In light of the incredibly low interest rates on mortgages these days I figured now was a good time to explore the ins and outs of refinancing a home. I’ve never done so myself, however my parents and several of my friends have refinanced their homes rather recently. I did some research and am here to give you the low-down on refinancing a home, whether you are considering it, wondering how the process works, or asking what the point of a refi is.

What Does it Mean to Refinance a Home?

Simply put, refinancing a home is the process of replacing an existing mortgage loan with a new one. Typically, the interest rates are lower under the new debt obligation, and the loan term is usually different as well (for example, if a homeowner originally had an adjustable rate mortgage, or ARM, they might refinance for a fixed rate mortgage.) Refinancing a home does not pay off the debt that one owes on a loan, it simply restructures the loan. The homeowner may accrue closing costs that come with refinancing their home, which are the fees charged for the services performed to actually process and confirm the loan.

Why Do People Refinance Their Homes?

According to Bills.com, the top four reasons for refinancing a home are:

1.)   To save money

2.)   To change from an ARM to a FRM or vice versa

3.)   To get money out of the home

4.)   To avoid foreclosure

Based on my research it seems that the most prominent reason of these is to reduce the interest expense on a mortgage by refinancing for a lower interest rate than the original loan, thus saving potentially thousands of dollars over the life of the loan. This could result from either a reduced monthly payment or from a reduced loan term. In terms of changing loan types, during high interest times many people find the ARMs more attractive because they usually come with a lower interest rate than a typical 30-year FRM. However, the US is presently experiencing lower than normal interest rates, and the differential between the ARM and the FRM interest rate isn’t very big. Thus, people may choose to finance now because the security of locking in a low rate is more appealing than paying 1% more over the course of 30 years. This is a way to reduce the risk of being subject to higher interest rates when they do jump again under an ARM. Also, people may opt for a longer loan term when they refinance, which would reduce the monthly payment amount from the original loan. The other reason I’ve seen for refinancing is to consolidate other debt into one loans, and pay the same interest rate on all of them.

Should I Refinance My Home?

Bankrate.com suggests considering the timing and circumstance for your refinance, and getting your goals clear. Are you looking to reduce your monthly payments by extending your loan out another 30 years? Do you have a first mortgage as well as a home equity mortgage and are eager to consolidate your debt and level out the payments? It may be a good idea if these are your goals, especially considering the incredibly low interest rates of the present. However it’s still important to consider how many months at this lower payment rate will it take to make up for the money you spent on refinancing in the first place. Bankrate stated that in their closing cost survey from 2008, to refinance a $200,000 loan in the U.S. costs an average of $3,118 in closing fees. Bankrate has a refinancing calculator where you can input your costs from the refinancing deal, as well as the loan terms, to calculate how many months it will take to recoup those costs to find out if it’s worth it. The site also warns that multiple refinances can sometimes be financially harmful, because closing costs are not cheap and can outweigh the money saved in a smart refinance. They referred to folks who always migrate to the next low interest rate as “refinancing junkies,” and do not advise in following this pattern.

How Do I Get Started?

SmartMoney.com give the advice of shopping around and checking the prices (such as for closing costs) and rates from various lenders as they will vary. One tip from the financial website was not to overlook your original lender, since sometimes they will be able to wave some of the fees and, since you already have a history with them, it might even expedite the process of the refinancing. Just make sure you do some price shopping so you know what sort of rates and deals to ask for. Mortgage brokers or upfront mortgage brokers are another option to the typical lender, just make sure their fees are not exorbitant. SmartMoney also describes the pros and cons of using an upfront mortgage lender, who will reveal their fees upfront should you choose to shop anonymously for a quote. The big pro here is you can get a fast glimpse at what you would be paying without putting yourself at risk for solicitors to get your information. Again, always be cautious to check the credentials of mortgage lenders when entering personal information. And last but not least, it’s a good idea to make sure that your credit score is in good shape. A recent CNN Money article about current low interest rates included a quote from IHS Global Insight economist Patrick Newport, who stated,  “If you have good credit, this is the best time in 40 years to buy [a house.]” Generally speaking, the higher your credit score, the better mortgage deal you’ll be able to get, including when refinancing your house. A credit score below 620 is generally seen as just okay, 620-650 is good, and above 720 is viewed as having excellent credit.

Dk is an enthusiastic finance blogger who can be found at RoadFish.com

Why, When, and How to Refinance Your Home is a post from: Austin Texas Mortgages

Stock Up on Packaging Supplies

Before you start boxing up your life, make sure you have enough supplies.  You will need:

• Several moving boxes.  You can buy these online, or from your removal company.  Most sellers offer a calculator to help you figure out how many you’ll need for your home.  Add a few extra to the calculation, unless you’ve embraced a Spartan, zero clutter lifestyle, you’ll need them.
• Bubble wrap rolls:  You will use these to protect fragile items.
• Packing paper: Wrap bowls, plates, and glass ornaments in paper to protect them
• Tape: Invest in some sellotape (to secure bubble wrap), and some sturdy packing tape.
• Sharp scissors.

