Refinance Free Credit

The Typical Refinance and the Implications

A change in the mortgage industry has been needed for quite some time.  When house values rose continuously for so many years many homeowners believed that the value of their home would continue to rise forever.  This led many people to refinance their homes without thinking of the implications.  What were the implications?  Many folks were charged enormous fees by mortgage companies and they didn't bat an eye because their home value would continue to rise forever.  The equity lost seemed to make no difference as long as they could get the cash out that they were looking for or get their payment reduced.  This brings us to the heart of the problem.

Homeowners would refinance to reduce their payment by let's say $150 per month.  The cost of the refinance added $8,000 to the balance of their mortgage.  The savings was $1800 a year, but that savings was typically spent by the homeowner to increase their quality of living.  They have lost equity in their home and at the end of the day they don't have anything to show for that lost equity, other than a few extra pair of shoes or some other product that gave them immediate gratification.  Obviously not everyone "wasted" the money but this example is simply to prove a point.

Refinance Addiction

Most homeowners would refinance their home again before they even recovered the cost of their first refinance with their monthly savings.  They paid $8,000 in cost to save $1,800 a year for 3 or 4 years.  This is a lose-lose situation.  Consider this, the average 30 year fixed mortgage in the United States is 1.9 years old and it is commonly said that the average American will refinance every 5 years.  This situation played out fine for the homeowner until house values started to decline.  Once home values started to decline the true effect of that lost equity started to be felt, and now everyone who holds a mortgage or uses any type of credit is feeling the effect.  Mortgage brokers did not bother to explain this simple idea to most of their clients and many people did not truly understand this concept when they were refinancing, they simply knew that their monthly expenses would decrease or that they would get some cash in their pocket via a cash out refinance.

This leads us to today, and a change that is coming in the mortgage industry.

There is a way around all of this.  A way to create transparency for homeowners.  A way to eliminate over charging by greedy mortgage companies.  A way for homeowners to truly understand what they are getting and how it is benefiting them.  How can this be done?  Before we go into the solution let's think about a concept.  What if a refinance did not require you to pay the mortgage company?  What if the only charges for refinancing were title fees and possibly an appraisal fee?  That would cost around $2,000 for a refinance.  It would be very simple to determine monthly savings compared to cost and it would also be very easy to compare offers.  If title fees and appraisal fees are the same with every company, which they are, the homeowner would only be left to compare interest rates.  There would be no points and no fees and very little would be added to the loan amount.  Sound like a simple solution to a growing problem.

So would it be possible to offer a free refinance?

The simple answer is yes.  It is already available.  So what's the problem?  The problem is that most mortgage companies will charge the consumer a higher interest rate in order to waive their fees.  There is a new company that is changing this.  They have teamed up with lenders to offer a truly free refinance with the same interest rate that would be charged with their typical lender's fees.  How is that possible?  The mortgage industry is struggling.  Companies are having trouble finding clients partially because they burned their bridges along the way and did not build relationships with homeowners by offering fair mortgage refinancing in the past.  There were bait and switch tactics and outright lies.  Margins are also being reduced and companies aren't making as much on a refinance transaction as they used to.  In exchange for your business these companies are now willing to waive their fees to earn your business.

How do I know that they are not just giving me a higher rate?

A simple question deserves a simple answer.  If you work with the company that has developed this idea they will make sure of it, but don't take my word for it.  Go down to your local bank and have them give you a good faith estimate.  Once you have that in your hands, fill out an application online that same day.  Tell the lender that calls you that you have an estimate and send them the estimate.  Tell them that you want the same rate that your bank is offering without the fees.  You will be pleasantly surprised.  So why am I promoting this company?  To be honest I have known the founders of this company for years.  They are good people and they have a great idea.  These guys have worked very hard to develop this idea with the lenders and they maintain the highest quality of service of any company out there today.  Don't take my word for it, they have a toll free number that you can call and get answers to just about any questions that have to do with refinancing your mortgage.  I believe that this effort will truly change the way that things are done in the mortgage industry.

To learn more visit www.freehomerefi.com .

It’s official. Down payment assistance — DAP or DPA to most industry participants — has gone the way of the Tyranosaurus Rex, independent Wall Street investment banks and the even textbooks that once suggested Pluto as the outermost planet in our solar system. That is to say that DPA is no more, effective today. The Housing [...]

Valleywag has the story on Honeywell CEO Dave Cote’s email to all 122,000 employees encouraging them to support the housing bail out.  Why you ask?  Because Honeywell, like many other large firms, leverage the short-term commercial paper market to manage cash flow and operation expenses.  This market has effectively stopped working and CEO’s like Cote (and GM’s Immelt) are hoping that they don’t have to tap credit lines to fund ops while the commercial paper market is frozen.  

Tapping credit lines would make investors nervous, putting pressure on their stock prices and increasing borrowing costs (a nice, little vicious cycle).

