Refinance Home Mortgage The Federal Savings Bank
Types of Refinancing
No Closing Cost
· Borrowers with this type of refinancing typically pay few if any upfront fees to get the new mortgage loan. This type of refinance can be beneficial provided the prevailing market rate is lower than the borrower's existing rate by a formula determined by the lender offering the loan. Before you read any further do not provide any lender with a credit card number until they have provided you with a Good Faith Estimate verifying it is truly a zero cost loan. The appraisal fee cannot be paid for by the lender or broker so this will always show up in the total settlement charges at the bottom of your GFE.
· This can be an excellent choice in a declining market or if you are not sure you will hold the loan long enough to recoup the closing cost before you refinance or pay it off. For example, you plan on selling your home in three years, but it will take five years to recoup the closing cost. This could prevent you from considering a refinance, however if you take the zero closing cost option, you can lower your interest rate without taking any risk of losing money.
· In this case the broker receives a credit or what's called yield spread premium (YSP). Yield spread premiums are the cash that a mortgage company receives for originating your loan. The broker provides the client and the documentation needed to process the loan and the lender pays them for providing this service in lieu of paying one of their own loan officers. Since a brokerage can have more than one loan officer originating loans, they can sometimes receive additional YSP for bringing in a volume amount of loans. This is normally based on funding more than 1 million in total loans per month. This can greatly benefit the borrower, especially since April 1, 2011. New laws have been implemented by the federal government mandating that all brokers have set pricing with the lenders they do business with. Brokers can receive so much YSP that they can provide you with a lower rate than if you went directly to the lender and they can pay for all your closing cost as opposed to the lender who would make you pay for all the third party fees on your own. You end up with a lower rate and lower fees. Since the new RESPA law as of April came into effect in 2011, brokers can no longer decide how much they want to make off of the loan. Instead they sign a contract in April stating that they will keep only a certain percentage of the YSP and the rest will go toward the borrowers closing cost.
No Appraisal Required
The Obama Administration authorized several refinance programs aimed at helping underwater homeowners take advantage of the historically low interest rates. Most of these programs do not require an appraisal, and encompass all loan types. The programs offered in 2013 include:
· FHA Streamline Refinance: The largest group that benefits from this refinance program will be those who have a FHA loan that was endorsed prior to May 31, 2009. For those who meet this date, the FHA PMI rates are very low. This Streamline Refinance Program without an appraisal is also available to borrowers who no longer live in the property or own the house as Investment Property.
· VA Loan Refinance: The Veteran's Administration offers Interest Rate Reduction Refinances IRRR for Veteran Home Owners who simply want to reduce their interest rate, with no appraisal. These loans are also available to qualifying Veteran's who no longer live in the property as their primary residence.
· HARP Refinance: When the Home Affordable Refinance Program (HARP) was launched in 2009, it sought to help homeowners with underwater mortgages refinance their loans into lower monthly payments and /or interest rates. Unfortunately, the first version of the program failed to help as many homeowners with underwater mortgages as was hoped, leading to the release of a new and improved version of HARP, dubbed HARP 2, to deal with the complications. HARP 2 no longer caps the loan-to value at 125%, and allows any loan-to-value acceptable, thereby covering underwater homes.
· USDA Home Loans: No appraisal required – the current residence must be in a USDA “Footprint Area” and currently be insured under the USDA program. So refinancing from a Conventional loan or a FHA loan to USDA will not work under this program. No Credit Report Required – the current mortgage must be current, and all of the previous 12 months of mortgage payments need to be made on time. That’s all. We just verify that you made your house payments on time. Employment Verification Required – we will need to verify that you are employed, and drawing enough money to meet the underwriting guidelines… meaning we must prove that you have enough income to make your house payments. Cannot take cash out - All you can do is finance your current loan balance, and the new Guarantee Fee (USDA PMI) which is 1.5%.
Cash-Out
· This type of refinance may not help lower the monthly payment or shorten mortgage periods. It can be used for home improvement, credit cards, and other debt consolidation if the borrower qualifies with their current home equity; they can refinance with a loan amount larger than their current mortgage and keep the cash out.
· In situations where the borrower has both a first and second mortgage, it is common to consolidate these loans as part of the refinance process. However, even if the borrower does not receive any net "cash out" as part of the transaction, in some cases lenders will consider this a cash-out transaction because of the "twelve month rule". This rule states that any refinance that occurs within twelve months of a second mortgage is considered a cash-out refinance, unless it was part o the original purchases transaction.
So, if you need to refinance a home mortgage The Federal Savings Bank is the lender for you. Call them today.
