Refinancing a Mobile Home Loan

If you’re thinking about refinancing your mobile home, there are some important details that you should know in advance. Refinancing a mobile home can be a challenge, depending on your current situation. For instance, with the majority of mobile home lenders there is a minimum credit score requirement. Your existing credit history could end up being a big factor.

Another thing to be aware of is that with a mobile home loan, you will normally end up paying more in interest than you would pay with a traditional mortgage loan. This is because mobile home loans typically have a higher default rate. Here’s what else you should consider when refinancing your mobile home:

Why refinance your mobile home?

Before determining how to go about preparing to refinance a mobile home loan, you should first consider your reason for refinancing. This is especially true if your monthly payments are already manageable. Are you hoping to obtain a lower mortgage interest rate? Refinancing could lower those mobile home mortgage payments that you make every month. Needless to say, in the long run, you could actually end up paying less by refinancing.

Some mobile home owners opt to get a refinanced loan so they can switch from their existing adjustable rate. They may be ready for the stability that a fixed rate can offer. Obtaining the right kind of fixed rate may enable you to lock the amount in for the duration of your mobile home loan. Other reasons for refinancing your mobile home loan could be to modify a spouse or co-applicant’s name, or even to shorten the loan term so you can pay it off sooner.

If your mobile home is not affixed permanently to land, your original financing was probably the result of a personal property loan. This is a standard situation, because lenders won’t normally finance homes unless they are designated as “real property” by law. Since mortgage loans have lower interest rates than personal property loans, it makes more sense to try and obtain a mobile home mortgage loan. One way to try and do this is to seek to have your mobile home reclassified. That means permanently affixing your mobile home to a foundation that is approved by the Federal Housing Administration. Doing this will change the classification of your mobile home to “real property” and entitle you to a home mortgage loan.

Government help is available

When you decide to refinance your mobile home loan, be sure to look into the type of government help that may be available to you. There are several government agencies that refinance loans if you are a qualified mobile home owner. Freddie Mac is a government sponsored entity that has mobile home mortgage programs. They are well known for being one of the largest purchasers of traditional home mortgages. But not everyone realizes that Freddie Mac also buys and guarantees a number of mobile home mortgages each year.

If your mobile home qualifies as a permanent attachment to land, you may be eligible for a mortgage loan. Freddie Mac can help whether you’re a lender with a fixed or adjustable rate mortgage. Believe it or not, you can get help from the Federal Housing Administration (FHA), even if you are a mobile home owner. The FHA is responsible for enabling the banks to offer traditional homeowners a variety of low-down payment programs. Now more than ever, mobile home owners are also being encouraged to take advantage of these and other related financing programs.

Should You Refinance to an Adjustable Rate Mortgage?

An adjustable rate mortgage (ARM) is a type of mortgage where the interest rate charged on the outstanding balance varies based on a specified schedule. The interest rate is initially fixed for a given period after which the rate is set periodically. There are many advantages associated with the adjustable rate mortgage especially when compared to the fixed rate mortgage. Below are some of the reasons why you should consider refinancing to an adjustable rate mortgage.

You want a lower interest rate

A lower initial rate is charged on an ARM when compared to the rate charged on fixed rate mortgages. While the initial rate is fixed for a given duration of time, the interest rate is much lower than the rate charged on a fixed mortgage at any given time. This works to your advantage as it frees up some money at the beginning of your loan term. This money can be useful in taking care of other expenses or can be invested in an income generating project.

You’re selling soon

An ARM is ideal for home buyers who wish to sell in the near future. For buyers who foresee a job transfer to another location or a need to upgrade to another house, for example when starting a family, the lower ARM initial interest rate provide a better and cheaper option. Once the house is sold, the loan can then be paid off in full. It is important to note that some contracts stipulate that a penalty is charged if the loan is paid off early. This should be considered while refinancing the mortgage.

You want to improve your financial standing

An ARM mortgage is ideal for homeowners who want to improve their financial standing. The adjustable rates provide short term stability as the homeowners anticipate a better financial standing in the future. The state of the economy also means that homeowners get some relief with the adjustable rate mortgage as they wait for the economy to recover.

