Refinancing your home could be the BEST decision you ever make!

BUT DO NOT PROCEED UNTIL YOU READ THIS FREE REPORT

CRACKING THE CODE ON REFINANCING

In most cases a person’s home is their most prized possession. It’s the place where you raise your family, your hidden oasis, a place of safety and security. If viewed the right way, it can also take the form of a personal bank; each mortgage payment becoming a deposit on your future.

Refinancing your home could be one of the best decisions you could make. It is a relatively simple process. In reality all you are doing in most cases, is paying off your current mortgage, obtaining a new one, settling debt, or pulling cash out. Other times you may be taking out a line of credit, which is supported by the equity in your home.

Before you make the decision to proceed with this type of process you need to educate yourself. That’s why this free report was created.

So let’s get down to it. Some of the most common questions out there are:

When is it good time for me to refinance?

• When you want to get out of a high interest rate loan to take advantage of lower rates. This is a good idea only if they intend to stay in the house long enough to make the additional fees worthwhile.
• When you have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
• When you want to convert to an ARM with a lower interest rate or more protective features (such as a better rate and payment caps) than the ARM they currently have.
• When you want to build up equity more quickly by converting to a loan with a shorter term.
• When want to draw on the equity built up in their house to get cash for a major purchase, home improvement or for their children’s education.
• To consolidate debt, pay off creditors, and just be able to hear the phone ring and not cringe!

Most people refinance to lower their monthly mortgage payments. If rates have come down significantly since you obtained your original loan, you may be able to cut your payments substantially. But there are other reasons to turn in your old loan, too. Perhaps you want to reach into the equity that’s built up in your home since you bought it. In that case, you can do a “cash-out refi” by taking out a new mortgage based on the home’s current worth, pay off what you still owe on the old loan and pocket the difference.

Or maybe you want to shorten the period you’ll be making payments. You can do that by swapping your current 30-year mortgage for a 15-year loan or one of practically any other duration. If rates have come down enough, you may even be able to achieve this with little or no increase in your monthly outlay.

What if I have an Adjustable Rate Mortgage, that is about to adjust?

A very good reason to refinance might be to jump from an adjustable-rate mortgage (ARM) - where your rate changes with market conditions - to a fixed-rate loan which offers the certainty of set payment amounts no matter what happens to mortgage rates in the future.

Since ARMs often start off at rates substantially lower than those charged for fixed loans, you might want to go the other way and take advantage of a particularly low introductory ARM rate. You might even want to switch from an ARM which is about to be more costly (the rate’s going up) to another ARM with a lower starting rate. Your options are practically endless.

What should I consider before refinancing?
Costs: Add up ALL the costs, which could include points, and fees for the application, loan origination, appraisal, attorney, credit report, extra insurance, inspections, private mortgage insurance, recording, survey, title insurance, underwriting and others.
Monthly Savings: Figure your monthly savings by subtracting your current monthly payment from your refinanced mortgage’s monthly payment. A good broker will actually do this for you.
Tax Cost: Multiply your monthly savings by your combined state and federal tax rate.
Net Savings: Subtract your tax cost (because the cheaper loan gives you a smaller tax benefit than the previous loan) from your monthly savings.
Break-Even Point: Divide your total costs by your net savings to determine how many months it will take to pay off the cost of refinancing.
For example, if you will save $100 a month on the refinanced mortgage and the refinanced mortgage costs you $2,500 it would take you just over two years, 25 months, to break even and start enjoying that savings.
If you plan to move within two years, that loan might not be for you.
Hidden costs: Also, if your current loan contract includes a prepayment penalty you’ve got to factor it in too. Some penalties can be as high as six months interest on 80 percent of your balance, but diminish the longer you hold the loan.

The points vs. interest rate also presents a mathematical quandary and, but again, do the math. Generally, lower points (each point is 1 percent of the amount financed) produce a higher interest rate. Higher interest rates mean lower points.