Of course you wouldn’t want to come right out with your ulterior motive, so instead make it a play for Main Street and hope your butt gets saved by the folks that are going to get screwed the most.

From Valleywag:

Why is Dave Cote telling Honeywell’s 122,000 employees to call Congress and ask them to vote for the $700 billion Wall Street bailout? The high-tech manufacturing giant makes its money far from Wall Street, on building electronics and airplane parts. But where the credit crisis hits the heartland the hardest is a market for what’s called commercial paper — short-term loans made to large corporations to fund their daily operations. It provides the cash that smoothes over the gaps between when supplies get bought and employees get paid and when customers pony up.

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The U.S. Department of Housing and Urban Development on Wednesday touted the availability of lawmakers’ latest attempt to stanch the nation’s foreclosure crisis, called the Hope for Homeowners program. Authorized by the Economic and Housing Recovery Act of 2008, the HFH program is designed to provide a refinancing option for troubled borrowers that cannot afford [...]

Well, leave it to the folks who brought you Woohoo! to bring you the latest in marketing for failed banks - pimping your new sugar daddy. WaMu’s headline in-branch flyer reads: “We love Chase. And not just because they have a trillion dollars.” Actually, it’s precisely because of their money, but I digress.

Always good to find a sense of humor in the gross mismanagement that led to the largest bank failure in the history of our country. (h/t to Jeff for the find)

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Mortgage applications tanked last week as the nation’s financial markets were thrown into chaos, according to a weekly survey released Wednesday by the Mortgage Bankers Association. For the week ended Oct. 26, the MBA reported that application volume fell a whopping 23.4 percent on a seasonally-adjusted basis over the previous week; applications were 28.4 percent [...]

A widely-unheard perspective on the bailout came to light late last week, courtesy of a letter to lawmakers from Branch Banking and Trust Co. (BBT: 38.88 +2.86%) chairman and CEO John Allison, who argued that the bailout debate has been all too focused on “problem companies”, and not the institutions that have maintained “healthy profitability [...]

Refinancing your mortgage loan with the wrong broker will cost you thousands of dollars and in today’s economy could even result in the loss of your home. Remember that mortgage brokers are salespeople and come in multiple shapes in sizes with their own personalities. How can you tell if ...

Home prices are likely to continue their recent declines, due to largely to elevated foreclosures and rising unemployment rates, according to data released Wednesday by PMI Mortgage Insurance Co. The Walnut Creek, Calif.-based mortgage insurer released its Fall 2008 U.S. Market Risk Index, which ranks the 50 largest U.S. metropolitan areas according to the probability of [...]

Refinance

Your mortgage payment may be the largest expense you'll have in your monthly budget. If you are stuck in a subprime loan or adjustable-rate mortgage that has recently caused your mortgage payments to increase, a loan refinance can help save you from defaulting or possible foreclosure. Wouldn't it be great to use this asset to reduce your monthly payment and put extra cash in your pocket? When you refinance your mortgage, you can take advantage of the equity in your home and enable this to take place.

Getting a refinance loan simply means you're taking out a new mortgage loan on your home. It can be a great way to borrow money when you are in need. Unlike a regular mortgage, a second mortgage does not have priority on your home if you default on the loan. Your first mortgage would be repaid by your home's value before any funds go towards paying off the second mortgage.

Many borrowers use a refinance to shorten the term of the mortgage. And brace yourself, even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.

You can now easily apply to refinance your home mortgage and fulfill that goal. For example, you have a 30-year mortgage you’ve been paying since you bought your first home when you were young, had average credit and the market rates were high. It’s now 10 years later and you are feeling locked in to your loan. You have a stable job, a high credit score and the US is in a rate-cutting period. You now have option to refinance! You can change your payment period to 10, 15, or 20 years, saving you thousands of dollars in interest. Because your refinance rate is lower and on a shorter payment period, you can still have the same monthly payment. This doesn’t mean the refinancing was useless. You are now building equity in your home faster as you cut out interest and are paying more on principal.

Another way to make a refinance work for you is to refinance for more than the balance remaining on your old mortgage - in effect, tapping your home equity, or "cashing out," in mortgage speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. For example, at 8.5%, the payment on a $200,000, 30-year fixed rate mortgage is $1,538. But at 7.5%, that same payment lets you borrow nearly $20,000 more.

Refinance loans can be used to help with many personal financial situations such as reducing monthly payments, home improvements, college tuition and more.
It is the perfect time to refinance your mortgage to lower your payments, make home improvements or just get some extra cash. Plus if you have high interest rate credit cards, auto loans and other bills, refinancing is a great way to consolidate your bills and save money at tax time too, since the interest may be tax deductible.

And at www.online-advisor.org we make it easy to get a great deal on your refinance loan. Fill out our prequalification form to request a refinance loan and a mortgage specialist will contact you. There is no cost or obligation.

http://www.online-advisor.org/refinance.html