Refinancing is not for everyone

It is important to note that an adjustable rate mortgage may not be favorable in some situations, for example where the homeowner is looking to stay in the house in the long haul. You should, therefore, take your time to examine your financial situation and get a professional to advise you on the additional costs to be incurred with refinancing and help you determine whether refinancing to an adjustable rate mortgage will make any economic sense both in the short term and in the long run.

Should You Refinance This Summer?

 

Are you trying to decide if you should refinance your existing mortgage this summer? Well, we can help in your decision! In order to ensure the best outcome, it’s best to be informed of the refinancing process and how it can potentially benefit you as a homeowner. Otherwise, refinancing could be a costly mistake if you don’t do your research.

Refinancing costs

You need to consider the costs for refinancing in order to determine whether or not it will be worthwhile for your particular financial situation. Unfortunately, you must be willing to invest some money in order to save in the long run. Be prepared to pay multiple refinancing costs that include filing, credit checks, application fees, title examination costs, and appraisal fees.

 What are the possible benefits to refinancing?

• Lower monthly payment
• Tax benefits
• Lower interest
• Obtain cash
• Consolidate debt

Should you refinance?

There isn’t a clear cut and dry answer to whether or not you should refinance without looking at the smaller details. First of all, if you are planning to move in the next few years, refinancing may not be for you. You want to reside in the house and keep the new loan long enough to reap the benefits, and this may take a while.

If your credit score has greatly improved since your original mortgage loan, it may be a great idea to take advantage of low refinancing rates. Also, if you have high-interest loans that you wish to pay off or get a lower rate, refinancing may be a good option. It’s not a good idea to refinance simply to get cash to go on vacation or buy a new luxury car. Refinancing is a good option for those who want to pay for college tuition or get a shorter mortgage.

Right now, you have an opportunity to get some great mortgage rates through refinancing. And don’t forget about HARP, which lets borrowers refinance even though they may owe more than their home is worth. Keep in mind that the borrower's loan must be owned or guaranteed by Fannie Mae or Freddie Mac. HARP expires at the end of December in 2015.

Things to Consider Before Getting a Refinance

Mortgage interest rates are falling and this has encouraged many homeowners to explore the possibility of getting a refinance. However, before submitting your mortgage refinance application, you have got to consider quite a few things.

Remember that low rates can't be the only reason to get a refinance. You need to consider several other factors as well. As a rule of thumb, you should get a refinance only if you plan to keep the home for a long time. If you can't figure out whether refinancing is good for you, you should ask your lender.

When to refinance

You should get a refinance only when the current rates are at least 1 percent lower than the rate you pay on your existing mortgage.

Refinancing involves closing costs. If you don't plan to live in the house for a long time, the monthly savings that you get from the lower rates may not justify the costs of getting a new mortgage.

The closing costs can run 3 percent to 6 percent of the total loan amount. Lenders might add these costs to your loan amount. In that case, you don't have to bring cash to the closing table. However, you will still be paying for it over the life of the mortgage.

Is refinancing right for you?

To determine whether refinancing is good for you, you need to know your current mortgage payment and the new payment. You should also estimate the length of the time you intend to stay in the house.

When you refinance, your monthly mortgage payments will be lower than what you are currently paying. But if you don't live in the house for long enough, you will not be able to recover the closing costs associated with getting a new mortgage.

So, for example, if the closing costs on a $100,000 mortgage are 4%, you will have to shell out $4,000. If your monthly savings after getting a refinance is $80, you have to live in the house for at least 50 months to recover the closing costs. If you sell the property before that, you will incur a loss. It gets better the longer you stay in the house. This also explains why refinancing is not the right option for people who plan to move out in a couple of years.

You should consider refinancing only if the new rate is at least 1% lower than your current rate. If you can get even lower rates, refinancing becomes a much better option. If the rates are lower, your monthly savings will be higher and you will reach your breakeven point in less time.

Some other factors, too, can make refinancing a better option. For example, your earnings might have improved since you took the last mortgage or your credit rating might have gone up. When your income or credit rating is high, lenders will be more interested in considering your application. In this case, you will be able to negotiate lower rates and lower closing costs. This will further shorten your breakeven period.