If you know you’ll stay in your home for a few years, a zero-point loan option would likely be a better deal because you may not have the opportunity to recoup those costs. If you are staying longer with more time to recoup costs, consider a cheaper interest rate with points.

Watch out for some no-pointers. They can be useful if you are cash poor, but in addition to the higher interest rate, some come with prepayment penalties that kick in if you refinance again too soon.

What are some of the costs associated with refinancing?

The fees described below are the charges that you are most likely to encounter in a refinancing.

• Application Fee. This charge imposed by your broker/lender covers the initial costs of processing your loan request and checking your credit report.
• Title Search and Title Insurance. This charge will cover the cost of examining the public record to confirm ownership of the real estate. It also covers the cost of a policy, usually issued by a title insurance company that insures the policy holder in a specific amount for any loss caused by discrepancies in the title to the property.

Be sure to ask the company carrying the present policy if it can re-issue your policy at a re-issue rate. You could save up to 70 percent of what it would cost you for a new policy. Because costs may vary significantly from area to area and from lender to lender, the following are estimates only. Your actual closing costs may be higher or lower than the ranges indicated below.

Application Fee: $75 to $300
Appraisal Fee: $150 to $400 (all depend on how many units your home has)
Survey Costs $125 to $300
Homeowner’s Hazard Insurance $300 to $600 (vary depending on home value/ location)
Lender’s Attorney’s Review Fees $75 to $700
Title Search and Title Insurance $450 to $2000 (vary depending on home value)
Home Inspection Fees $175 to $350
Loan Origination Fees 1% to 3% of loan
Mortgage Insurance 0.5% to 1.0%
Points 1% to 3%

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• Lender’s Attorney’s Review Fees. The lender will usually charge you for fees paid to the lawyer or company that conducts the closing for the lender. Settlements are conducted by lending institutions, title insurance companies, escrow companies, real estate brokers, and attorneys for the buyer and seller. In most situations, the person conducting the settlement is providing a service to the lender. You may also be required to pay for other legal services relating to your loan which are provided to the lender. You may want to retain your own attorney to represent you at all stages of the transaction including settlement.
• Loan Origination Fees and Points. The origination fee is charged for the lenders work in evaluating and preparing your mortgage loan. Points are prepaid finance charges imposed by the lender at closing to increase the lender’s yield beyond the stated interest rate on the mortgage note. One point equals one percent of the loan amount. For example, one point on a $75,000 loan would be $750. In some cases, the points you pay can be financed by adding them to the loan amount. The total number of points a lender charges will depend on market conditions and the interest rate to be charged.
• Appraisal Fee. This fee pays for an appraisal which is a supportable and defensible estimate or opinion of the value of the property.

I want to make some home improvements, how can refinancing help?

Home improvement is the process of renovating, modifying, or making additions to a home. Home improvement is a costly affair that necessitates some type of financing. Any loan offered to homeowners in which the home is used as security is called a home improvement loan.

Reasons for Home Improvement?

The reasons behind home improvement are varied. While some might desire home improvement in anticipation of future needs, such as a new baby, others might desire renovation simply to modernize the house. Statistics reveal that most homeowners consider home improvements for one of the following reasons:

• To update some part or parts of the home.
• To replace fixtures or appliances that might have been outdated.
• To sell a home. This is, once again, a serious consideration, as an up-to-date home always fetches a better price when compared to the same home with outdated features.
• Some people also consider improving the present home when the need to move to any other place arise.
• To accommodate a new family member

Home improvement is often performed to raise the asking price of a house about to be sold. Such home improvement projects often include:

• Adding or remodeling bathrooms
• Improving/redesigning the kitchen
• Adding a new room
• Adding/modifying a bedroom

Types of Home Improvement Loans or Financing

There are various types of home improvement, and these depend on the scope of a home improvement plan. A small home improvement plan usually does not require financing, however, larger projects necessitate additional financing, or a home improvement loan. The following are the types of home improvement loans or financing options available:

A second mortgage is a loan against the equity in the home. A second mortgage is basically an additional mortgage, and financial institutions usually lend up to 80 percent of the appraised value of a home minus the balance on the original mortgage. Fees that are normally associated with a mortgage, such as closing costs, title insurance and processing fees, must be incurred additionally.