Planning Your Packing

Before you start packing, work systematically through your house and throw out any items that you don’t want to take with you. Try to be fairly ruthless about getting rid of things you don’t need or no longer use.  It will save you time and effort in the long run.

Start by packing up items that you rarely use. Be generous with those bubble wrap rolls and wrap up anything that’s fragile with plenty of packing paper.  Label boxes in big writing with a marker pen so that you know where they should go in your new home.

Use cushions, pillows, and other soft items to fill up boxes that contain fragile items, and ensure that those items don’t shift while the boxes are in the removal van. It’s better to go overboard on careful, soft packaging than to find that your most treasured ornaments got broken during the moving process.

Don’t Over-Fill the Boxes

Don’t put all of your books (or other heavy items) in one box.  Spread them out over several boxes that belong in the same room.  Some removal companies will refuse to move boxes if they’re too heavy.  One useful rule of thumb is to check the weight of the box yourself.  If it’s too heavy for you to move, split the contents of that box.

Pack A Survival Kit

Designate one box as a survival kit.  Fill that box with the things you’ll need for the first few evenings after the move.  You’ll probably want to include a kettle, a toaster (or sandwich maker), some basic eating utensils, and a couple of overnight bathroom kits with soap, toothbrushes, hair brushes, and other essential items for each family member.

If you have children, allow them to put one or two favourite toys in the survival kit.  Having access to their favourite toys should make them feel a lot more comfortable in their new home.

Article by guest author Amy Fowler on behalf of bubble wrap rolls and suppliers of other packaging, UK Packaging.

How to Pack for a House Move is a post from: Austin Texas Mortgages

However, even the bigger cities here are nice too. If you’re thinking of moving, but are not sure where to go, here are some of the best reasons why you should consider an Austin new home when you’re looking for new homes in Texas.

Enjoy the Diversity of Austin

There are a lot of reasons to settle down in Texas’ capitol and fourth largest city. Forbes and other websites and magazines consider Austin to be one of the top 10 cities in the U.S., not only for its vibrant music scene and its cultural diversity, but most importantly, for its strong economy and high literacy rate as well. Housing is affordable—whether you are looking for foreclosed or new homes in Texas—which is a major draw to young professionals and families, as well as retirees.

Austin also has a lot to offer nature enthusiasts. The climate is generally warm-winter is usually mild and short — so people get a lot of sunny days, all the more reason to go out and enjoy the city’s open green spaces. There are hiking and biking trails, swimming holes for the warm summers, nature parks, and a lot of springs that make for excellent family activities.

Austin is Great for Foodies

For those who love food, Austin is a great place in which to live. Cheap and delicious eats can be had in food trailers, and you can find the best Tex-Mex here. There are a number of restaurants and eateries, too, and the Restaurant Week event also gives you the opportunity to enjoy a variety of foods at discounted prices.

Hollywood lovers will also enjoy Sandra Bullock’s highly-acclaimed restaurant, the Bess Bistro. Aside from boasting of a celebrity owner, it offers scrumptious food well worth the price.

A Lot of Great Entertainment Options

Austin is called the “Live Music Capital of the World” and it is in fact well known for its music scene. There is always a happening every night, aside from the annual music festivals such as SXSW, a huge music and technology event that creates an international buzz each year.

The film industry here is thriving too. Austin has a lot of film studios, including Richard Linklater’s Detour Film Productions. There are annual film festivals like the Austin Film Festival, the South by Southwest Film Festival (SXSW), and the Austin Gay and Lesbian Film Festival.

Austin, Texas hasn’t been included in many lists as one of the best cities to live without reason. So if you’re looking for new homes in Texas, make sure to look in Austin first.

Austin: One of the Best Places to Live in Texas is a post from: Austin Texas Mortgages

Knowing When to Refinance Your Mortgage

Refinancing your mortgage over to a lender with a lower interest rate can be a good way to save plenty of money each month. A reduced interest rate can reduce your monthly repayments, freeing up your cash flow. This makes it easier for you to budget, which should make it much easier to keep up with repayments.

Anyone who applied for a mortgage when their credit wasn’t so good may find it very helpful to refinance. This is usually because the interest rate they were quoted at the beginning of the loan would have been higher to compensate for having a low credit score. Yet, if your score has improved over that time, you could find you suddenly qualify for a reduction in interest rates.

Likewise, if you’re currently paying exorbitant interest rates on credit cards, store cards, personal loans, or other consumer debts, you could find that consolidating these outstanding amounts into a mortgage can save you plenty of money. You’ll be paying much less interest on your overall debt each month and you’ll find that your repayments are much lower. This can make it much easier to focus on debt reduction plans, but it also streamlines your finances. Instead of worrying about multiple repayments to creditors each month, you just have the one mortgage to think about.

