Refinancing question for those that are in the know
- Thread starter Qbert
- Start date
Well rule one... refinancing is not free. You will have to pay something like the closing costs again. Over the life of your loan, this might not be a bad idea. I am pretty sure you can refinance with a bank, but I don't think FHA will make you a second loan.
Rule Two... The days of unsecured house loans are gone (maybe this has changed since I last checked?) To move your loan to a bank, you will need at least 20% equity in your house.
Rule three... Find a bank that agrees to hold onto your load for the term of the loan. Some banks will write your loan then immediately sell your loan to a quick foreclose artist, and you could be foreclosed on is as few as 3 months from your first late payment. If it is a local bank that mortgages other houses in your same neighborhood they have a vested interest in making sure you make good on your loan. As long as you pay something each month they will not foreclose in the event of a job change etc etc etc.
Once upon a time a adjustable rate loan was a good deal. For the time being, you want a fixed rate loan.
Make a house payment every four weeks, not once a month. Every extra dollar you spend paying down your loan now is like $7 5 years from now.
Finally, consider selling your house and renting instead. Home ownership is for chumps, and it is a huge material investment for little or no return. Instead of improving your house (which will not increase its value as much as you spend) look for an unsalable flipper, fix that up, and sell it, or better yet make it an income property. There are still stupid numbers of foreclosed vacant homes on the market.
my $0.02
Rule Two... The days of unsecured house loans are gone (maybe this has changed since I last checked?) To move your loan to a bank, you will need at least 20% equity in your house.
Rule three... Find a bank that agrees to hold onto your load for the term of the loan. Some banks will write your loan then immediately sell your loan to a quick foreclose artist, and you could be foreclosed on is as few as 3 months from your first late payment. If it is a local bank that mortgages other houses in your same neighborhood they have a vested interest in making sure you make good on your loan. As long as you pay something each month they will not foreclose in the event of a job change etc etc etc.
Once upon a time a adjustable rate loan was a good deal. For the time being, you want a fixed rate loan.
Make a house payment every four weeks, not once a month. Every extra dollar you spend paying down your loan now is like $7 5 years from now.
Finally, consider selling your house and renting instead. Home ownership is for chumps, and it is a huge material investment for little or no return. Instead of improving your house (which will not increase its value as much as you spend) look for an unsalable flipper, fix that up, and sell it, or better yet make it an income property. There are still stupid numbers of foreclosed vacant homes on the market.
my $0.02
if you can refinance for a lower interest rate, perhaps the money you save each month can go towards home improvements? thats what I did. I know I am upside down but somehow I was able to get a new mortgage at 3.5% and now save about $350 each month and used that towards either paying off principal or putting into an a home improvement fund.
So it may or may not help the value of the house as XBoxNeo points out but there is a certain quality of life that I want to enjoy and Im tired at looking at formica.
So it may or may not help the value of the house as XBoxNeo points out but there is a certain quality of life that I want to enjoy and Im tired at looking at formica.
Well I'm not sure of Banking laws in your country but I do work in a Bank for the Credit Dept that interacts with the Real Estate Loans Dept...
Just to clarify if I understood you correctly:
FHA Loan is a term you Americans use for a government funded Housing Loan??? Yes Or No
If yes and you are planning to apply for a Refinancing loan from a bank...
In my experience(in my country):
Bank will have the property in question appraised... most cases they are willing to refinance maximum of 70%(80% depending on the banking industry's policy from your country)... It can be be even lower than 70% as its dependent on the condition of the collateral(your house) and how far is it depreciated.
Next they will run background checks on you and your spouse whether you are employed or in business or if you have a poor financial history such as unpaid loans that have gone sour or unpaid credit cards left to rot.
If you check out in a good way they'll proceed to your income... if you can afford the loan amount in question. If you can they will probably grant you the loan but the loan term can also be dependent on how old you already are.
Payments however will be made first to the FHA loan to cancel it out(usually called a Loan Take Out by the bank to another financial institution) and whatever is the remaining balance will go to you and your spouse(if applicable).
The Loan will be secured by a Real Estate Mortgage(REM) document generally and the full amount of the Loan will not yet be released if the conditions indicated by the bank are not met.
1. Usually submission of necessary documents
2. Submission of the Title under you and your spouses name
3. Cancellation of the FHA loan(which mean the bank will pay it off first; this is done by the bank providing a letter of guarantee to the other financial institution) and then the excess(remaining loan proceeds) will only go to you once the annotation of the Current Approved Loan by the bank is on the title.
Not sure if this applies to you though and your situation but hope it helps.
Just to clarify if I understood you correctly:
FHA Loan is a term you Americans use for a government funded Housing Loan??? Yes Or No
If yes and you are planning to apply for a Refinancing loan from a bank...
In my experience(in my country):
Bank will have the property in question appraised... most cases they are willing to refinance maximum of 70%(80% depending on the banking industry's policy from your country)... It can be be even lower than 70% as its dependent on the condition of the collateral(your house) and how far is it depreciated.
Next they will run background checks on you and your spouse whether you are employed or in business or if you have a poor financial history such as unpaid loans that have gone sour or unpaid credit cards left to rot.
If you check out in a good way they'll proceed to your income... if you can afford the loan amount in question. If you can they will probably grant you the loan but the loan term can also be dependent on how old you already are.
Payments however will be made first to the FHA loan to cancel it out(usually called a Loan Take Out by the bank to another financial institution) and whatever is the remaining balance will go to you and your spouse(if applicable).
The Loan will be secured by a Real Estate Mortgage(REM) document generally and the full amount of the Loan will not yet be released if the conditions indicated by the bank are not met.
1. Usually submission of necessary documents
2. Submission of the Title under you and your spouses name
3. Cancellation of the FHA loan(which mean the bank will pay it off first; this is done by the bank providing a letter of guarantee to the other financial institution) and then the excess(remaining loan proceeds) will only go to you once the annotation of the Current Approved Loan by the bank is on the title.
Not sure if this applies to you though and your situation but hope it helps.