Refinancing refers to paying off the old loans and taking out a new mortgage on a home. A refinance generally requires equity in a home, a solid credit rating, and an overall steady income. Moreover, when refinancing is sought, an individual will have to incur all the closing costs that go along with getting a new mortgage. These additional fees are the main reason why refinancing is not advised unless an extensive home improvement project is planned.

A Home Equity Line of Credit (HELOC) acts like a second mortgage and lets the borrower borrow up to about 80 percent of the appraised value of the home. However, the current mortgage balance is subtracted from the appraised value. Moreover, HELOC is set up as a line of credit, so interest is not charged until any withdrawal is made, although closing costs are applicable. The best way to approach HELOC is to avoid withdrawals until the need to pay contractors and suppliers arises.

Unsecured loans. The cost of obtaining unsecured loans is comparatively lower than the other types of home improvement loans. However, interest rates charged on unsecured loans are often higher, and borrowers are not able to get a tax deduction for interest paid on unsecured loans. Unsecured loans are advised for small home improvement projects with expenditures not surpassing about $10,000.

How can Home Improvement Help Increase Home Equity?

Home improvement can significantly help increase the equity of a home. This is because home improvement not only improves the quality or size of a house, but also increases its value, all of which adds up to an increase in equity. It should be noted that some home improvement projects bring better results in increasing equity. For example, remodeling kitchens or bathrooms usually brings greater returns than modifying or adding leisure amenities.

When shouldn’t I refinance?

The missing link in all of this is how long you’ve held your current mortgage. Because you will be starting all over again with a brand new mortgage, the longer you have had your present loan, the less advantageous it is to refinance, especially if the difference between your old and new interest rate isn’t significant.

Consider someone who wants to trade in a four-year-old loan on which he has already paid $25,000 in interest. By starting over, he could be paying more in interest for both loans than if he had stuck with the old one, depending on the difference in rates. You should do the math before making a final decision.

Remember, your house payments in the early years of your loan are almost all interest. Popular wisdom has it that interest isn’t so bad because it’s deductible. But interest isn’t all it’s cracked up to be. For one thing, interest is cash out of pocket - your pocket. Yes, every dollar you pay in interest is deductible on your tax return, but your tax savings is only equivalent to your tax bracket. So if you are in, say, the 31 percent bracket, your net write-off is just 31 cents, not a full $1.

The only sound way around this problem is to switch to a loan with a shorter term, say 15 years rather than 30. Your monthly savings may not be significant, but you’ll be shaving years off your loan, so your total interest costs won’t be as great.

Another potential roadblock: A prepayment penalty clause in your current mortgage.

Many lenders now charge borrowers a penalty if they pay off their loans before a certain period. Usually, that’s no more than two years, but sometimes it’s five. The fee, which might be as much as a percentage of the unpaid balance or as little as a full month’s interest, protects lenders against losing loans before they become profitable. In exchange, the borrower usually gets a slight break on his or her interest rate. But if rates fall during the penalty phase of the loan, the charge is one more cost you have to absorb.

Prepayment penalties are illegal in mortgages insured or guaranteed by the federal government and some other loans. Your loan documents will tell you whether your mortgage contains such a clause as well as the length of the

I want to refinance, what do I need to do to get started?

Since refinancing means you’re starting the loan process again, you’ll have to go through essentially the same process you did when you took out your current mortgage. First, you’ll have to get all your records together and make sure your credit profile is in good order.

That said, you have an advantage with refinancing if you have a good payment history with your current loan. Lenders can see that you’re a good risk, and that makes the qualifying process easier.

