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Home Equity Loan Refinance

Redoing 2nd Loans for a Better Rate

If rates fall on subordinate liens, why wouldn't you want to refinance your home equity loan to secure a lower interest rate with more favorable terms? Mainstream home-equity lending soared 33% last year according to SMR Research, with new borrowing at nearly quadruples the level of just five years ago. These figures don't include home-equity lending to those with credit issues--the sub-prime market. Sub-prime mortgage lending rose 60% last year, said SMR vice president George Yacik, to $516 billion.

The increasing concern over rising interest rates has moved many people to strongly consider refinancing their adjustable rate first mortgages and home equity loans (second mortgages) to lock in fixed rates before the next anticipated rate hike. Fixed-rate refinancing makes sense, especially since one in four mortgages, including adjustable rate second mortgages, will adjust by the year 2007. For many, the decision to refinance variable rate second mortgages will be to lock in fixed rates in times like these where interest rates are rising. But, others may refinance adjustable rate equity loans not only to lock in a fixed rate, but also for debt consolidation. The 125% home equity loans are particularly popular for bill consolidation and other cash-out purposes.

Debt
(creditors)
Balances
(Totals you owe)
Monthly Payments
Amex $10,500 $270
Master-card $6,800 $230
Visa $5,700 $188
Home Depot $3,500 $110
Sears $3,250 $88
Variable Credit Line $50,000 $479
Total $79,750 $1,365
     
New Loan
9.5% Fixed Equity Rate
$82,000 $689 a month
Our loan Saves you $676 a month and $8,112 a year!

Home Equity Factors
Nationwide Mortgages

- Get Cash Out
- Reduced Payments
- Fixed Rate Loan
- Fixed Loan Payment
- Terms: 15,20,25 or 30-year
- Principal & Interest Payments
- Stated Income Options
- Home Equity Loan
- Great for Debt Consolidation
- Great for Peace of Mind

Free Quotes for a
Mortgage Refinance

No Cost Home Equity Options

• No Application Fee
• No Commitment Fee
• No Point Options

- Low Rate Credit Lines
- Great for Rebuilding Credit
- Great for Home Improvements


 

 

 

Converting 80-20 Home Loans

Private mortgage insurance (PMI) protects the lender from the costs of foreclosing on a house when the borrower falls too far behind on the loan payments. The lender benefits, but the borrower pays. Generally, PMI is required when the loan amount is for more than 80 percent of the home's price. Many buyers with insufficient funds for a 20% down payment avoid PMI by getting an 80-20 loan--a main mortgage for 80 percent of the home's price and a "piggyback" second mortgage for other 20 percent. There's no PMI, so borrowers save about $100 each month. However, lenders charge higher interest rates for no-down-payment loans to compensate for the risk of a property with no equity. And, with 80-20 loans, the 2nd is typically an adjustable rate loan.

With interest rates rising, converting 80-20 home loans to single fixed-rate mortgages is an excellent way to refinance debts to 100% and lock in on fixed rates before the next rate hike. Even though you'll pay a higher interest rate because the CLTV (combined loan to value) exceeds 80%, it will probably work out to less than the rate of your 1st plus the adjusted 2nd. You'll only be making one mortgage payment, and you won't have to worry about rate hikes any more. As the housing market cools, interest rates will continue to rise, so it's best to lock in on a fixed rate now by converting your 80-20 loan to a single fixed-rate mortgage or at least refinancing your variable rate 2nd mortgage.


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