The Federal Savings Bank
http://www.thefederalsavingsbank.com
Types of Refinancing
No Closing Cost
· Borrowers with this type of refinancing typically pay few if any upfront fees to get the new mortgage loan. This type of refinance can be beneficial provided the prevailing market rate is lower than the borrower's existing rate by a formula determined by the lender offering the loan. Before you read any further do not provide any lender with a credit card number until they have provided you with a Good Faith Estimate verifying it is truly a zero cost loan. The appraisal fee cannot be paid for by the lender or broker so this will always show up in the total settlement charges at the bottom of your GFE.
· This can be an excellent choice in a declining market or if you are not sure you will hold the loan long enough to recoup the closing cost before you refinance or pay it off. For example, you plan on selling your home in three years, but it will take five years to recoup the closing cost. This could prevent you from considering a refinance, however if you take the zero closing cost option, you can lower your interest rate without taking any risk of losing money.
· In this case the broker receives a credit or what's called yield spread premium (YSP). Yield spread premiums are the cash that a mortgage company receives for originating your loan. The broker provides the client and the documentation needed to process the loan and the lender pays them for providing this service in lieu of paying one of their own loan officers. Since a brokerage can have more than one loan officer originating loans, they can sometimes receive additional YSP for bringing in a volume amount of loans. This is normally based on funding more than 1 million in total loans per month. This can greatly benefit the borrower, especially since April 1, 2011. New laws have been implemented by the federal government mandating that all brokers have set pricing with the lenders they do business with. Brokers can receive so much YSP that they can provide you with a lower rate than if you went directly to the lender and they can pay for all your closing cost as opposed to the lender who would make you pay for all the third party fees on your own. You end up with a lower rate and lower fees. Since the new RESPA law as of April came into effect in 2011, brokers can no longer decide how much they want to make off of the loan. Instead they sign a contract in April stating that they will keep only a certain percentage of the YSP and the rest will go toward the borrowers closing cost.
No Appraisal Required
The Obama Administration authorized several refinance programs aimed at helping underwater homeowners take advantage of the historically low interest rates. Most of these programs do not require an appraisal, and encompass all loan types. The programs offered in 2013 include:
· FHA Streamline Refinance: The largest group that benefits from this refinance program will be those who have a FHA loan that was endorsed prior to May 31, 2009. For those who meet this date, the FHA PMI rates are very low. This Streamline Refinance Program without an appraisal is also available to borrowers who no longer live in the property or own the house as Investment Property.
· VA Loan Refinance: The Veteran's Administration offers Interest Rate Reduction Refinances IRRR for Veteran Home Owners who simply want to reduce their interest rate, with no appraisal. These loans are also available to qualifying Veteran's who no longer live in the property as their primary residence.
· HARP Refinance: When the Home Affordable Refinance Program (HARP) was launched in 2009, it sought to help homeowners with underwater mortgages refinance their loans into lower monthly payments and /or interest rates. Unfortunately, the first version of the program failed to help as many homeowners with underwater mortgages as was hoped, leading to the release of a new and improved version of HARP, dubbed HARP 2, to deal with the complications. HARP 2 no longer caps the loan-to value at 125%, and allows any loan-to-value acceptable, thereby covering underwater homes.
· USDA Home Loans: No appraisal required – the current residence must be in a USDA “Footprint Area” and currently be insured under the USDA program. So refinancing from a Conventional loan or a FHA loan to USDA will not work under this program. No Credit Report Required – the current mortgage must be current, and all of the previous 12 months of mortgage payments need to be made on time. That’s all. We just verify that you made your house payments on time. Employment Verification Required – we will need to verify that you are employed, and drawing enough money to meet the underwriting guidelines… meaning we must prove that you have enough income to make your house payments. Cannot take cash out - All you can do is finance your current loan balance, and the new Guarantee Fee (USDA PMI) which is 1.5%.
Cash-Out
· This type of refinance may not help lower the monthly payment or shorten mortgage periods. It can be used for home improvement, credit cards, and other debt consolidation if the borrower qualifies with their current home equity; they can refinance with a loan amount larger than their current mortgage and keep the cash out.
· In situations where the borrower has both a first and second mortgage, it is common to consolidate these loans as part of the refinance process. However, even if the borrower does not receive any net "cash out" as part of the transaction, in some cases lenders will consider this a cash-out transaction because of the "twelve month rule". This rule states that any refinance that occurs within twelve months of a second mortgage is considered a cash-out refinance, unless it was part o the original purchases transaction.
So, if you need to refinance a home mortgage The Federal Savings Bank is the lender for you. Call them today.
The Federal Savings Bank
http://www.thefederalsavingsbank.com