Paperwork
Nothing has changed: Your broker/lender will need to verify your income, employment, account balances and the like, so be prepared. The broker will tell you exactly what you need, but generally you’ll be required to produce current pay stubs and savings and checking-account statements if going FULL DOC. If you are self-employed, you’ll also be asked to produce copies of your last two federal income tax returns as well as a profit-and-loss statement and perhaps even a personal financial statement.

Polish Your Credit
Even if you are just thinking about refinancing, obtain copies of your credit

You COULD get it here

Go over them to make sure they are accurate and current. If they’re not, take the steps necessary to have the errors corrected and the information brought up-to-date.

Credit Correction Program

Also, do what you can to make yourself more credit worthy. That includes scrapping those credit cards you don’t really need, paying your account balances down to at least half of your maximum credit allowances, and making sure you pay all your bills on time.

Figure out what debt you would like included within the refinance loan so you can alleviate some of the stress and anguish associated with creditors.

I have a problem with debt and creditors won’t stop harassing me, how can refinancing help?

If you’re living from paycheck to paycheck rest assured you’re not alone. Many folks barely make ends meet on a week to week basis. Sadly many people can’t even remember where they spend their money. They only thing they know is that it’s all spent before their next paycheck. This lack of financial wisdom is causing many consumers to file for bankruptcy as a means of relieving themselves from their high debt and financial obligations. What many folks don’t know is that this method of erasing your debts also destroys your credit rating and any hope for having a good financial status. Instead there may be another alternative – A debt consolidation refinance may be just what the doctor ordered to fix your current financial disarray.

The main reason anyone would and should consider utilizing a debt consolidation refinance is because it usually can help eliminate the harassing phone calls from your creditors and the debt collectors they employ. It’s also designed to consolidate all of your bills into one monthly payment that is slightly lower then what you previously paid in order to help alleviate some of your financially induced stress. Another benefit is the ability for a debt consolidation refinance to keep you from filing bankruptcy allowing you to stay recognized as a credit worthy consumer.

So when should you consider seeking out a debt consolidation loan or refinance? Typically, you should consider a debt relief loan as soon as your monthly bills become difficult or near impossible to pay. This early intervention through the use of a debt refinance loan will prevent you from having to pay outrageous interest rates, late payment fees and charges which will only complicate your already shaky financial status. Another good indicator of when to seek out a debt relief loan is when you only make the minimum payment amount due every month and when all of your credit balances continue to remain the same even after your monthly payments.

Homeowners have a big advantage over non-homeowners because they have the option of applying for a debt refinance using the equity in their home or house. Using this method requires the discipline to pay off your consolidate bills monthly and to avoid incurring any new bills. Don’t use your home as collateral unless you intend to make the payments on your new debt consolidation loan.

Always make sure to do your research in order to find a reputable debt refinance and consolidation company. Many of these companies appear to be the real deal on the outside but in all actuality may only really be a loan shark in disguise. These establishments need to be avoided at all costs as they will place you under strict monthly payment terms and charge a much higher rate when compared to a real lender.

As you can see proper research will allow you to find a good debt refinance company which has the potential to help lower your current monthly payment total, keep you from filing bankruptcy, prevent you from paying higher interest rates and allow you to maintain your credit worthiness ranking.

I’ve been late a few times and got in over my head…I hate to admit it but it’s foreclosure time, what can I do?

A foreclosure bailout loan is a mortgage designed to save homeowners from having the properties being foreclosed upon by their banks. It is basically a refinance loan. The home owner takes out a mortgage to pay off the current loan that’s in default.

When taking a foreclosure bailout loan, strongly consider paying the points to remove the prepayment penalty. This will allow you to fix your credit and get in a better loan quicker.

You want to contact a mortgage professional as soon as you feel your home is in jeopardy, the longer you wait the more your credit becomes affected and the harder it is to get you into a more stable situation. Time is the key to saving your home.

