|Posted on March 31, 2016 at 8:00 PM||comments (1)|
When you decide to refinance a mortgage loan, you have to pay out the existing loan in order to move forward. And most mortgage contracts will have stipulated the terms of a payout especially regarding the fees and penalties associated with closing the loan. Once you are ready to close your new deal, the new lender will require you to get a "payout" figure or statement from the existing lender. The statement will list all the outstanding fees, the amount of the mortgage owed, and anything else that is associated with terminating that loan. The final figure derived will be what is owing on a particular day. Remember that interest accrues daily so the new lender will most likely provide a reasonable date in the near future in order to have an exact amount. The date chosen is normally the day upon which the new lender plans to finalize your mortgage loan and have you sign your papers.
As stated, your original mortgage contract will usually list all the costs for which you are responsible right down to the fee for creating the "payout figure" and sending it out. The final figure will be calculated depending on the time that you request your refinance. Generally speaking, this involves three different scenarios.
Mortgage Contract is Set to Renew - Refinancing on the same date that your existing mortgage agreement expires is the typical way to close your current mortgage loan. The reason for this is it is the most cost effective scenario, since you do not incur any penalties and are permitted to pay the debt in full. In this case, your payout figure will be the amount owing on the mortgage plus any stated administrative fees.
Mortgage Contract is Not Set to Renew - Refinancing whenever you choose with no regard to the expiration of the existing mortgage will cost you money. Mortgage lenders always add a stipulation that you can pay out the mortgage at any time provided you agree to the penalties, normally three months of interest payments. Since the lender loses money when you pay out, in the sense, that he no longer expects that income, he usually makes sure his entitlement is written into the contract. On top of the interest payments, there will be per diem fees (depending on the time of month you pay off the loan), and then, the regular costs will be included as well in the payout statement.
Refinance Due to Foreclosure - Sadly, this is the most expensive form of refinancing. For people with little equity in their home, often this type of refinancing causes them to mortgage more than the house is worth. But it appears to be the only way to keep their homes. In this scenario, when the payout figure is requested, the existing lender is going to include all arrears, NSF charges for each of those arrears, interest on the arrears, any lawyers' fees involved in the foreclosure and attempted collection of payments, court costs, long distance phone call charges, penalties, and anything else that they can legally charge to terminate that loan.
In all cases, once the new lender has the payout figure, he will make arrangements to pay the existing lender on the closing date. He will actually write the check and either send it himself or have you deliver it so that you can obtain your final documents releasing you of the obligation. Very rarely will a new lender trust the customer to pay out the first mortgage. The lender needs to be assured that the money goes to the original lender, and that the house is free and clear of title so that he can place his lien on the house for the new mortgage.
If you are refinancing in order to obtain a cash out, then the lender will issue you a check for the remaining. The remaining balance is after everyone is paid.
Basically, when refinancing, the existing lender takes care of submitting the numbers, and the new lender takes care of closing your current mortgage loan. But please make sure that you have received copies of everything so that you are not responsible down the road for a debt that had already been paid.
|Posted on April 26, 2015 at 3:10 AM||comments (0)|
One of the most important decisions you make is buying a home and you want to know what you are doing. If you rush head first into a loan without educating yourself about them first, you can cause yourself big financial trouble. Continue reading to learn more about the mortgage process and getting the best rates.
If a 20% down payment is out of your league, do some shopping around. Different banks will have different offers for you to consider. Terms and rates will vary at each, some will give a lower downpayment, but a slightly higher interest rate. Look for the best mix for your current situation.
If you are planning on purchasing a house, make sure your credit is in good standing. Most lenders want to make sure your credit history has been spotless for at least a year. To obtain the best rate, your credit score should be at least 720. Remember that the lower your score is, the harder the chances of getting approved.
Start saving all of your paperwork that may be required by the lender. These documents include pay stubs, bank statements, W-2 forms and your income tax returns. Keep these documents together and ready to send at all times. If you don't have your paperwork in order, your mortgage may be delayed.
Hire an attorney to help you understand your mortgage terms. Even those with degrees in accounting can find it difficult to fully understand the terms of a mortgage loan, and just trusting someone's word on what everything means can cause you problems down the line. Get an attorney to look it over and make everything clear.
Don't let one mortgage denial stop you from looking for a home mortgage. One lender denying you doesn't mean that they all will. Shop around and talk to a broker about your options. There are several mortgage options available, which include getting a co-signer.
Check with your local Better Business Bureau before giving personal information to any lender. Unfortunately, there are predatory lenders out there that are only out to steal your identity. By checking with your BBB, you can ensure that you are only giving your information to a legitimate home mortgage lender.
Don't apply for new credit and don't cancel existing credit cards in the six months before applying for a mortgage loan. Mortgage brokers are looking for consistency. Any time you apply for credit, it goes on your credit report. Avoid charging a large amount during that time and make every payment on time.
Do not allow yourself to fall for whatever the banks tell you about getting a home mortgage. You have to remember that they are in the business of making money, and many of them are willing to use techniques to suck as much of that money out of you that they can.
Make sure you've got all of your paperwork in order before visiting your mortgage lender's office for your appointment. While logic would indicate that all you really need is proof of identification and income, they actually want to see everything pertaining to your finances going back for some time. Each lender is different, so ask in advance and be well prepared.
If you are having problems paying your home mortgage, contact your lender immediately. Don't ignore the problem. That'll only make the issue worse. Your lender can show you many different options that may be available to you. They can help you keep your home by making the costs more affordable.
Think about your job security before you think about buying a home. If you sign a mortgage contract you are held to those terms, regardless of the changes that may occur when it comes to your job. For example, if you are laid off, you mortgage will not decrease accordingly, so be sure that you are secure where you are first.
If you have bad credit, avoid applying for a home mortgage. Although you may feel financially ready enough to handle the costs of a mortgage, you will not qualify for a good interest rate. This means you will end up paying a lot more over the life of your loan.
After reading the above article you should now be familiar with the mortgage process and want to proceed. The tips located above will help guide you through the process. Now find a lending company and put the advice to use.