Bottom line

Don't get refinance just because everybody is getting it. Your financial situation might be different from theirs. When you get refinancing, you are getting an altogether new mortgage. So during the first few years, most of your monthly mortgage payment will go towards interest. This makes it difficult to build equity.

 

Refinancing? Here’s What You Need to Know

Homeowners who have decided to refinance this year have made a wise decision because mortgage interest rates are currently still extremely low. Whether you have already decided to refinance or you are in the process of making sure that it is a good choice for you, there are certain things you need to be aware of in order to make the best decision.

Refinancing can be a great option for homeowners like you, but for some, it may not the best time to do so. Factors that can dictate this are your credit score, the costs, and many more. Here are some things that you need to consider when making the decision to refinance:

Break-even point

Will you get ahead or break even by refinancing? If yes, then you refinancing will be a great option for you. You can calculate your break-even point by dividing the costs of the refinance by the monthly savings of the new home loan. The answer you get is the number of months it will take to gain back the costs of refinancing. A two or three year period is the usual amount of time.

Costs

While refinancing can potentially save you money, it is a long process that requires you to pay multiple costs. You will be paying many fees associated with refinancing, from application fees to loan processing fees and more. You want to be completely prepared to spend some money upfront in order to get the process going.

Credit score

Since your credit score is a huge factor in the mortgage rates that you can qualify for, it makes sense to know your credit score before you begin refinancing. Your score should be above average or high, and it will affect the rates you are offered.

Staying in your home

When you refinance, you need to remain in your home at least until you break even. For this reason, if you are planning on moving before then, refinancing will not be a good option for you.

Refinancing a mortgage loan can be a long and costly process, but if you are prepared upfront, you can budget accordingly and get the best refinancing results!

The Changing World of Refinancing

In the mid 2000's, getting a mortgage was a whole lot easier. Back then, borrowers were not required to have a good credit history. Even those who couldn't afford to make a down payment could get a home loan.

The underwriting norms were rather relaxed and more people could buy homes or get their existing mortgages refinanced. Some borrowers who saw good appreciation in the value of their homes drew out some of their positive equity and splurged that money on luxury cars or boats.

But then the recession arrived.

During the recession, several people lost their jobs and consequently many of them had to default on their mortgage payments. The value of properties, too, eroded. This forced banks to become more cautious and selective. Now getting refinance is not all that easy. Serial refinancing has become a thing of the past.

Recovering economy

The economy soon started showing signs of recovery and many people who lost their jobs during the recession are back to work. The value of homes, too, has increased. This has encouraged banks to relax their lending norms a bit. Now homeowners who are underwater on their mortgage payment are eligible to get refinance if the value of their home is slightly higher than their original loan amount. Even owners with negative equity are now eligible for refinance through HARP 2.0.

If you are planning to get a refinance, you should be prepared to deal with a lot of paperwork.

Refinancing now

Refinancing your existing mortgage is now difficult. It is still possible, but now banks have more stringent underwriting norms. Gone are the days when they would readily approve each and every application.

More paperwork

Refinancing now involves a lot of paperwork. Banks now require detailed documentation of your income because they are legally responsible to prove that you will be able to repay the loan. As a result, the borrower now has to submit additional documents like tax returns, pay stubs and bank statements.

Your credit score

Ten or 15 years ago, people who had little or no credit were eligible to get a home loan.  But now you need a good credit score. If your credit score isn't satisfactory, you should improve it before trying to get refinance. You should also get a credit report. There may be errors or inaccurate information in it. Your credit score will improve when you get those errors rectified.

Borrowers should also have a good idea about the value of their home.

Longer waiting periods

Now that rates are at their historic low, lenders are getting flooded with numerous home loan applications. Consequently, getting an approval now takes much longer. You can, however, speed up this process by responding quickly to document requests. Any delays on your part can cause your rate lock to expire. You will probably have to pay extension fee as well.

If you are paying too much interest on your fixed-rate mortgage, you are a good candidate for refinancing. When you refinance, you get to enjoy the lower rates. While choosing a refinancing deal, don’t forget to compare rates and fees. To get the best possible deals, you need to stay abreast of the latest happenings in the world refinancing.