Most foreclosure bailout loans require at least 25% equity in the home and credit scores over 500. While many potential borrowers do not fall into this category there are some that do and can benefit from the bailout programs.

Any time a mortgage goes 120 days late, most banks will consider that loan in default.

Be cautious of immoral predators if you are facing foreclosure. Many companies see your bad fortune as an opportunity to strip any remaining equity from your home, often leaving you both homeless and penniless. Carefully research and verify any company that is offering assistance, especially if the offer seems too good to be true.

When compared to the option of selling your home or loosing the home if foreclosure proceedings are completed, the higher interest rate associated with a bailout is usually the best alternative. These bailout programs are a form of refinance; they are not a lease back program. You still maintain ownership of the property.

A foreclosure bailout loan will be costly and typically carry a higher interest rate because the lender’s risk is so high.

The type of lender you are looking for in a foreclosure bailout is called an equity lender. They lend based solely on the equity in the home and not necessarily your credit score or credit history. This means they are protected by the higher risk should they have to take the property back. These are usually short term loans designed to keep someone from going to foreclosure. This allows you time to list and sell your property or get back on your feet again and refinance.

In some rare cases you may be able to pay off additional debts as part of a foreclosure bailout/refinance. If you have enough equity in your home this may be exactly what you need to get back on track.

The Loan Process in a Nutshell

Refinance

• Get pre-approved
• Fill out application
• Choose loan program

• Order title report
• Order appraisal
• Submit final application
• Satisfy conditions

• Loan gets cleared to close
• Schedule closing
• Get cash in 3 days!

TOP 10 BIGGEST MISTAKES

Refinancing tips can help save you thousands of dollars.

Refinance mistakes can cost you thousands, even tens of thousands of dollars. Here are some quick tips to help you out:
1). Wrong time frame

Don’t do a refinance under time pressure. Always be sure you can walk away from a refinance if you are surprised by last minute (usually more expensive) changes to the loan you weren’t expecting. These kinds of shenanigans happen. Sometimes people sign up for a bad deal because they need the money quickly, but could have avoided this with a little planning.

It is harder to walk away from a loan when it is a purchase loan. Make sure the broker or lender verifies in writing the final mortgage rate that was locked in, so there are no surprises.

2). Pay too much closing costs

Make sure you get a good faith estimate within 3 days of the loan application. Make sure the estimates are thorough. If a mortgage broker leaves off certain costs, such as property taxes or prepaid items, then their offer may seem much cheaper when it actually won’t be. Also make sure the quotes are for the same type of loan (30 year fixed, 5 year interest only, etc.) so you are comparing the same loan types. Otherwise you are comparing apples and oranges.

3). Not locking your interest rate properly

Your mortgage broker “locks in” your final interest rate with the lender. You can request a copy of this rate-lock prior to having to sign the loan documents. That way you know which interest rate to expect, and you won’t be hit by any last minute surprises.

4). Wrong loan type

There are many different loan options out there. Make sure these are explained to you thoroughly. This is your chance to get free advice. For some people a 30 year fixed loan is appropriate, and for some people an interest-only loan with lower payments may be better.

5). High prepay

Some loans come with a prepayment penalty. Find out how long this payment penalty period exists for, and how much it will cost. If you plan on leaving your house in a year, and your prepayment penalty is for 2 years, you will end up paying that prepayment penalty in the future. Sometimes accepting a prepayment penalty for the short term can lead to a lower rate. If you accept a prepayment penalty of one year for an interest rate, but reasonably expect to be in the property for another five years, then this is something to consider.

6). Paying a prepay

Your current loan may have a prepayment penalty. Some lenders waive their prepayment penalty if you refinance with them again. Sometimes this prepayment penalty waiver is prorated from your old loan. For example, if you have one year of a prepayment penalty left on a three year prepayment penalty, then your new loan with the same lender will carry over that one year prepayment penalty. Ask your broker to take your current loan to the same lender, along with at least 3 others for comparison sake.