What is the Best Refinancing Mortgage Rate?

If you spend a moment on an online mortgage comparison site, you’ll see plenty of very enticing low interest rates advertised from a variety of lenders. This leads most people to aim at the lowest possible refinancing mortgage rate they can find, believing that will be the best option for them.

Unfortunately, there are also some other factors that need to be considered before you submit your application. Just because a lender is advertising a very low interest rate does not automatically mean you’ll qualify for that mortgage product.

Always check what credit score that particular lender is seeking for that particular rate. Many banks and lending institutions will happily advertise the best rate they have available, but they may have this reserved for only customers with excellent credit. If your own credit is below this, they may offer a rate that isn’t so attractive.

You should also ask whether the amount of available equity you have in your home at the moment is enough to meet their lending criteria. Just as the best interest rates are reserved for those with great credit, many of these will also expect a low loan-to-value ratio showing that you have plenty of equity in your home.

Before you do decide to refinance your home loan, always consider the total costs to you. Work out whether it really will be advantageous and double check that you really qualify for the really low refinancing mortgage rates advertised. As long as everything checks out, go ahead and submit your application. You could end up saving a lot of money.

Choosing the Best Refinancing Mortgage Rate is a post from: Austin Texas Mortgages

Quite often there are disputes about who will get the house. Who even wants the house? And more often than not, the actually selling of the house. This often leads to disagreement about the actual sale price of the house if it is being sold. I’ve gathered links to several well known sources of information that might be a help to you.

• Protecting Your Credit During a Divorce
• 5 Steps to Protect Your Credit in a Divorce (MSN)
• Beware Buying a Home From a Divorcing Couple (CNN)

Obviously the most important way to help yourself is to hire a top local divorce attorney. Search on Google for “[YOUR CITY] divorce attorney”, to help your odds of finding the right divorce attorney for you. Take the time to review several of the results though. Do not assume that the first listing is the best divorce attorney.

Working Through a Divorce and Mortgage is a post from: Austin Texas Mortgages

A mortgage is a very serious obligation. You are committing to making monthly repayments continuously for 25 years or more, and if you fail to do so, your home can be re-possessed by the lender. This means that the answer to ‘What size of mortgage should I take out?’ must be that you should only agree to a deal where you are totally confident you will be able to meet the repayments.

Your lender must also satisfy itself of your ability to meet the payments. Many lenders operate a formula based on your income and any existing commitments to determine how much they may be prepared to lend.

Budget planning

If you have never done a household budget plan, you should certainly do this before you take out a mortgage. A search of the internet will produce several online budget planning tools, which should help you identify how much disposable income you have left each month. Unfortunately, it is not as simple as being able to take out any mortgage deal that has monthly payments less than your disposable income figure.

Consider possible changes in income and expenditure

Firstly, you should always think about any planned events that may affect your income and/or expenditure, for example are you planning to have children, and how might this affect your circumstances?

Secondly, you should consider whether you could afford the mortgage if interest rates rose. Before you are asked to sign a mortgage application form you should be given a document known as a Key Features Illustration. On your illustration you should look carefully not only at section 6, which explains the payments required at current interest rates, but also at section 7, which states by how much your payments would rise with a 1% increase in the interest rate, known in the mortgage industry as the payment shock.

Thirdly, while in years gone by you may have been able to assume that income and expenditure amounts might increase by roughly the same percentage, in the current climate this may not be so. Remember that wage increases are often well below inflation, and that the cost of utilities and transport is rising dramatically. The combination of these factors will erode disposable incomes further for many and affect the amounts available for mortgage repayments.

Finally, consider the likely monthly costs of any insurance premiums. A lender will insist that buildings insurance is in force on a mortgaged property, and life insurance and critical illness insurance on the mortgage balance are certainly highly desirable.

On a more positive note, whilst potential first-time buyers are experiencing certain difficulties in getting on the housing ladder, they may actually find their mortgage repayments are lower than their previous rent payments. Rents are rising dramatically as demand for rental properties increases, while mortgage interest rates remain very low as of December 2011.

Look for payment flexibility in a mortgage

Given the current economic climate, it could be well worth your while seeking out a flexible mortgage. Look out for deals that allow overpayments and/or payment holidays, so that you can vary your monthly repayments for short periods based on your financial situation. Also consider offset mortgages, where you can place any spare money each month into a savings account which is linked to your mortgage, and see your mortgage payments fall according to the balance of the savings account.

What if I can’t afford a mortgage?

If after a detailed analysis of what you can afford, your conclusion is that you cannot commit to a standard mortgage, your best options are either to save as much as possible so you accumulate a larger deposit, or to examine other types of mortgage such as shared ownership and shared equity.

This content was produced by Pamela Chimbonda of Fiscal Muses on behalf of Ulster Bank, who are now offering first time buyer mortgages.

How Large A Mortgage Can I Take? is a post from: Austin Texas Mortgages