine the new monthly principal and interest payments. Homeowners shopping for loans simply plug data into an online form, such as current income and the total amount of the second mortgage. Quotes are also available on some lending institution web sites, along with electronic applications which can be approved usually within a 24- to 48-hour period.

Web-based "money stores" also provide home refinancing information and help borrowers locate lenders who specialize in creative financing. In today's housing market, conventional lenders may be reluctant to offer loans to borrowers with less than perfect credit scores. Online money stores actually shop national databases to match borrowers with lenders who may be more lenient when it comes to extending a second mortgage. Some lenders may be willing to deal with poor credit borrowers for home refinancing, especially since the house is used as collateral; and repossession is always a guarantee that loans are not at risk. Homeowners seeking refinancing through an online agent are subject to screening to assess an ability to repay second mortgages. Income earnings statements, banking information, credit scores and histories, and evidence of steady employment are required before financing can be approved.