7). Fixed for long time frame

If you plan on keeping the house for 10 years and get a loan that is fixed only for 5 years, you are exposing yourself to the risk of a higher interest rate in 5 years. Interest rates may be lower or higher at that time, but if you have a 30 year fixed loan you don’t have to worry about that for 30 years.

8). Hard/soft prepay

A hard prepayment penalty is triggered if the loan is refinanced or the house is sold. A soft prepayment penalty is only triggered by a refinance, so if you sell the house then there is no prepayment penalty. A soft prepayment penalty gives you more options.

9). Borrow too much

There are lots of aggressive loan options and lenders out there. It can be relatively easy and tempting to cash out a lot of equity. Make sure you can afford the new payment, and that the cash you are taking out is for reasonable purposes.

10). Going with an inexperience broker

Make sure that you are working with someone who is knowledgeable and educated about what you are trying to do. There are times when a refinance means you pay more/month, but if there is beneficial reasoning behind this, it may make sense. Your broker should be able to clearly define the benefit to doing a refinance, and if he or she can’t, it’s time to wave bye bye.

REFINANCE 101 QUIZ

This is Refinance 101, what would a good lesson be without a quiz at the end. The mini exam (don’t get scared) is designed to test your knowledge. It should be used as a learning tool and will be updated every month. I would recommend reading over the LOAN PROGRAMS and BASIC TERMS page prior to taking this. In order to get the answers just send an email to: info@accessgrantednow.com and the answers will automatically be emailed to you right away!

1). It’s a good time to refinance if I want some cash to buy a car and a lawn mower?

a. True

b. False

2). _____________ increases as you pay off your mortgage or as the property appreciates in value. When the mortgage and all other debts against the property are paid in full the homeowner has 100% ___________ in his property.

a. Payment

b. Depreciation

c. Equity

d. None of the above

3). If you decide you want to refinance you should consider if there is a ______________ on your current mortgage, as you will have to add this amount to the pay-off for satisfying your loan too early.

a. Early pay-off penalty

b. Financial sacrifice

c. Lender payback

d. Prepayment penalty

4). When you have been 120 days late on your mortgage, you arte considered in default.

a. True

b. False

5). You should consider__________________ before refinancing.

a. Hidden costs

b. Tax costs

c. Net saving

d. All of the above

6). This charge imposed by your broker/lender covers initial costs of submitting your loan request and checking your credit.

a. Title Search Fee

b. Application Fee

c. Lender Fee

d. Underwriting Fee

7). _______________ acts like a second mortgage and allows the borrower to borrow up to 80% of the home value.

a. HELOC (home equity line of credit)

b. Jumbo Loan

c. Home Improvement Loan

d. Foreclosure Bailout

8). A____________ is a map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land.

a. Zoning

b. Underwriting Scale

c. Floor Plan

d. Survey

9). Sometimes the longer you wait the better it is when you know a foreclosure is in the future.

a. True

b. False

10). It’s always a bad idea to refinance your Adjustable Rate Mortgage and get another one.

a. True

b. False

11). A refinance is a very good way to consolidate debt and get a fresh start.

a. True

b. False

12). The following all could be considered part of closing costs:

a. Title Search Fee

b. Home Inspection Fee

c. Origination Fee

d. All of the above

13). A written agreement between a lender and a borrower to loan money on specific terms or conditions is known as a _________________.

a. Mortgage

b. Promise to Pay

c. Cleared to Close

d. Commitment

14). A certain type of refinance that is done so you can get money to do things you want like: home improvements, pay for your school, or invest is known as:

a. Debt Consolidation

b. Cash Out

c. Forbearance Loan

d. Construction Refinance

15). A mortgage is an unsecured loan

a. True

b. False

OK, I’m ready to refinance…who do I contact to get the process started?

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